As part of our interview series, we talk to the people whose work and experience sit behind development research. Many of these conversations happen during fieldwork and bring valuable information and research ideas. Some of them never become research projects because of various constraints. In this blog we share these conversations so that other scholars can connect these ideas and propose new advances in our field. For this interview we spoke with Luis Iturbe, a farmer in Cascas, Peru. This interview was conducted in Spanish and translated by the author.
Luis Iturbe is a grape farmer in Cascas, Peru. An industrial engineer from the Universidad Nacional de Trujillo, he worked in mining, cement and oil before moving to Cascas, where he championed a packing plant so that farmers could sell their grapes without going through the traders.
ETRM: You grew up in Trujillo, one of the most populous cities in Peru. What led you to leave the city and devote yourself to farming?
Luis: I studied industrial engineering and then worked for large companies in mining and oil. I was very passionate about my profession, but I had to work 12 to 16 hours a day, sacrificing family life. I remember that once I applied for, and won, an international maintenance competition for companies. One of the prizes was a trip to Japan, but the company didn't let me go and I had to keep working. I felt that the effort you put into your company is not rewarded, so I started to think about going independent.
At that time my father was a manager [jefe] in Cascas and I visited him often. I liked the stable temperature, because when I worked in the jungle [selva] I felt far too hot, and when I worked in the highlands [sierra] I felt extreme cold. One day my father told me there was a plot of land for sale at a very low price. But when I came, it was a dump; that's where the town threw its garbage. Even so, I bought the land and started fixing it up little by little. And although it meant giving up the benefits of my previous job and of the city, what I started to like was that in this work I could see the results within a few months.
ETRM: You told us you trained as an engineer. What knowledge and skills from that profession have been useful to you in farming? And which ones do you think can be taught to farmers who have not had professional training?
Luis: Engineering gives you many skills that are useful in different activities. For example, we have work methodologies that let us take on a problem, analyse its causes, propose solutions and apply them according to priority and the resources we have. As engineers we can also propose projects and lead farmers who want to take part in them. We do the studies and the farmers apply the processes under our instruction.
The challenge in bringing farmers into projects is convincing them; they no longer believe anyone. For example, with chemical products, the sales reps from the laboratories present their products as if they were very good, and they really aren't. They fill the farmer with a lot of information, and when farmers use the products, they don't get the results they expected. The farmer, who has to invest their own money to find out whether a product is good or bad, loses trust.
So our job is to show the farmer that any project we offer is going to make them money. If they see that return, they will give us their attention. We also have to gather, process and translate all the information related to a project so that the farmer can receive it, understand it and apply it.
ETRM: One of the most common complaints among farmers is the influence of intermediaries on prices. Can you tell us how intermediaries operate in Cascas and how much they influence prices?
Luis: There is a symbiosis between the traders [comerciantes] and the farmers, which makes them a necessary evil. Let me give you an example. When I came to Cascas I wanted to grow something other than grapes on my plot, but I had no one to sell it to, because the traders buy in large volumes. I was forced to grow grapes.
The traders seem to offer farmers some advantages, but if we look at them closely, they are not all beneficial. You can see this with farm inputs. Farmers usually get their inputs from the farm-supply shops on credit. And for a product that costs 100, they pay 115 at the end of the harvest. At the end of the season, often there is only enough to pay off their credit. That is where the traders come in and offer farmers inputs in exchange for selling them their harvest. But many of those products are smuggled [de contrabando] and of poor quality.
When they buy, the traders also take advantage of their position. For example, when they negotiate the price of a 10-kilo box of grapes, they offer to pay for 8 kilos, claiming that 2 kilos are shrinkage [merma] and the weight of the box. Then, at harvest time, they usually bring the labour, and often they don't weigh the boxes of grapes. They take the chance to fill the boxes to the top, taking several kilos without paying for them.
And you might think: maybe I can sell to another trader who pays me more? It turns out they all pay the same, because they agree among themselves. On top of that, they divide the farmers up among themselves. If a farmer who belongs to one trader approaches another, the other won't buy from them. The farmer resigns themself to selling to the same grape trader.
ETRM: What else can you tell us to help us understand how the traders operate?
Luis: The traders are local people, from Cascas. And they don't let people from outside come in to buy. Let me tell you a story. Once a trader from Lima arrived and offered to buy our grapes at a higher price than the rest. He took the whole harvest, without setting different prices by grape quality, as the others usually do. But on one of his trips, some cars boxed him in and forced him to dump his grapes. That trader never showed up again. It doesn't happen all the time, but it shows how they keep out other players with new ideas or better prices for farmers.
It's true that anyone from the area can aspire to be a trader, and they would earn a lot. But it is very tiring work: the harvests are long, and then they have to arrange shipments to the cities and find buyers there. Some retire after a while and take up growing grapes. And something curious is that when a big trader retires, the price for the farmer goes down. The traders who remain don't change the volume they buy, so the harvest of the farmers who worked with the retired trader has nowhere to go. The pressure to sell the grapes leads them to accept lower prices.
ETRM: You mentioned that there are no formal banks or lenders in Cascas. Why do you think these institutions don't reach Cascas?
Luis: These institutions ask for many requirements that farmers don't meet. The Banco Agrario, which is state-owned, is in the area and its loans are profitable. The interest is very low and you make a single payment after 9 months. But to get one you need a property title, the property has to be legally in order [saneada], and if there are several owners, they all have to be present. For many farmers, meeting all this is a maze. And although there are lenders [financieras], they charge 3 or 4% interest a month, with repayment schedules that don't match the harvests. On those terms you can't make a profit.
ETRM: You mentioned you had a project to set up a packing plant. Can you tell us about that project and the economic impact it had in Cascas?
Luis: There was a government initiative to eradicate the whitefly, and they advised us to set up packing centres so that the grapes could be cleaned and packed and leave the area sterile and free of contaminants. We took that idea and set up a plant that met the requirements for cleanliness, hygiene and production. Then we got in touch with the grape buyers in Ecuador, which is where the grapes from this area are exported. We agreed the sale with them at the market price, and we charged the farmers for transport and packing. In the end, the farmer got a higher price than with the traders, not only because they saved the trader's commission, but because we didn't have bad commercial practices like taking more weight than the farmer was paid for. The farmers welcomed this. We didn't just talk about the benefits of the project; they could see directly that they earned more with us.
However, we had to close, because the state plant-health agency started demanding requirements that made our operation more expensive and that weren't necessary for our plant. They required lockers for the staff, dining tables, and so on. Meanwhile, the other traders and packing plants that began to appear weren't held to the same standard. And to top it all off, a load contaminated with chicken droppings was detected in Ecuador. Instead of tracing where that load came from, the health agency ordered all the packing plants to close. And for their part, the traders began to pressure the farmers, who ended up going back to doing business with them. At least where grapes are concerned, I think packing plants can have several benefits. First, they help control pests across a whole area. And second, they make it possible to organise production in a region so that supply is steady and there are no price cycles.
ETRM: Pesticides are used heavily in Cascas, and there have been cases where products couldn't be sold because they exceeded permitted limits. How could farmers keep producing and exporting as pesticides face stricter controls?
Luis: Packing plants could also contribute to better pesticide management by organising production by zones within the same region. Right now in Cascas, since there are no strong seasons, you can plant and harvest at any time of the year. So at any given moment, farmers can be at very different stages of the crop cycle. If it's time to apply a fungicide on my plot, the pest will move to my neighbour's plot. If my neighbour isn't at the stage of applying fungicides, the pest will stay there and come back to my plot once the residual effect wears off. This means I have to apply these inputs several times to control the pests. And that affects us directly, in our health and also commercially, when excess levels of these inputs are detected.
If, instead, production is organised by sectors, pesticides would be applied fewer times. Sector 1 would produce in a certain month, and all the farmers in that sector would apply insecticides fewer times, since the pest would have nowhere to hide in that sector. And since this is a dry region, a few applications are enough to make the pest disappear.
ETRM: Thank you for your time!
