Jan 13, 2010

Has Peruvian Asparagus Peaked?

Four years ago, Peruvian asparagus growers were feeling pretty confident — and for good reason.

Their industry had grown exponentially since 1991, when Peruvian asparagus was granted tariff-free access to the U.S. market. The U.S. government eliminated the tariffs as part of its war on drugs – in an attempt to get South American farmers to grow something other than the coca plant, the basis for cocaine – and the Peruvians, thanks to advantages like year-round production, cheap labor and low pest pressure, made the most of the situation. They built a domestic industry nearly from scratch, their acreage exploded and they started flooding the United States with cheap asparagus. The U.S. industry couldn’t compete.

That was the state of things in late 2005, when the International Asparagus Symposium was held in The Netherlands. Peru was on a high, and its remarkable growth showed no sign of stopping.

A few years later, however, Peru was the host of the symposium, and the picture had changed somewhat.

The symposium, held every four years, gives asparagus industry members from all over the world a chance to meet and share ideas. Michigan sent a number of representatives to Lima, Peru, last year. Some of them had been to The Netherlands four years previously and had seen how confident the Peruvians were. When they got the chance to visit Peru last fall, however, they found a mature industry grappling with new challenges.

The overall impression they got was that Peruvian asparagus, while still a strong presence in the world market, might finally have hit a plateau. In fact, Peruvian production is expected to go down, starting this year.

Challenges

Four members of the Michigan delegation presented their findings during the Great Lakes Fruit, Vegetable and Farm Market EXPO in December. As part of the symposium, they had toured Peruvian asparagus fields and greenhouse facilities, where they got a chance to observe, firsthand, that industry’s strengths and weaknesses.

The biggest challenge Peruvian growers are dealing with right now is Prodiplosis longifila, a tiny midge that has been doing a lot of damage in their asparagus fields. The midge is native to Peru, but didn’t seem to notice the country’s bounty of asparagus until a few years ago, said Norm Myers, Extension director in Michigan’s asparagus-rich Oceana County.

The midge lays eggs on new spears as they emerge from the ground. When the eggs hatch, the larvae bore into the spear and damage it to the point where it curls over and dies, making it unmarketable, Myers said.

The midge isn’t much of a problem on white asparagus, which is harvested before the spears break through the ground, but it’s a serious impediment to the production of green asparagus, most of which goes to the United States. The Peruvians are using sprays, scouting, biostrips and other techniques to fight the midge, but they’ve established little control so far, Myers said.

“I don’t see a good out for them,” he said.

The midge attacks asparagus and other plants year round, but the worst infestations are in the summer, according to Mathieu Ngouajio, an associate professor at Michigan State University.

The midge’s presence, or potential presence, leads to another problem: Peruvian exports to the United States have to be fumigated with methyl bromide, which hurts their marketability, Myers said.

Other challenges have arisen in the last few years. Thanks to a weak world economy, the price of asparagus has gone down. On top of that, the rising cost of air transport has forced the Peruvians to ship more fresh asparagus by sea. They do a good job maintaining their cold chain, but shipping asparagus from Peru to the United States by sea can take 17 days. There’s not much shelf life left after it’s unloaded, said John Bakker, executive director of the Michigan Asparagus Advisory Board.

The Peruvians are keeping their eyes on the U.S. “buy local” movement, which could pose a serious threat to their sales in that market, said Ken Nye, executive director of the Michigan Agricultural Cooperative Marketing Association’s Asparagus Division.

They’re also keeping their eyes on another looming threat: China. The world’s largest producer of asparagus can grow the crop quite cheaply, even compared to Peru. China’s presence in the world market has so far been blunted by the fact that its people consume most of its asparagus, but as China solves more of its food safety and quality problems, its exports could start making an impact, particularly processed exports in Europe, Nye said.

The next asparagus symposium will be held in China. It’ll be interesting to see what the Chinese are up to by then, he said.

Tours

The Michigan delegation visited two major asparagus companies while in Peru: Camposol S.A. and Viveros Genesis.

Camposol, founded in 1997, is the world’s largest asparagus-exporting company. Every day, more than 9,000 employees pick, pack and process green and white asparagus on thousands of acres. It’s a large, impressive and very modern operation, Bakker said.

Peruvian growers don’t have to worry about labor shortages. Most picking is done by hand, but there are lines of people looking for work. The average wage used to be about $5 per day, but that has risen to about $8 per day (still extremely low compared to U.S. wages), Bakker said.

The asparagus fields they saw were basically in a desert. There was no water. It “looks like the moon,” Bakker said.

The fields get half an inch of rain per year, so irrigation is a must. Everything is trickle irrigated. The water comes from rivers that flow down from the Andes Mountains, but it has to be treated before it can be used. Using that water costs 20 cents per cubic meter, which can get expensive when it’s your only supply, Myers said.

Despite its impressive operation, Camposol is moving away from asparagus production at this time. The midge has taken a toll, Bakker said.

To make up for its lost asparagus, Camposol is moving into other crops, like avocado and citrus. Other Peruvian farms are doing the same. It doesn’t bode well for those U.S. industries, he said.

“If I was an avocado grower, I would be scared.”

Myers said the Integrated Pest Management and Good Agricultural Practices he saw were state-of-the-art. On the tour, attendees had to wash their hands, disinfect their shoes, wear special clothes – even trucks are sprayed. There’s an IPM scout every 125 acres, biodiversity strips, wind breaks, insect traps, etc. The Peruvians have invested a lot of money, but whether it’s out of a genuine concern for the environment and food safety or for marketing purposes is hard to tell. GAPs and IPM are popular with European customers, Myers said.

The vast majority of Peruvian asparagus is started using greenhouse-grown plugs, and most of those are supplied by Viveros Genesis. UC157 is still the major cultivar, which does well in both white and green production. Atlas is another popular cultivar. Younger fields are geared toward fresh production, older fields toward processed production, Ngouajio said.

Viveros Genesis produced only 30 percent of its normal volume of plugs in 2009. That’s an indication of how much plantings are going down, Ngouajio said.

Still a factor

At this point, Peru still exports more asparagus than any other country: white, green, fresh, frozen, canned, you name it. The crop might be losing its star quality and production might be declining, but the Peruvian industry is still world-class. Peruvian asparagus is going to be a presence in the U.S. market for years to come, Nye said.

“They have some production issues, but we all do,” he said. “They may not grow as much, but they’ll certainly be a factor.”