Chiang-Mai, Thailand, November 24-25, 2005

1. Best Practice Marketing for Communities in Mountainous and/or Drug –Crop Producing Regions Central Huallaga and Vrae, Peru Chiang-Mai, Thailand, November 24-25, 2005

2. PERU • A potentially wealthy country with a rich and varied cultural and architectural heritage. • Facing the Pacific, it is an important link between south-east Asia and Brazil. • Its development has been held back by endemic corruption and the failure of successive governments to address social and economic inequality. • Peru is rich in copper, silver, lead, zinc, oil and gold. • It also enjoys spectacular and varied scenery, including Lake Titicaca, the world's highest navigable lake, and has a strong Inca and pre-Inca heritage, which includes the ancient Incan capital of Cuzco and the lost city of Machu Picchu.

3. Facts • Population: 28 million (UN, 2005) • Capital: Lima • Area: 1.28 million sq km (496,225 sq miles) • Major languages: Spanish, Quechua, Aymara • Major religion: Christianity • Life expectancy: 67 years (men), 72 years (women) (UN) • Main exports: Fish and fish products, copper, zinc, gold, crude petroleum and by-products, lead, coffee, sugar, cotton • GNI per capita: US $2,360 (World Bank, 2005)

4. Peru Illicit Crops Cultivation • Peru was once the world’s foremost coca producer. • However, cultivation was reduced significantly from 115,000 hectares in the mid-1990s to 42,200 hectares at present. • This reduction is in part attributable to a better alternative development program. • However, after Colombia, Peru remains the second largest coca leaf producer, with a current potential cocaine output of 155 metric tons.

5. Central Huallaga • Population: 160,000 habitants (67% are poor). • Topography: Undulating, the rolling hills up into the mountains are called the high jungle and the Tarapoto region is called "the land of waterfalls". The mountains on either side of Tarapoto rise to an average of 1,800 masl. • Soils: Alluvial, great for agricultural and cattle development. The Peruvian Ministry of Agriculture said those are the most fertile soils of the tropic. Recent deforestation is causing mudslides. • Rainfall: 2,000 mm annually. • Temperature: 22.6 C, warm and humid Frost-susceptible. • Trade network characteristics: • Access to major cities: Huancayo, Lima. However, road conditions are deplorable. • International airport: Lima • Seaport: Iquitos

6. Development Initiatives • Conduct agricultural extension. Increase cacao yield; propagation systems; fertilization; pruning; pest management, etc. • Leadership scholarships have also been awarded: these enable thirty farmers at a time to live and study for five days at the ICT-NAS/CICAD Experimental Station in Tarapoto. • Training consists of 50 hours of classroom work and 50 hours on the field (hands-on).

7. Future Activities • Expand the production and commerce of sugar cane-ethanol, palm oil, cocoa, coffee, export-certified wood, tropical fruits, etc. taking advantage of the trade benefits provided by ATPDEA and making it permanent via a free trade agreement. • Promote private, national and foreign investment. • Create direct and indirect employment.

8. Central Huallaga • Work with Cocoa in the Central Huallaga of the San Martin’s Region, (Tingo Maria, Tocache y Juanjui) began in 1992 with the participation of the United Nations. • CICAD/OAS, in association with the NAS/Peru country team, has continued to maintain its support through the Tropical Crops Institute (ICT) in Tarapoto, Peru. • The ICT was created in 1998 as a means to provide Peruvian government with technical scientific research that can be used to backstop the execution of alternative development projects.

9. ACOPAGRO • In 1997, more than 500 families of cacao producers created the cooperative ACOPAGRO with the idea of creating a supply-chain for the cacao produced in the region and contribute to increase farmers’ income. • The three pillars of ACOPAGRO are: strenghtening farmers associations, technical assistance and marketing. • Since 2002 the cooperative has been exporting cacao (with the FLO-Fair trade certificate) to Europe (Italy, Spain and Switzerland). • In 2004, 429 metric tons were sold with a value of US$ 549,497. • In 8 years, net worth of ACOPAGRO went from US$79 to US$100,000.

10. The Valley of the Rivers Apurimac and Ene, VRAE • Topography: Rolling, 450-1,800 m.a.s.l. It presents a mountainous relief with slopes that range between 40 and 80% of the total surface. • Soils: Clay loam, and ideal soils for the development of quality cocoa. • Rainfall: 1500 mm per year • Temperature and climate: 17-18°C annual average temperature; Humid Amazon Tropical Mountainous Forest. • Trade network characteristics: • Access to major cities: Huancayo, Lima • Seaport: Iquitos • Located 768 km from the City of Lima-Perú.

11. The Valley of the Rivers Apurimac and Ene, VRAE • The Valley of the rivers Apurimac and Ene, known as VRAE, is located at the South East in the upper jungle of the country. It comprises the region of Ayacucho, Cusco and Junín. This is a Valley of the Andean Amazon Slopes of Peru, the Inca’s sacred land. • In the lower part of this basin, soils are rich in minerals and with great aptitude for the agricultural activity, mainly cacao. These are soils with excellent physical chemical and biological properties, ideal texture for quality coffee and cacao production. • This valley concentrates two thirds of the national production of cacao.

12. Greatly composed of QUECHUA migrants of the Andean regions that preserve the tradition of a collective working system named AYNI, their ancestral language quechua inheritance of the INCA Empire. There are approximately 37,000 inhabitants in the valley. 87% of the population lives in rural areas. The great majority of them are ex-coca leaf growers. 48% of the population is considered to live in extreme poverty. In the past decades the area was hit by subversion, forcing its population to abandon their coffee and cocoa fields and use limited technology.

13. Coca cultivation in Apurimac-Ene • Coca cultivation has long been established in Apurimac-Ene, predominantly on the steep-slope areas where the only other crops that can be grown are coffee and a few legumes. • To a lesser extent coca is also grown in areas of lower slopes, sharing the land with annual crops like maize, yucca, beans, sesame and permanent crops like cacao and fruit trees. • Apurimac-Ene is the second largest coca growing region of Peru, and with 14,700 ha in 2004, it represented 29% of the national total. • According to local authorities, coca cultivation in this area would be linked to the presence of subversive groups.

14. Production practice and strategy • The CICAD/OAS program on Biological Control of Cacao Diseases was launched in 1998 and has been implemented and developed in conjunction with the U.S. Department of Agriculture (USDA) and the Peruvian National Agricultural Health Service (SENASA). • The objective of the program is to promote cacao production and thus discourage farmers from planting illicit crops, in a context of community participation, sustainability, and environmental protection. The program’s primary focus is in areas where coca is grown illicitly (Apurimac River Valley, Alto Huallaga and Aguaytia).

15. DEVELOPMENT • In 2004, the social and political situation remained tense in Apurimac-Ene. There were numerous road blockades by farmers organizations protesting against possible eradication of coca fields and demanding the release of their imprisoned leaders. • The social tensions surrounding the issue of coca cultivation were noticeable during the past two years and impeded the work of various organizations in alternative development projects. • Since 1995, some agencies have been implementing Alternative Development projects to improve cocoa, coffee and palm tree production. These efforts have benefited approximately 1,100 persons.

16. DEVELOPMENT The VRAE constitutes one of the main areas of intervention of the National Program of Alternative Development (ADP), due to the strong presence of cultivation of coca for illicit purposes and to the drug trafficking activities in the region. As a result, there is a need to counteract the negative effects of the terrorism and the social violence. For this reason, cocoa becomes one of the main alternative crops that the ADP wishes to boost in order to recover the economic and social stability of the valley.

17. Production practice and strategy • Project components include technology transfer and agricultural extension programs. • Contacts have also been made with the private sector, nationally and internationally, with the purpose of expanding marketing outlets. • The purpose is to offer a high quality cacao bean to clients. To achieve this, they provide technical assistance and constant training to their producers, with highly qualified technicians in the sustainable production of cacao. • They work with a production system adequate to the reality of producers in the Apurimac River valley avoiding the use of polluting agrochemicals, and encouraging them to generate their own fertilizers with resources obtained in their farms, the use of shade in order to avoid the stressing of the plant as well as the use of varieties that do not demand too much fertilizers.

18. Conclusions Coffee and small cacao farmers once generated significant income in rural areas, but because of terrorism and the coca boom, many struggling small-scale farmers were forced into coca production or abandoned their land and were pushed deeper into poverty. That is the reason why farmers in Peru must be able to earn income and do so without jeopardizing their natural resources if they are to be persuaded to leave coca production permanently. As a result, the projects work on the many angles that have an impact on agricultural income.