Technical ReportPDF Available

Climate Change and the Agri-Food Trade: Perceptions of Exporters in Peru and Uganda

Authors:
  • International Trade Centre (UN/WTO)

Abstract and Figures

The report presents the findings of research on the perceptions of agri-food exporters of climate change - provides direct insight into the perceived needs of business and exporters in responding to climate change impacts in Uganda and Peru, to inform ITC, its clients and other Aid for Trade practitioners on strategies to mainstream climate resilience among exporters and to improve the effectiveness of support for adaptation - Part 1 on Uganda shares the perceptions of agri-food exporters in key export sectors including coffee, tea, cocoa, cotton, fruits and spices. Part 2, on Peru, shares the perceptions of agri-food exporters in the coffee and cocoa sectors; gives recommendations from stakeholders on how to improve the delivery of climate assistance to exporters; includes bibliographical references
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TRADE IMPACT
FOR GOOD
CLIMATE CHANGE
AND THE AGRI-FOOD TRADE
PERCEPTIONS OF EXPORTERS
IN PERU AND UGANDA
CLIMATE CHANGE
AND THE AGRI-FOOD TRADE
PERCEPTIONS OF EXPORTERS
IN PERU AND UGANDA
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
ii DMD.14-269.E
Abstract for trade information services
ID=43129 2015 F-11.05 CLI
International Trade Centre (ITC)
Climate Change and the Agri-Food Trade: Perceptions of Exporters in Peru and Uganda.
Geneva: ITC, 2015. xx, 53 pages (Technical paper)
Doc. No.: DMD.14-269.E
The report presents the findings of research on the perceptions of agri-food exporters of climate change -
provides direct insight into the perceived needs of business and exporters in responding to climate change
impacts in Uganda and Peru, to inform ITC, its clients and other Aid for Trade practitioners on strategies to
mainstream climate resilience among exporters and to improve the effectiveness of support for adaptation
- Part 1 on Uganda shares the perceptions of agri-food exporters in key export sectors including coffee,
tea, cocoa, cotton, fruits and spices. Part 2, on Peru, shares the perceptions of agri-food exporters in the
coffee and cocoa sectors; gives recommendations from stakeholders on how to improve the delivery of
climate assistance to exporters; includes bibliographical references (pp. 52-55).
Descriptors: Climate Change, Agriculture, Food Products, International Trade, Uganda, Peru.
For further information on this technical paper, contact Mr. Alexander Kasterine (kasterine@intracen.org)
English, Spanish (separate editions)
The International Trade Centre (ITC) is the joint agency of the World Trade Organization and the United
Nations.
International Trade Centre, Palais des Nations, 1211 Geneva 10, Switzerland (www.intracen.org)
Suggested citation: Kasterine, A., Butt, A., de Beule, H., Karami-Dekens J., Keller, M., Mebratu, S., Nossal,
K., Slingerland S. and J. Yearwood (2015). Climate change and the agri-food trade: Perceptions of
exporters in Peru and Uganda, International Trade Centre, Geneva.
Views expressed in this paper are those of consultants and do not necessarily coincide with those of
ITC, UN or WTO. The designations employed and the presentation of material in this paper do not
imply the expression of any opinion whatsoever on the part of the International Trade Centre
concerning the legal status of any country, territory, city or area or of its authorities, or concerning the
delimitation of its frontiers or boundaries.
Mention of firms, products and product brands does not imply the endorsement of ITC.
This technical paper has not been formally edited by the International Trade Centre.
Digital image(s) on the cover: © International Trade Centre 2015 © Bobby Neptune USAID
© International Trade Centre 2015
ITC encourages the reprinting and translation of its publications to achieve wider dissemination. Short
extracts of this technical paper may be freely reproduced, with due acknowledgement of the source.
Permission should be requested for more extensive reproduction or translation. A copy of the reprinted or
translated material should be sent to ITC.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E iii
Foreword
Climate change is one of the defining development challenges for this century.
Rising temperatures, more extreme weather events and other climate-related
impacts are affecting the competitiveness of economies and reducing agricultural
productivity. As the majority of the world’s poor still live in rural areas, climate
change threatens to reverse decades of development gains and places the most
vulnerable – women and youth – at the greatest risk. In many scenarios, we are
seeing a disproportionate impact on the poorest sections of the population despite
evidence that shows they have a negligible contribution to the problem.
Exports of agri-food products are an important driver of rural growth, creating jobs
and raising rural incomes. However, currently very little is known about the role
that exporters play in adaptation to and mitigation of climate change. It goes
without saying that exporters, particularly micro, small and medium-sized
enterprises (MSMEs), play a key role in the value chain through delivery of extension services to farmers,
making investments and connecting with markets. Exporters have a constant “ear to the ground” on what is
happening in the field and thus have unrivalled knowledge of market trends, the challenges facing farmers
and what is needed to make markets work more effectively.
Against this background, it was important for ITC to dig deeper into this issue and provide a fact-based
insight into what is happening on the ground through a survey of exporters. We selected two countries
where we are actively engaged in agri-food development projects, namely Peru and Uganda. I am grateful
to PROMPERU and the Uganda Export Promotion Board for the support provided to ITC in carrying
out the survey.
The results of the survey illustrate how the contrasting development position of the two countries has an
impact on their capacity to adapt to climate change, with Peru able to invest in adaptation given its access
to more resources, but Uganda unable to do the same given that the country faces greater financial and
technical constraints.
The key finding emerging from this survey is that climate change makes existing challenges in the agri-
food sector more difficult to overcome, and thus has a highly negative impact on competitiveness. In both
Peru and Uganda, the majority of exporters surveyed reported that climate change was of equal or greater
importance to their existing export challenges, most notably price volatility, high operating costs and
product quality. In response, governments and agencies need to integrate climate change into sector-
specific policies and investment strategies and provide a platform for more effective sharing of information
on best practices. The survey finds that MSMEs are already providing locally driven, effective solutions on
adaptation, but that they need support to implement these initiatives.
I hope this report will provide a fresh private-sector perspective on agriculture and climate change and, in
doing so, make a substantial contribution to the Aid for Trade community on how to mainstream climate
change into its programming. I look forward to engaging with our technical cooperation partners to support
exporters and importers to deliver locally driven solutions to the substantial challenge of climate change.
Arancha González
Executive Director, International Trade Centre
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iv DMD.14-269.E
Foreword
Climate change is affecting Peru’s ecosystems and micro-climates – seen in
phenomena such as higher temperatures, variable precipitation, eroding glaciers
and rising sea levels – and has become a major issue on the national agenda. The
Fifth Assessment Report of the United Nations Intergovernmental Panel on
Climate Change (IPCC), presented in November 2014, contains scientific
information on social and environmental effects that have become key factors in
shaping responsible public policy seeking to mitigate the effects of climate change.
Such effects will be especially significant in Latin America and the Caribbean. Peru
ranks third worldwide for its vulnerability to climate change. It is periodically
subjected to El Niño, which increases the likelihood of flooding in some areas due
to heavy rainfall, as well as prolonged droughts elsewhere in the country. At the same time, Peru’s rich
variety of flora and fauna is priceless, and it has an enormous diversity of micro-climates, with 27 of the
world’s 32 climate types found within its borders.
Peru has made significant efforts to increase agricultural productivity and sell its products successfully on
global markets. But we need to be more than just competitive going forward. We must address the issue of
climate change, which poses a major challenge to our crucial export sector, consisting primarily of non-
traditional goods.
New efforts are being made through an alliance between the public and private sectors to promote
sustainable businesses in sectors such as agriculture and food products. Peru’s agriculture and food
sector consists primarily of small and medium-sized producers which are reluctant to adopt technology to
confront climate change. Considerable effort is required from all stakeholders to develop and adopt
technologies and practices, such as drought-resistant crops, hydroponic agriculture and the construction of
seawalls to protect against tidal phenomena. We must nevertheless continue to support producers in
different regions to enable them to adopt technologies and practices suited to their circumstances.
The study conducted by the ITC, deserves praise for making producers aware of the steps they need to
take to deal with climate change in terms of mitigation and, to adapt its effects on trade, and to safeguard
markets for products that are important for Peru’s economy. ITC surveyed food and agricultural exporters
to gauge their views on climate change and its commercial impacts. In the study, 24 Peruvian coffee and
cocoa exporters, associations, cooperatives and small businesses from five different regions shared their
concerns about the impact of climate change on the bottom line of their exports. They also explained the
strategies they use to cope with the changing climate and their capacity to mitigate climate risks.
The results show that exporters require better information to confront climate change adequately; and they
need financial capital to respond to long-term climate change challenges. The ITC survey highlights key
exporter requirements: help in developing new crop varieties and adapting these to changing
temperatures; hedging strategies against climate change risks; stronger institutions to help them find
solutions; access to adequate financing; constant availability of live weather-forecasting information;
workforce training; improved infrastructure; and promotion of associations and cooperatives.
I invite you to take a close look at the results of this important survey and reflect on strategies to enable
players in the agricultural export sector to continue increasing their exports and overcome the challenges
that climate change poses to trade. Together, we must focus our individual and collective efforts on
responding to the challenges that climate change represents for commercial exchange.
Magali Silva Velarde-Àlvarez
Minister of Foreign Trade and Tourism of Peru
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
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Foreword
The Ugandan agricultural sector, with its related wide range of agri-business
activities, employs more than 70% of the country’s population. Enhancing
agricultural production and productivity, along with agro-processing, is therefore
critical to Uganda’s economic growth.
Climate change has an adverse impact on Uganda’s agriculture. As most of the
sector is rain fed, the country is sensitive to climate variability. Uganda
experiences increasingly erratic rainfall patterns, prolonged droughts, flooding
and increased incidence of pests and diseases. Agriculture productivity has
declined as a result.
Exporters cite climate change as a major threat to their competitiveness. They
rank it high among other sources of uncertainty about and obstacles to competitiveness, such as price
volatility, weak infrastructure and low agricultural yields.
This study by the International Trade Centre (ITC) in partnership with the Uganda Export Promotion Board
(UEPB) is, therefore, timely. Its findings highlight the challenges confronting the country’s agricultural
sector, giving voice to farmers and small and medium-sized enterprises (SMEs) to express their
perceptions of climate change, their strategies to adapt to it and their support needs.
In December 2013, Uganda approved its National Climate Change Policy (NCCP), which focuses on the
impacts of climate change on national development. Agriculture is one of the policy’s priority sectors. The
ITC report echoes the NCCP’s stated need for more work on adaptation, mitigation and research, as well
as cross-cutting areas of capacity building, education and training.
ITC’s work will support Uganda in implementing the NCCP by providing helpful insights on how to design
better responses to climate change and ways to enhance the sector’s climate resilience. The report
stresses the importance of mainstreaming climate change into Aid for Trade and creating more effective
platforms for sharing information on adaptation and mitigation measures.
Our expectation is that this document will reinforce efforts by the international community to direct
resources into assisting landlocked developing countries to meet the challenge of climate change.
Amelia Anne Kyambadde (MP),
Minister of Trade, Industry and Cooperatives, Republic of Uganda
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Contents
Foreword from A. González, ITC iii
Foreword from M. S. Velarde-Àlvarez, Minister of Foreign Trade and Tourism of Peru iv
Foreword from A. A. Kyambadde, Minister of Trade, Industry and Cooperatives, Uganda v
Acknowledgements xi
Abbreviations xii
Executive summary xiii
Introduction xix
Chapter 1 Climate and agri-food trade in developing countries 1
The case of Uganda and Peru 1
Chapter 2 Research methods 4
1. Survey design 4
2. Data collection and analysis 4
Uganda 4
Peru 5
Chapter 3 Perceptions of agri-food exporters in Uganda 9
1. Agri-food production and trade in Uganda 9
1.1. Coffee exports 10
1.2. Cotton exports 10
1.3. Tea exports 11
2. Climate change in Uganda 11
2.1. Uganda’s climate 11
2.2. Vulnerability to climate change 11
2.3. Potential impacts on the agri-export sector 12
2.4. National policies for climate-change mitigation and adaptation 13
3. Survey results 14
3.1. Perceived climate impacts on business 14
Mostly negative impacts associated with climate hazards 14
Climate change is perceived to exacerbate other challenges facing exporters 15
3.2. Direct and indirect impacts 15
3.3. Sector impacts 17
3.4. Agri-food exporters’ resilience and adaptive capacity 18
Financial resources 18
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
viii DMD.14-269.E
Natural resources 18
Social and human capital 19
Infrastructure 19
Information resources 19
Institutional and policy environment 20
3.5. Agri-exporters’ adaptation responses 20
Sustainable agriculture practices 20
Diversified supplier base 20
Technologies to improve supply-chain efficiency 21
Improved climate information 21
3.6. Support needs identified by agri-exporters 21
Access to finance 21
Climate information 22
Networks and partnerships 22
Crop varieties 22
Infrastructure 22
Export diversification 22
Chapter 4 Perceptions of agri-food exporters in Peru 23
Agri-food production and trade in Peru 23 1. 1.1. Coffee exports 24
1.2. Cocoa exports 27
1.3. Voluntary markets, standards and certifications 30
Sustainability certified exports of coffee and cocoa 30
Main sustainability export certifications in Peru 31
Climate change in Peru 32 2.
Peru’s climate 32 2.1.
Vulnerability to climate change 32 2.2.
Potential impacts on the agri-export sector 33 2.3.
National policies for climate change mitigation and adaptation 34 2.4.
Survey results 36 3.
Perceived climate impacts on business 36 3.1. Climate risks are perceived to negatively affect exports 36
Climate change is perceived to exacerbate other challenges facing exporters 36
Direct and indirect impacts 37 3.2.
Agri-exporters’ resilience and adaptive capacity 39 3.3. Natural resources 39
Infrastructure 40
Financial resources 40
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E ix
Social and human capital 40
Information resources 40
Institutional and policy environment 41
Adaptation responses of exporters 41 3.4. Technology and Infrastructure 41
Training and extension services 41
Support needs identified by agri-exporters 41 3.5.
Chapter 5 Conclusions and recommendations 43
Appendix I Survey participants 46
References 49
Tables, Figures and Boxes
Table 1. Countries most vulnerable to the adverse effects of climate change as highlighted by the
UNFCCC 2
Table 2. Summary of context facing agri-exporters in Uganda and Peru 3
Table 3. Production of coffee and cocoa, by region in Peru, 2012 7
Table 4. Coffee production by region, 2012 27
Table 5. Cocoa production by region, 2012 29
Table 6. Main destinations for Peruvian cocoa exports, 2012 30
Table 7. Key coffee and cocoa certifications 32
Table 8. Current adaptation programmes for agriculture in Peru 35
Table 9. Perceived climate impacts in the past 5 to 10 years 38
Table 1. Study participants, Uganda 46
Table 2. Study participants, Peru 46
Figure 1. Number of Ugandan exporters surveyed, by sector (percent) 5
Figure 2. Number of Peruvian exporters surveyed, by sector 6
Figure 3. Four survey regions (in orange) 8
Figure 4. Agriculture and livestock exports, 2011 (US$ 1.1 billion) 9
Figure 5. Perceived impact of climate hazards over the past year 14
Figure 6. Key trade challenges for agri-food exporters (% of survey responses) 15
Figure 7. Perceived climate impacts in the past 5-10 years 16
Figure 8. Perceived impacts of climate change on adaptive capacity 18
Figure 9. Additional measures needed to respond to climate-change impacts 21
Figure 10. Agriculture and livestock exports 2011 (US $4.5 billion) 23
Figure 11. Main destinations for Peruvian coffee, 2012 25
Figure 12. Coffee production areas 26
Figure 13. Coffee production and farm gate price, 1990–2012 26
Figure 14. Cocoa growing regions of Peru 28
Figure 15. Cocoa production and farm gate price, 1990–2012 28
Figure 16. Cocoa exports by type, 1990–2012 29
Figure 17. Perceived impact of climate hazards over the past five years 36
Figure 18. Key trade challenges for coffee and cocoa exporters 37
Figure 19. Perceived climate impacts in the past 5 to 10 years 38
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
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Figure 20. Perceived impacts of climate change on adaptive capacity 39
Figure 21. Additional measures needed to respond to climate-related risks and their impacts 42
Box 1. Uganda: Country Profile 2
Box 2. Peru: Country Profile 2
Box 3. Selection of regions in Peru 6
Box 4. Case study cocoa: Could Ugandan exporters benefit from climate change? 17
Box 5. Industry associations and cooperatives 24
Box 6. Yellow rust outbreak in 2012 and 2013 27
Box 7. Coffee and cocoa as a substitute for drug production and trafficking 30
Box 8. El Niño 32
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Acknowledgements
The International Trade Centre (ITC) would like to express its appreciation to the representatives of export
associations, enterprises and experts who agreed to be interviewed for this study. ITC also expresses
gratitude to the participants of the regional focus groups and the workshop held in Lima, Peru, in
November 2013 for contributing concrete recommendations. We also thank Stephen Paul Gitta
(Uganda Export Promotion Board (UEPB)) and PROMPERU (Peru) for their support throughout the
survey process.
This report is the result of two ITC studies on the perceptions of agri-food exporters to climate-change
impacts in Peru and Uganda. The Peru study was led by Triple E Consulting (Stephan Slingerland and
Jessica Yearwood), Inform@ccion (Fernando Cilloniz) and the Pontificia Universidad Católica del Perú
(Alan Fairlie (PUCP) and Michael Rodríguez) under the guidance of Katarina Nossal (ITC). The Uganda
study was undertaken by Hilde de Beule under the guidance of Aaban Butt (ITC). The questionnaire for
both studies was developed by Semhar Mebrahtu with support from Christophe Durande (ITC), and
adapted in-country by project teams. Literature reviews of climate-change impacts on agriculture were
carried out by Julie Karami-Dekens and Marius Keller from the International Institute for Sustainable
Development (IISD). The report was directed by Alexander Kasterine (ITC).
The research greatly benefited from comments and feedback from Aaron Cosby (IISD), Martina Bozzola
(ITC), Hyesu Cho (ITC), Jason Dion (IISD), Jo-Ellen Parry (IISD), Rob Skidmore (ITC) and Ann-Kathrin
Zotz (ITC). Administrative support, sub-editing, formatting were provided by Natalie Domeisen (ITC),
Medea Metreveli (ITC), Siri Lindqvist Stahle (ITC), Paivi Teivaala (ITC), Max Thompson (ITC) and Yolande
Zaahl (ITC). We also thank Serge Adeagbo (ITC) and Franco Iacovino (ITC) for providing graphic and
printing support.
The financial contributions of the Governments of Denmark and Norway to the Trade and Environment
Programme are gratefully acknowledged.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
xii DMD.14-269.E
Abbreviations
Unless otherwise specified, all references to dollars ($) are to United States dollars, and all references to
tons are to metric tons.
The following abbreviations are used:
APPCacao Peruvian Association of Cocoa Producers
AdapCC Adaptation to Climate Change for Small-scale Coffee and Tea Producers
ADEX Peruvian Exporters Association
BCR Central Bank of Peru
CAMCAFE National Coffee Chamber
CDO
COCLA Cotton Development Organization
Central Agricultural Coffee Cooperative
CWD
DSIP
ENCC
Coffee Wilt Disease
Development Strategy and Investment Plan
National Strategy on Climate Change
ENSO El Niño – southern Oscillation
FOB Free on Board
GDP
GVP Gross Domestic Product
Gross Value of Production
Ha Hectares
INEI National Institute of Statistics and Informatics
ITC International Trade Centre
JNC National Coffee Board
LDC Least Developed Country
MINAGRI
MINAM Ministerio de Agricultura y Riego del Perú
Ministry of Environment of Peru
MT Metric Tons
NGO Non-governmental Organization
NTFP Non-timber Forest Products
PLANGRACCA Risk Management and Climate Change Adaptation Plan in the Agricultural Sector
PROMPEX Peru Commission for Export Promotion
PSFU
SENAMHI
SMEs
Private Sector Foundation Uganda
Peruvian National Service for Meteorology and Hydrology
Small and Medium-sized Enterprises
SUNAT National Superintendency of Customs and Tax Administration of Peru
UCDA
UNCTAD
UNFCCC
USAID
Uganda Coffee Development Authority
United Nations Conference on Trade and Development
United Nations Framework Convention on Climate Change
United States Agency for International Development
USD
UTA
WTO
United States Dollar
Uganda Tea Association
World Trade Organization
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E xiii
Executive summary
Agri-food exports are a major source of income for Uganda and Peru and provide livelihood for millions of
people. However, like many other least developed and emerging economies, Uganda and Peru have
climate-change vulnerabilities that could undermine their export competitiveness. In this context, the
International Trade Centre (ITC) has undertaken a programme of research to improve understanding of the
climate challenges facing agri-food exporters and specific actions required to build climate resilience. This
report serves to increase awareness of the challenges, strategies and needs of agri-exporters in building
adaptive capacity and responding to climate risks.
Climate change can affect agri-food exporters in a number of ways: biophysical impacts on agricultural
production, damage or delays to supply-chain infrastructure, changes in overseas production and world
prices, changes in policy, and business competitiveness among trading partners. These impacts pose a
business risk for exporters.
Research questions and approach
This research collects the perspectives of agri-food exporters in Uganda and Peru regarding climate
change and its business impacts, as well as adaptation strategies and capacity to mitigate climate risks.
The research evaluates three research questions:
1. How is climate change affecting or likely to affect agri-food exporters?
2. What are the key determinants of agri-food exporters’ vulnerability to climate change?
3. What is required to improve climate resilience among agri-food exporters?
A diverse range of exporters were interviewed in Uganda and Peru through face-to-face surveys. In
Uganda, businesses surveyed were small and medium-sized enterprises (SMEs) exporting coffee, cotton,
tea, fruit and spices. In Peru, businesses were small enterprises, export associations and cooperatives
(mostly with thousands of smallholder members), exporting coffee and cocoa. The surveys were
supplemented with stakeholder discussions, regional focus groups and a workshop.
Climate change and agri-food trade in developing countries
For developing countries, climate change poses an additional risk to trade and competitiveness, alongside
other challenges such as weak physical infrastructure, poor access to finance and governance.
The vulnerability of agri-food exporters to climate change differs between regions, sectors and individual
businesses. As exporters have minimal control of their exposure and sensitivity to climate change, they
rely on their adaptive capacity in order to improve resilience to climate risks. Following a framework
proposed by Smit et al. (2001), adaptive capacity depends on access to six resources: economic
resources, technology, information and skills, infrastructure, institutional and policy environment,
and networks and partnerships.
Uganda and Peru attract significant foreign exchange from agricultural exports and aim to expand further
their farm sectors. However, both are highly exposed to current and future climate hazards. Some climate
impacts have already become a concern, such as drought and flooding in Uganda and variable
precipitation and glacial retreat in Peru. Both countries have seven of the nine characteristics used by the
United Nations Framework Convention on Climate Change (UNFCCC) to identify economies most
vulnerable to climate change.
Both countries have begun to take action at the national level to plan for climate change, and to some
extent this has been mirrored at a sector level. However, few steps have been taken for agri-food
industries to enable businesses to undertake detailed climate-risk assessments and to build
adaptive capacity.
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Research methods
Uganda and Peru were selected to compare the vulnerability and approach to climate risks by businesses
in a least developed country (LDC) and an emerging economy.
Semi-structured surveys were used for data collection. These covered socio-economic characteristics,
export challenges (including climate change), adaptation responses and perceived needs.
The survey was taken by 12 businesses in Uganda and 24 in Peru. Content analysis was used to identify
key themes, and focus groups and personal communication were useful in confirming findings.
Nevertheless, the small sample sizes prevent the findings from being applicable across the population.
Most of the businesses in Uganda were based in Kampala, with operations across various regions. The
products were sourced from smallholder farmers, either directly or through middlemen. The exporters’
products were largely destined for Europe, with some goods shipped to the United States and Asia.
In Peru, the businesses were located in four unique agro-climatic regions: Piura, Cusco, San Martin and
Junín. These regions represent 56% of coffee production and 57% of cocoa production. All but two
exporters were associations or cooperatives, nearly all had at least 250 members and the majority were
exporting certified products (mostly organic or Fairtrade certification).
Perceptions of agri-food exporters in Uganda
Agri-food production and trade in Uganda
Agriculture is the mainstay of the Ugandan economy, employing 67% of the population and contributing
45% of export earnings. Traditional exports include coffee, tea, cotton and tobacco, although production is
increasingly diversified. Organic certification is rising, but accounts for less than 2% of exports.
The country’s agro-ecological diversity is characterized as having high potential, which can feed into
agricultural biodiversity (McDonagh and Bahiigwa, 2002).
Exporters face a number of constraints to expansion: high production costs and poor storage and transport
systems. A significant share of production is lost post-harvest. Agricultural exports are at the centre of the
National Development Plan and export-diversification strategy.
Climate change in Uganda
Due to its equatorial climate, Uganda is subject to risks including higher temperatures, increased rainfall
and extreme weather events such as storms and wildfires. Floods and droughts are the most frequent
climate threats. While data remain limited, several estimates suggest that Africa will likely be hardest hit by
climate change, and temperature increases could be double the global average.
The agriculture sector, which relies on rainfall, is particularly vulnerable to direct and indirect climate risks,
including reduced yield, infrastructure damage and post-harvest losses. Some of these impacts have
already been associated with recent droughts, glacial retreat in the Rwenzori Mountains and extreme
flooding. Most sectors are expected to be negatively affected by climate change, with the possible
exception of cocoa, which could benefit from the predicted increases in temperature and humidity.
Climate change has been integrated into a number of policy reforms, but the government remains
constrained by limited economic resources. Climate threats have been integrated into the most recent
Agriculture Sector Development Strategy (DSIP), but not into subsector strategies for crops, livestock
and fisheries.
Survey results
Perceived impacts on business
The survey results assessed the perceptions of 12 exporting businesses, including coffee, tropical fruit,
cocoa, tea, dried chilli and vanilla exporters. In the previous 12 months, 75% of exporters had been
affected by climate hazards including drought, hailstorms, fruit fly outbreaks and excessive rainfall. Some
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DMD.14-269.E xv
exporters faced difficulty with quality drying crops and meeting supplier contracts. Of those exporters
affected, some experienced positive and negative impacts. For example, higher temperatures were
beneficial for cocoa and vanilla production, although future increases could by offset by
unpredictable rainfall.
In the past five years, 40% of exporters experienced temperature variability and 40% experienced rainfall
variability. All experienced changes in seasonality. The impact of these changes were crop losses
(caused by landslide, erosion and runoff), reduced yield and fruit size (as harvests matured too quickly),
delays caused by roadblocks and energy supply cuts during heavy rainfall. For some, uncertainty also
affected business relationships.
Exporters agreed that climate change would exacerbate disadvantages Uganda now faces on global
markets. Most reported challenges included high operating costs (especially transport and energy),
market competition, poor yield and quality and price volatility. Two-thirds of exporters believed that climate
change was of equal or greater importance than these challenges. Most were concerned about the effects
on production quantity.
Resilience and adaptive capacity
Following the framework set out by Smit et al. (2001), agri-exporters described their resilience in terms of
the six factors affecting adaptive capacity.
In Uganda, financial resources were perceived to be the greatest constraint to protecting against climate
change, followed by natural resources, social capital, human resources and infrastructure. All but one
exporter believed their access to finance was insufficient to respond to climate change, with reported
interest rates as high as 20%–25% per month.
Adaptation responses
Three-quarters of exporters were taking some action to build climate resilience. The others believed that
the impacts were too big to tackle as a small business or were constrained by a lack of capacity and
expertise. Of those taking action, the strategies were mostly at the producer end of the supply chain and
included tree-planting and soil and water conservation practices. Two exporters had shifted or expanded
their supplier base into new regions to mitigate climate risks, which to date have had localized impacts.
Fewer exporters had adapted processing and transport equipment, although some had taken steps to
invest in alternative drying systems and heavy-duty vehicles to cope with road damage. One had moved to
collect additional weather and climate data in order to evaluate supply-chain implications.
Support needs identified
The agri-food exporters identified several measures that would help them adapt to climate change. Three-
quarters saw the need for better access to finance and climate information. Finance would enable
exporters to invest in sustainable practices or infrastructure improvements, to expand and diversify their
facilities, and to better monitor climate impacts. Climate information was a concern, particularly given the
limited national meteorological services. Access to reliable information would better enable exporters to
respond to shifting weather patterns.
More than two-thirds of exporters noted that improved networks and partnerships were required. While
some sectors have exporter associations, developing the membership and services provided by these
associations could improve knowledge-sharing and create new opportunities to attract funding and
government support for managing climate risks.
Other needs included new crop varieties, infrastructure improvements and export diversification.
Perceptions of agri-food exporters in Peru
Agri-food production and trade in Peru
Agri-food exports in Peru grew rapidly following trade liberalization and a number of international
agreements in the 1990s. The main agricultural exports are coffee, preserved vegetables, grapes and
asparagus. Coffee accounts for one-third of agricultural exports. Cocoa represents 2.6% of agricultural
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
xvi DMD.14-269.E
exports, but has been increasing rapidly in recent years (16.7% a year). Peru is the biggest global exporter
of green coffee beans and the second-largest exporter of organic cocoa.
SMEs manage most coffee production and trade. Small producers are grouped in cooperatives and
associations to better coordinate post-harvest management, negotiate better prices and improve
competitiveness. Bigger associations have up to 2,000 members. Larger industry bodies promote exports.
Despite strong economic growth over the past decade, Peru still faces high poverty and various
development challenges, particularly in rural and regional areas.
Climate change in Peru
Peru contains a number of diverse ecosystems and microclimates which are vulnerable to climate-change
impacts including increased temperatures, variable precipitation, glacial melt and sea-level rise. Due to El
Niño, Peru is affected by inter-annual climate variability and is prone to severe floods, heavy rainfall and
prolonged droughts. Climate change is expected to increase the frequency of these extreme
weather events.
The agri-food sector is highly vulnerable, particularly as smallholders have low adaptive capacity and
limited access to technical and financial support. Poverty among rural Peruvians is 60%, higher in the
Andean Region. Beside crop damage, the agri-food sector is vulnerable to infrastructure damage and
human capital losses. Energy is largely hydroelectric and has been affected by water scarcities during
droughts and damage from floods. Likewise, road damage can delay or halt transport to export markets.
Climate change is expected to have direct negative impacts such as delayed flowering and harvest,
reducing crop quality, landslides and floods, reducing crop quantity. However, higher temperatures may
increase cultivation areas for some crops, such as coffee and certain fruits.
The Peruvian government has integrated climate change into several national strategies, including for the
agriculture sector. The Peruvian Strategy for Disaster Risk Management and Climate Change Adaptation
of the Agricultural Sector (PLANGRACC-A) includes US $700 million over 10 years for adaptation
priorities. Support for specific subsectors has largely been through pilot programmes promoted by
international organizations and non-governmental organizations (NGOs).
Survey results
Perceived impacts on business
The survey results assessed the perceptions of 24 coffee and cocoa exporting businesses. All of these
exporters had been affected by climate hazards in the previous 12 months. In the past five years, 95% of
exporters had been affected by climate risks, with one-third reporting a severe impact. The main impacts
included reduce harvest quantity and quality as a result of rainfall variability, pest outbreaks and flooding.
Changes in seasonality, temperature and rainfall affected about two-thirds of respondents, though
responses varied between regions. Extreme weather events had affected almost 50% of exporters in
Piura, compared to less than a quarter in other regions. Cusco was most affected by reduced rainfall,
while Junín and San Martín were affected by increased temperatures.
Exporters overwhelmingly perceived that current and future climate change would have a negative impact
on exports. They agreed that export volumes would become more volatile and unpredictable. Coffee
exporters generally had greater concerns than cocoa exporters as coffee is particularly sensitive to
waterlogging. A small number of exporters in Cusco and San Martin thought that climate change could
have a positive impact on cocoa production, depending on the timing of increased rainfall.
While only 30% of exporters included climate change among their top export challenges, the majority
(19 out of 24) thought climate change was of equal or greater importance to their existing export
challenges, most notably price volatility, competitiveness and product quality. While exporters had difficulty
contending with price volatility, they had taken steps to improve competitiveness and quality, including
certifying products and investing in plant dryers and efficient transport equipment.
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Resilience and adaptive capacity
Following the framework set out by Smit et al. (2001), Peruvian exporters all considered natural resources
to be the greatest barrier to climate resilience. Other constraints included infrastructure (57%), financial
resources (48%) and social capital (43%). Peru has limited port infrastructure, and only one in seven roads
is paved. Exporters on the Pacific coast are more resilient in this respect. Climate variability has reduced
the ability of agri-food SMEs to secure access to credit due to the perceived risky nature of agricultural
production.
Adaptation responses
All but one exporter had taken at least one step to adapt to climate change. Most common strategies
included investments in new technology and infrastructure as well as training and extension services for
producers, particularly in high-risk areas such as riverbanks and steep slopes. One export cooperative was
training its members in business management, including risk. One cocoa exporter was adjusting stock
levels to mitigate production volatility. Technical innovations included mechanical dryers and shade covers
to prevent crop losses. In Cusco and Piura, some exporters were supporting irrigation projects to take
advantage of intense rainfall periods.
Support needs identified
Exporters’ adaptation strategies were often targeted towards short-term issues rather than building long-
term resilience and only two exporters believed they had the capacity to respond to future climate change.
The majority were concerned about inadequate human and financial capital.
The most common needs exporters identified to help them adapt to climate change included new crop
varieties and export diversification. Most exporters believed these were essential to maintain export
viability. Exporters also said they needed climate-risk insurance, an improved institutional environment and
better access to financing. To a lesser extent, exporters required additional climate information, human
resources and new works and partnerships.
Exporters called for more coordinated government initiatives, including practical and targeted support to
assist in building climate resilience.
Conclusions and Recommendations
Agri-food exporters in Uganda and Peru expect climate change to aggravate existing challenges involving
production, supply-chain infrastructure and international competitiveness. Through this study, exporters
have identified challenges they face in building climate resilience and prioritized their main support needs.
Peru is an emerging economy with a more advanced agri-food sector and strong networks and
partnerships between SMEs. As such, Peruvian exporters have invested more to build climate resilience.
However, Ugandan exporters were equally aware of climate challenges and most have adapted
somewhat, despite significant financial and technical constraints.
Climate change is expected to pose an increasing risk to agri-food exports in both countries, and greater
effort is needed to build adaptive capacity and resilience. There is a role for business, government and the
international community to support exporters in developing economies, such as Uganda and Peru,
to ensure climate-change impacts are effectively mitigated. To assist exporters and increase awareness of
the risks of climate change to agri-food, this study makes the following recommendations:
Recommendation 1: Integrate climate change into long-term policy and business planning
Climate change is just one of many challenges confronting exporters. Nevertheless, nearly all exporters
recognized that climate change would make existing challenges even more difficult to overcome. As such,
businesses and policymakers should better integrate climate change in their decision-making.
For example, governments should consider integrating climate change into sector-specific strategies and
investment opportunities that could build long-term resilience under a number of climate-change scenarios.
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Recommendation 2: Develop a climate data platform to facilitate information exchange
Numerous pilot initiatives are under way in Peru and a smaller number in Uganda, yet few opportunities
remain for information sharing. The international community could take the lead in developing a platform
for producers, exporters and experts to share best practices for building climate resilience. For example,
improving the aggregation and dissemination of findings from pilot programmes could further extend
their reach.
Recommendation 3: Support SMEs to implement climate resilience strategies
Agri-food exporters have identified technical and financial impediments to adaptation. A targeted training
programme could help exporters plan for and respond to climate change, even with limited resources and
other constraints. Each strategy would specify an approach for responding to climate risks and would
enable exporters to build a business case for climate resilience.
Recommendation 4: Train SMEs to assess certification opportunities and their potential benefits
Certification is widely used in Peru, often because the associated cost is low and because production has
never relied heavily on chemicals or fertilisers. In Uganda, certification is increasingly popular, but the cost
of applying for certification remains a barrier. In both countries, some regions lack understanding of
certification options, their requirements, costs and benefits. For many SMEs, certain certifications are likely
to build adaptive capacity by encouraging producers to adopt best practices and strengthen integration into
global supply chains. Enabling SMEs to evaluate alternative options, as well as providing training and
support to meet certification requirements, could contribute to climate resilience among exporters.
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Introduction
This report presents the findings of research on the perceptions of agri-food exporters of climate change. It
provides a qualitative impact analysis and needs assessment of exporters in Uganda and Peru, to inform
ITC, its clients and other Aid for Trade practitioners on strategies to mainstream climate resilience among
exporters and to improve the effectiveness of support for adaptation. Uganda and Peru were selected to
highlight the contrasting attitudes and challenges associated with climate change between exporters in an
LDC and an emerging economy.
Agri-food exporters can be vulnerable to the effects of climate change, such as changes in temperature,
precipitation patterns and extreme weather events. For example, climate change can:
Have biophysical impacts on agricultural production, affecting the quality and quantity of traded
goods.
Affect supply-chain infrastructure, for example, transport and storage systems can be susceptible to
flooding or temperature extremes, causing damage or delays.
Affect overseas production, supply chains and, consequently, world prices and export viability.
Climate-change policies and negotiations among trading partners can also affect business
competitiveness, particularly in developing countries.
Each of these challenges poses a business risk to exporters, with implications for export-led growth and
development.
The ITC survey of agri-food exporters used in this research enabled companies, associations and
cooperatives to report directly their perceptions of climate change and their expectations for how their
business is affected or likely to be affected in the future. Exporters continuously deal with volatility, risk and
other challenges in the supply chain. In this context, it is useful to understand how climate change fits
among these challenges and how exporters manage climate risks and opportunities facing their business.
For governments, an understanding of the climate-change concerns facing business and exporters can
help define national and sectoral strategies geared towards expanding sustainable trade and building
business resilience, as well as strategies introduced specifically to mitigate and adapt to climate impacts.
For Aid for Trade practitioners and the international community, this report provides direct insight into
the perceived needs of business and exporters in responding to climate-change impacts. Moreover, the
research identifies key recommendations for Aid for Trade programming.
Research questions and approach
This report answers the following research questions for Uganda and Peru:
1. How is climate change affecting or likely to affect agri-food exporters?
2. What are the key determinants of agri-food exporters’ vulnerability to climate change?
3. What is required to improve climate resilience among agri-food exporters?
To answer these questions, a literature review of climate change and agriculture impacts was undertaken
for Uganda and Peru. This was followed by a face-to-face questionnaire of agri-food exporters in the two
countries, supplemented by regional focus groups and a stakeholder workshop.
Structure of this report
The report starts with an overview of climate change in developing countries, followed by the research
methods. It is then structured in two parts. Part 1, on Uganda, shares the perceptions of agri-food
exporters in key export sectors including coffee, tea, cocoa, cotton, fruit and spices. Part 2, on Peru,
shares the perceptions of agri-food exporters in the coffee and cocoa sectors. The final chapter contains
recommendations from stakeholders on how to better deliver climate assistance to exporters.
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Chapter 1 Climate and agri-food trade in developing countries
Many developing countries rely heavily on agri-food exports for economic growth and foreign exchange.
Among challenges such as weak physical infrastructure, poor governance and difficulties attracting
finance, climate change has added an extra risk to trade and competitiveness.
The vulnerability of agri-food exporters to climate risk differs between regions, sectors and individual
businesses. Vulnerability depends not only on biophysical conditions, but also a host of socioeconomic and
institutional factors. For example, where rural livelihoods are almost entirely dependent on agricultural
production, people are more vulnerable to the effects of climate change than regions where employment is
more diversified.
The adaptive capacity of exporters is one way to measure their ability to respond to consequences
(or opportunities) associated with change. In the context of climate change, adaptive capacity refers to the
inherent ability of businesses to absorb climate shocks and buffer their impacts (USAID, 2013).
According to a framework originally proposed by Smit et al. (2001), the adaptive capacity of exporters to
climate change depends on access to six resources:
Economic resources (e.g. revenues and profits, access to credit and insurance)
Technology (e.g. product transformation, storage and transport techniques)
Information and skills (e.g. market information, climate risk analysis)
Infrastructure (e.g. roads, electricity, Internet)
Institutional and policy environment (e.g. political stability, supporting government institutions and
policies on trade, exports, including trade agreements, sanitary and other standards, etc.)
Networks and partnerships (e.g. linkages with producers and buyers, government contacts)
Those most vulnerable to climate change have high exposure, high sensitivity and low adaptive capacity.
Agri-exporters, with little control over exposure and sensitivity to climate change, must rely on building
adaptive capacity to improve business resilience.
The case of Uganda and Peru
Uganda and Peru attract significant foreign exchange from agricultural exports (55% and 12% of
merchandise exports, respectively (FAO, 2014a). Both have ambitions to strengthen economic
development by promoting expansion and value addition in their agriculture sectors
(Republic of Uganda, 2010b; BCR-PROMPEX, 2014).
However, both countries are highly exposed to current and future climate hazards. In Uganda, prolonged
droughts and more frequent flooding are major concerns. In Peru, climate concerns include extreme
weather events associated with El Niño, along with water scarcity and glacial retreat. Both countries have
seven of the nine characteristics of most vulnerable countries to climate change, highlighted in Article 4.8
of the United Nations Framework Convention on Climate Change (Table 1).
Maintaining agriculture export growth may be difficult for both counties as climate change is expected to
reduce their agricultural productivity. Country-specific development challenges pose a constraint to
businesses looking to build their adaptive capacity (see Box 1 and Box 2). There is a risk that climate
change could reverse recent socio-economic gains in some areas.
Both countries have taken some action to plan for climate change, but are only beginning to detail risk
assessment and build the capacity of exporters (or producers) to respond. Peru has developed an
agriculture strategy that includes risk management and climate adaptation. However, there is little
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emphasis on major export products other than coffee. There is a pressing need to better understand the
challenges, strategies and needs of exporters in building adaptive capacity and responding to climate risk.
A summary of the agri-export sector in each country and their current response to climate risks is
presented in table 2.
Table 1. Countries most vulnerable to the adverse effects of climate change as
highlighted by the UNFCCC
Countries with high vulnerability Uganda Peru
Small island countries; x x
Countries with low-lying coastal areas; x9
Countries with arid and semi-arid areas, forested areas and areas liable to forest decay; 9 9
Countries with areas prone to natural disasters; 9 9
Countries with areas liable to drought and desertification; 9 9
Countries with areas with fragile ecosystems, including mountainous ecosystems; 9 9
Countries with areas of high urban atmospheric pollution; 9 9
Countries whose economies are highly dependent on income generated from the
production, processing and export, and/or on consumption of fossil fuels and associated
energy-intensive products 9 9
Landlocked and transit countries. 9x
Source: Adapted from UNFCCC, 2007 and MINAM, 2010a.
Box 1. Uganda: Country Profile
Uganda is an LDC looking to improve development prospects through higher productivity and better access to
international markets. In many ways, it has been constrained by its geography (landlocked), high cost of
business (including poor infrastructure and high transport costs) and a number of other barriers to trade.
Globally, Uganda ranks 158 of 183 economies on the ease of trading across borders (World Bank and IFC,
2012). For agriculture, improved productivity and better market access will be fundamental to improving climate
resilience at a national level. The agri-export sector is dominated by smallholder farmers and corporate
exporters, many of which are multinationals.
Box 2. Peru: Country Profile
Peru is an emerging economy that has made significant development progress since the 1990s. However,
growth has been unequal and poverty remains significantly higher in rural areas. While Peru has secured
greater market access for its agricultural products, including through a number of free trade agreements,
productivity remains low. In particular, marginalized communities in the Andes and Amazon face a number
challenges in building technical capacity and in accessing markets, due to their remote location and poor
connectivity to trading ports. The agri-export sector is dominated by smallholder farmers and large exporters,
although associations and cooperatives are active exporters in many major sectors and promote research,
extension, marketing and international standards compliance.
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Table 2. Summary of context facing agri-exporters in Uganda and Peru
Uganda Peru
Agri-export sector
US$ 1.1 billion (2011)
71% land under agriculture
25% of GDP
80% of livelihoods dependent on agriculture
US$ 4.5 billion (2011)
19% land under agriculture
7% of GDP
25% of livelihoods dependent on agriculture
Key agri-exports
Coffee
Tea
Cotton
Tobacco
Fishery products
Cereals (especially rice, beans and maize)
Coffee (especially organic)
Asparagus, grapes, chillies and avocados
Plantains and bananas
Cocoa
Fishery products
Non-timber forest products
Climate impacts
Past floods and droughts have already led to
decreased water availability and production
and revenue losses due to crop and
infrastructure damage.
Climate change may accentuate these past
impacts, but a lot of uncertainties exist due
to limited availability of data and analysis.
El Niño and La Niña events regularly lead to
massive losses of land, crops and fishery
output.
Reduced water availability due to glacier retreat
will particularly affect key export crops on the
coast, such as asparagus.
Infrastructure, such as roads, remains
vulnerable to extreme events
Adaptation
responses
The National Adaptation Plan of Action
prioritizes actions for climate-resilient
agriculture.
The National Development Plan and Export
Strategy emphasize export diversification
and value-chain approach, although explicit
mainstreaming of climate risk is lacking.
National Climate Change Strategy, Action Plan
on Adaptation and Mitigation, and sector-
specific plan for risk management and climate
change adaptation in the agricultural sector.
Detailed response priorities for certain products
and/or regions, but lack of practical actions for
many export crops.
Elements of
adaptive capacity
Strong focus on diversification of exports
and export markets
Growing awareness of climate risk at the
national level
Low competitiveness and weak business
environment
Landlocked country with weak transport links
High production costs (inputs, energy,
storage, etc.)
Limited research capacity
Strong economic growth
Good access to credit
Stable political environment and advanced
climate policy
Low spending on research and development
Weak access to technology
Weak transport infrastructure
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Chapter 2 Research methods
This chapter provides information on country-specific survey design and implementation, sampling
methodology, basic characteristics and course of analysis.
1. Survey design
Surveys were the main tool for data collection. A semi-structured survey was developed covering socio-
economic characteristics, export challenges (including climate change), adaptation responses and
perceived needs. The initial qualitative survey was developed in 2012 and informed by a desktop study on
the climate risks facing exporters in Uganda and Peru. Prior to implementation, the survey and general
methodology were adjusted to suit local requirements after in-country pilots and in collaboration with
key stakeholders.
The survey contained four sections:
Business characteristics: including size, operational age, main products, main export destinations
Business challenges, including climate variability and change
Adaptive capacity and response to climate risks
Support received and support needed to adapt
2. Data collection and analysis
Study participants were identified in each country through industry experts and business directories.
The face-to-face questionnaire was used to collect data from 12 participants in Uganda and 24 in Peru.
Content analysis determined key themes emerging from the interviews. Triangulation between literature,
survey data, focus groups and personal communication sources was also useful in confirming findings.
Uganda
In Uganda, the survey took place between April
and July 2013 and was conducted in English.
Businesses were identified from a list of agri-food
exporters was provided by the Uganda Export
Promotion Board (UEPB). While 15 respondents
were available and willing to participate in the
interview, three provided incomplete data and
were excluded from analysis. The remaining
exporters represented diverse agri-food export
industries, exporting coffee, tropical fruit
(pineapple, banana, mango and passion fruit),
cotton, cocoa, tea, dried chilli and
vanilla (Figure 1).
The Uganda surveys were conducted face-to-
face with business owners. The surveys covered
companies in Kampala, Kasese, Lutembe,
Bundibugyo, Fort Portal, Mityana and Mbale. For
the majority, the exporter was based in Kampala
with operations in the various regions. In general,
the exporters surveyed were small (50%) or
medium businesses (42%). (Size was defined Coffee berry from Uganda
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 5
according to the number of employees: small businesses have fewer than 50 employees and medium have
between 50 and 250 employees.) All of the exporters had been operating for at least five years and around
two-thirds had foreign ownership of more than 50%.
Figure 1. Number of Ugandan exporters surveyed, by sector (percent)
Source: Authors’ elaboration based on survey
The exporters’ products were largely destined for Europe (mainly Germany, the United Kingdom of Great
Britain and Northern Ireland, Spain and Switzerland). Only vanilla was exported to the United States.
Cotton was exported to China and, to a lesser extent, Bangladesh and Thailand.
The products were mostly sourced from smallholder farmers. The tea and chilli exporters had their own
estates, but also sourced from smallholders. Coffee, cocoa and vanilla exporters sourced from more than
3,000 smallholders, either directly or through middlemen.
Peru
In Peru, the survey took place between August and October 2013 and was conducted in Spanish. Coffee
and cocoa were selected as two major export sectors for Peru. Exporters of coffee and cocoa were
identified using national directories including CONCYTEC, AGROIDEAS and SIICEX. These directories
were used to identify five to six exporters in each of four agro-climatic regions of Peru: Piura, Cusco, San
Martin and Junín. These are all major producing regions and capture the diversity in Peru’s climatic and
agro-ecological factors (Box 3). Together, the four regions represent 56% of coffee production and 57% of
cocoa production in Peru. A total of 24 exporters participated in the face-to-face survey (around 8% of the
survey population), all of which could be classified as micro (fewer than 10 employees) or small enterprises
(11 to 49 employees). All but two exporters were associations (29%) or cooperatives (58%), nearly all of
which had at least 250 members.
The participants were major exporters of coffee, cocoa or both products (Figure 2). Coffee was mostly
exported as green beans and cocoa as beans, powder, butter or paste. Only two cocoa exporters were
also trading final chocolate products. Some also exported other agricultural products such as panela,
beans, mangoes and grapes. All but two exporters had certification (mostly organic or Fairtrade) for their
coffee and cocoa.
42%
17%
9%
8%
8%
8%
8%
coffee
tropical fruits
cotton
cocoa
tea
chilli
vanilla
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
6DMD.14-269.E
Figure 2. Number of Peruvian exporters surveyed, by sector
Source: Authors’ elaboration based on survey
41%
17%
42% coffee
cocoa
coffee and cocoa
Box 3. Selection of regions in Peru
Four regions were covered by the survey: Cusco, Piura, Junín and San Martin. These are all major producing
regions and were selected to capture the diversity in climatic and agro-ecological factors (Table 3, Figure 3).
Cusco
Cusco, with over a million inhabitants, is the seventh most populated region in Peru. It is a highland region that is
generally dry and temperate. There are two distinct seasons: the dry season and the rainy season. The average
annual temperature ranges from 4.2°C–19.6°C.
Agriculture is a key economic sector accounting for over 50% of employment. In 2012, agricultural gross value of
production (GVP) was US$ 453 million, mainly from potato, coffee, white maize and yucca (INEI, 2014)
Piura
Piura lies on the north Pacific coast and is, after Lima, the second-largest region in Peru. Approximately 32% of its
1.8 million inhabitants are involved in agriculture (INEI, 2012). Piura is an equatorial coastal region with a warm
climate all year round. The southern coast area has a semi-arid climate, with an average temperature of 26°C.
The highlands are characterized by a sub-tropical humid and mild climate, averaging 15°C.
The mainstays of the economy in Piura are crude oil, agriculture and fisheries. Piura also hosts the second-largest
port in Peru (Paita). The main agricultural products include rice, plantains, cotton, mangoes, limes, corn, coffee,
bananas and cocoa (INEI, 2012). Agricultural GVP was US$ 531 million in 2012 (INEI, 2014).
San Martin
San Martín lies at the edge of the Amazon basin. It is a poor socio-economic region and drug trafficking has
generated a series of negative environmental impacts, such as deforestation, soil erosion, water contamination
and the loss of biological diversity (Novak et al., 2008). The region is predominately sub-tropical with temperature
averaging 23ºC–27ºC. Average annual rainfall is 1,500 mm. The eastern part of the region has heavy
precipitation, thin soil, high forest cover and high biological diversity.
Palm oil is the main crop, with 91% of Peruvian palm oil grown in this region. San Martin is also the main rice and
banana producing region. Yucca, tobacco, cocoa, yellow maize, bananas and coffee are also grown in San
Martin. In 2012, regional agricultural GVP was US$ 679 million (INEI 2014).
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Table 3. Production of coffee and cocoa, by region in Peru, 2012
Region Coffee Cocoa
Area
(1,000 ha) Yield
(kg/ha) Area
(1,000 ha) Yield
(kg/ha)
Junín 95.9 935 10.3 519
Cajamarca 65.2 1012 1.2 820
Cusco 53.7 894 16.6 335
Amazonas 48.8 793 6.7 429
San Martin 28.8 949 5.8 856
Puno 10.2 663 0.2 NA
Pasco 7.8 1010 0.3 NA
Ayacucho 6.4 678 8.8 708
Piura 6.3 355 1.0 543
Huánuco 4.7 506 4.8 480
Ucayali 2.3 1500 3.0 910
Lambayeque 1.1 479 0.0 NA
Total area / Average yield 331.7 903 59.4 603
Source: MINAGRI, 2011 yield data; MINAGRI, 2012 area data.
Junin
Junin is located in the centre of Peru between the highlands and the Amazon jungle of Peru (central Andean
area). Climate varies in accordance with altitude, but averages 11ºC. In the inter-Andean valleys (mostly in
Junín, Yauli, Tarma, Jauja, Concepción, Chupaca and Huancayo provinces) the climate is temperate and cold,
with low humidity (dry); in the upper jungle and jungle (Chanchamayo and Satipo), the climate is warm and
humid, with abundant rainfall from November to May.
Around 36% of the population is employed in the agricultural sector. Major agricultural products include potato,
vegetables, grains, cattle and coffee. Other products in the Amazon basin include citrus, pineapples, bananas
and avocados, and in the highlands include wheat, barley, quinoa and maca. In 2012, regional agricultural GVP
was US$ 836 million (INEI 2014).
Source: Authors’ elaboration based on survey
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Figure 3. Four survey regions (in orange)
Source: Authors’ elaboration based on survey
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Chapter 3 Perceptions of agri-food exporters in Uganda
1. Agri-food production and trade in Uganda
Agriculture remains the mainstay of the Ugandan economy. In 2010–2011, the sector employed 67% of the
population (UBoS, 2012) with women responsible for 50% of cash crop production (NAARI, 2003). An
estimated 80% of the population derives its livelihood from agriculture indirectly (UBoS 2012). Export
earnings also mainly come from agricultural commodities (45%). Nevertheless, like most developing
economies, the share of agriculture to GDP has declined, from 51.1% in 1988 to 22.9% in 2011
(UBoS, 2012).
Traditional export products include coffee, tea, cotton and tobacco (Figure 4). These are mostly destined
for the Common Market for Eastern and Southern Africa (COMESA), with a growing share destined for
Europe (19%) and Asia (7%) (UBoS, 2012). Up to 15% of trade is informal, largely flowing to neighbouring
countries, namely the Democratic Republic of Congo, Kenya, Rwanda, Sudan and Tanzania. To a large
extent, this trade comprises shipments by bicycle or wheelbarrow of up to 200 kg, which do not require
official registration.
Uganda has been diversifying its exports with non-traditional products such as fish and fish products
(particularly Nile perch), flowers (mainly roses), fruits and vegetables (including cooking apples and
bananas, hot pepper, chilli, okra, green beans, passion fruit, etc.), hides and skins, vanilla, sesame seed
and cereals (especially rice, beans and maize). Organically certified exports account for less than 2% of
exports (US$ 37 million in 2009–2010) (Willer and Kilcher, 2011), but have been increasing, particularly for
coffee, cocoa and fruit.
Figure 4. Agriculture and livestock exports, 2011 (US$ 1.1 billion)
Source: FAO, 2014
Agricultural production is largely dependent on rainwater and managed by smallholder farmers. While
exports continue to grow, the sector faces a number of constraints to expansion, including high production
costs, inadequate storage and transport systems, and weak policy and institutional frameworks
(AfDB, 2014). An estimated 65% of production is lost post-harvest (PSFU, 2012).
The Ugandan Government’s development strategy is focused strongly on exports to achieve the country’s
national vision (Vision 2040), and agriculture is at the centre of its export diversification strategy. The
39%
7%
6%
4%
4%
4%
4%
32%
coffee
cotton
tea
sugar
tobacco
cocoa
palm oil
other
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
10 DMD.14-269.E
Cotton is a dominant crop in the eastern and northern parts of
Uganda (© Luis Alejandro Bernal Romero)
National Development Plan 2010–2011 to 2014–2015 (Republic of Uganda, 2010b) specifically aims at
penetrating high-value markets in high-income countries for various agri-food products, including coffee,
tea, maize, fish, beans, cassava, dairy cattle, beef cattle, poultry and bananas. These priorities are in line
with those set out under other national programmes, the key objective of which is the promotion and
development on value chains.
1.1. Coffee exports
Coffee is Uganda’s main export product, contributing 22% of total goods trade in 2011 (US$ 466.6 million)
(FAO, 2014a). Most beans are exported green, with only a handful of companies exporting roasted coffee
(Ahmed, 2012). Coffee is cultivated in most districts of Uganda. Robusta accounts for 85% of production,
with Arabica only produced in highland areas (mainly western highland, eastern Uganda (Mt Elgon) and
West Nile). Both varieties require predictable rainfall during the year, with a two-month dry spell for
flowering. Arabica coffee does not tolerate higher temperatures, which accelerate ripening and reduce
quality. While Robusta can thrive at higher temperatures (up to 30°C), excessive heat can damage leaves
and fruit, reducing both quality and yield.
1.2. Cotton exports
Cotton contributes export earnings of more than US$ 80
million annually (7% of total agricultural exports). In
recent years, Uganda has been one of the top 10 organic
cotton producers in the world (Truscott et al., 2011).
While cotton is generally high quality, production levels
have been erratic (PSFU, 2012). Cotton is used for
textile, cotton wool, edible oil, seed cake and soap
production, but local infrastructure is limited, with only two
textile factories and a dozen privately owned cotton seed
crushing and oil extraction facilities, located in various
parts of the country. Most of the cotton is exported as raw
product (baled cotton) through international cotton trading
companies to India, China, Thailand, Malaysia,
Indonesia, South Korea, Switzerland and the United
Kingdom (Cotton Development Organization, 2011).
Cotton is produced in all regions, but is dominant in the
east and north. Production is rain-fed and grown in
rotation with other crops. Production relies on a long
growing season and can be sensitive to excessive
rainfall, pests and disease outbreaks. More than 150,000
smallholders grow cotton on a regular basis, typically on
plots smaller than 1 hectare.
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DMD.14-269.E 11
1.3. Tea exports
Tea is the third-largest agricultural
export, contributing 6% of export
earnings (around US$ 72 million in
2011). Uganda is Africa’s third-biggest
tea producer after Kenya and Malawi.
Around 70% of Ugandan tea is sold via
the Mombasa tea auction in Kenya, with
20% sold in direct sales and the
remainder sold locally (Kiwanuka and
Ahmed, 2012). There are 12 processing
and exporting companies (BoU, 2011).
Tea is mainly produced in warmer, low-
altitude areas of Uganda, including the
central and south-western regions, Lake
Victoria crescent, the lower Rwenzore
Mountains and above the Western Rift
Valley. Around 10% of arable land is planted for tea production (FAO, 2012). Tea is grown by smallholder
growers (54%) and large tea estates (46%). Many small growers are affiliated with a particular tea factory
or grower association. In recent years, a number of smallholders have entered tea production as it
provides year-round income and entry costs are low (Kiwanuka and Ahmed, 2012).
2. Climate change in Uganda
Uganda is an LDC with high poverty. Due it its equatorial climate, it is subject to a number of climate risks,
including higher temperatures, increased rainfall and extreme weather events.
2.1. Uganda’s climate
Uganda experiences relatively humid conditions and moderate temperatures throughout the year, with
mean daily temperatures of 28°C (UNDP and BCPR, 2013). Its climate is bimodal in the south, exhibiting
two rainy seasons (March to June and October to January), with the exception of the northern-easterly
region, which experiences one long rainy season (Republic of Uganda, 2007, FAO, 2014a).
The mean annual rainfall in Uganda ranges between less than 900 millimetres in the driest districts to an
average of above 1,200 millimetres per year in the wettest districts located within the Lake Victoria Basin,
eastern and the north-western parts of Uganda (Republic of Uganda, 2007). Three different climates
characterize the country: the highland climate with cool temperatures and moderate rainfall, the savannah
tropical climate in the central and western parts of the Lake Victoria Basin, and the semi-arid climate with
high average temperatures and low and unpredictable rainfall (Republic of Uganda, 2007). Uganda’s agro-
ecological diversity characterizes it as having high potential, which can feed into agricultural biodiversity
(McDonagh and Bahiigwa, 2002).
Floods and droughts are the most frequent climate hazards. Drought especially affects the “cattle corridor”,
the country’s dryland area running from the north-east to the south-west and dominated by pastoralism.
The northern region is also especially vulnerable to both floods and droughts (FAO, 2014a).
2.2. Vulnerability to climate change
While trends are uncertain and data remain limited, the main climate-change impacts expected to affect
agriculture in Uganda in the future include higher temperatures, more erratic and heavy rainfall, change in
the timing and distribution of rainfall, and an increase in the frequency and duration of droughts.
Climate models differ, but several estimates suggest that Africa will likely be hardest hit by climate change
and that temperature increases in parts of Africa could be double the global average. East Africa has
Many smallholders work in tea production in East Africa
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
12 DMD.14-269.E
experienced a significant increase in temperature since the beginning of the 1980s (Niang et al., 2014,
Anyah and Qiu, 2012).
The future impacts of climate change are expected to include:
Temperature: A significant warming has been measured in Uganda and is projected to continue.
Estimates suggest that temperatures are likely to continue to increase between 0.7°C and 1.5°C by
2020–2029 and between 1.5°C and 4.3°C by the 2080s (Hepworth and Goulden, 2008).
Precipitation: Average annual rainfall in Uganda could increase by as much as 7% by 2080
(UNDP and BCPR, 2013). Inter-annual rainfall variability is already high, and precipitation patterns
are likely to be even less predictable as the climate changes in the future. The impacts of climate
change may vary considerably between regions, with drier areas likely to receive less precipitation
and wetter areas likely to receive more. There is a projected increase in rainfall during the dry
season in all locations (USAID, 2013). Most of the agriculture in the country is rain-fed, which makes
farmers more vulnerable to variability in climate, especially to erratic rainfall (Bashaasha et al., 2012;
Ellis et al., 2006).
Extreme weather events: Climate change is expected to increase the frequency and intensity of
extreme weather events as hydrological cycles intensify in a warming atmosphere. Storms and high
winds on the lakes could cause infrastructure damage (Timmers, 2012). Prolonged drought is
expected to increase the number of wildfires (Republic of Uganda, 2007).
2.3. Potential impacts on the agri-export sector
Uganda’s agriculture sector is highly vulnerable to these climate risks. Changes in rainfall, runoff and soil
moisture will affect agricultural production directly as well as indirectly through changes in production
areas, infrastructure damage (including transport, storage and communication), post-harvest losses and
potential changes in comparative advantage. Some of these have already affected parts of Uganda:
More frequent droughts: Analysis of historical data shows significant drought episodes increasing
from every 20 years in the early 1900s to every five years now (Republic of Uganda, 2010a).
Decreased water availability: Between 1955 and 1990, the glaciers of the Rwenzori Mountains
retreated 40% (Republic of Uganda, 2007).
Quality and revenue losses: Extreme flooding and droughts have resulted in crop destruction,
degradation of crop quality, reduction in milk production and death of animals, and biodiversity
losses including loss of spawning areas for fish (Hepworth and Goulden, 2008; Republic of Uganda,
2007; UNFCCC, 2002).
Infrastructure damage: Climate volatility in 1997–1998 contributed to US$ 400 million in road
damage, causing a 60% decline in coffee exports between October and November 1997 due to a
disrupted transport system (UNFCCC, 2002).
The impacts are likely to vary between industries. However, the production area and yield for coffee, cotton
and tea are each likely to decline.
Coffee is very sensitive to rises in temperature. Uganda Coffee Development Authority (2010)
attributes the overall decline of coffee production in Uganda over the last 40 years to climate
variability in combination with other factors (e.g. old trees, soil fertility problems). Robusta and
Arabica varieties have different vulnerabilities to climate change. Higher temperatures are predicted
to dramatically decrease areas suitable for Robusta coffee production, with only higher areas
remaining suitable (Simonett, 1989). Between 2007 and 2009, drier weather increased Arabica
volumes by 30% while Robusta volumes declined 11% (PSFU, 2012). In addition, higher
temperatures have been recognized as a cause of coffee mealy bugs (Republic of Uganda, 2010b).
Warming trends in East Africa are a serious threat for coffee production (Jaramillo et al., 2011).
Notably, these may cause the spread of the coffee berry borer (Hypothenemus hampei) in
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 13
Rail infrastructure is limited in Uganda with most goods transported by road
©flikr/John Hanson – U.S. Arm
previously colder areas where its presence and damage have been limited to date (Soto-Pinto,
Perfecto and Caballero-Nieto, 2002).
Cotton would benefit from higher temperatures and elevated carbon dioxide levels under climate
change. However, reduced water availability is expected to more than offset these benefits
(ITC, 2011b). For example, drought in 2009 decreased the cotton harvest by 50% (ITC, 2011a).
Inadequate water availability reduces the yield and quality of cotton production. Cotton is also very
sensitive to waterlogging, especially during the flowering season.
Tea is highly dependent on rainfall and vulnerable to drought. In Uganda, tea is grown in relatively
low areas. Tea is highly sensitive to higher temperatures, which cause leaves to wilt and a quality
decline. Research suggests that the area suitable for tea production will decline significantly by 2050
(CIAT, 2011).
For annual crops, such as maize and beans, production may become unviable due to climate change as
the risks of total crop destruction by extreme weather events increase (UNDP and BCPR, 2013).
Climate change is also expected to exacerbate pest and disease risks. Since 1993, coffee wilt
disease (CWD) may be responsible for the destruction of more than 50% of Robusta coffee trees in
Uganda, costing the industry up to US$ 9.6 million per year (Phiri and Baker, 2009). Uganda has also been
affected by black twig borer (coffee), bacterial wilt (banana), cassava diseases and other tick-borne
diseases. Climate change increases the risks of disease and pest populations. For example, coffee leaf
rust and coffee berry disease are now being observed at higher altitudes (IISD, 2011).
In contrast, some agriculture sectors and
regions are expected to benefit from climate
change. For example, El Niño impacts in
1997–1998 increased tea and livestock
production in some arid areas of Kenya due
to improved water stocks and fodder
availability (ICRAF, n.d.). Higher
temperatures could enable new, previously
unsuitable crops to be grown (for example,
cassava is now growing in the Rwenzori
Mountains) or may increase crop yield for
others (such as potatoes)
(Republic of Uganda, 2007).
2.4. National policies for climate-change mitigation and adaptation
In spite of its limited economic resources, the Government of Uganda has taken several steps to review
climate-change risks and address mitigation and adaptation needs.
In 2007, Uganda introduced a National Adaptation Programme of Action (NAPA) under the guidance of
the UNFCCC and UNEP. The plan helped to identify new priority activities to respond to immediate
adaptation needs (those that for which delay would increase vulnerability and costs at a later stage).
However, their implementation has been hampered by lack of funding and poor coordination.
In 2008, Uganda established a Climate Change Unit within the Ministry of Water and Environment with
the objective of strengthening the country’s implementation of the UNFCCC and the Kyoto Protocol. As
one initiative, the Unit is looking to develop guidelines to mainstream knowledge on climate change and
adaptation methods among local governments.
The Ministry of Agriculture, Animal Industry and Fisheries has integrated climate threats into its most
recent Agriculture Sector Development Strategy (DSIP 2010–2011 to 2014–2015). The DSIP was
developed using climate-risk assessment and aims to better evaluate adaptation priorities, focusing initially
on the regions and sectors most vulnerable to climate impacts. For example, the current DSIP will include
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
14 DMD.14-269.E
pilot projects to improve water efficiency for livestock and support research for drought-resistant
crop varieties.
Climate risks have not been included in agriculture subsector strategies (including crops, livestock and
fisheries strategies). However, the government is looking to integrate climate change in the next revision of
these sector strategies.
The Ugandan Carbon Bureau is also acting to support Clean Development Mechanism projects by
allowing organizations to register their activities that generate carbon credits. The Bureau offers support in
preparing project proposals, undertaking baseline assessments and registering projects through
the UNFCCC. The activities to date have mainly been rural energy, energy efficiency and forestry projects.
3. Survey results
The results of the agri-exporters survey conducted in Uganda are presented in this section. The survey
assessed the perceptions of 12 exporting businesses to climate change.
3.1. Perceived climate impacts on business
Mostly negative impacts associated with climate hazards
In the 12 months before the survey was carried out, climate hazards significantly affected 50% of exporters
and somewhat affected 25% of exporters. Only 25% of exporters surveyed had not been affected by
climate hazards (Figure 5).
For 75% of respondents, the impacts of climate hazards were only negative. These impacts included crop
losses due to drought and hailstorms, fruit fly outbreaks associated with excessive rain, declines in
production quantity and quality as a result of rainfall variability, and difficulty in harvesting and drying crops
due to excessive rainfall. Some exporters had difficulty meeting contracted supply arrangements.
For 25% of exporters, the impacts of climate hazards were mixed. For example, higher temperatures and
associated humidity benefitted cocoa and vanilla production, but concerns remained that these gains
would be offset by higher rainfall (e.g. reducing vanilla harvest from two seasons to one season a year).
Figure 5. Perceived impact of climate hazards over the past year
Source: Authors’ elaboration based on survey
50%
25%
25%
seriously affected
somewhat affected
not affected
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 15
Climate change is perceived to exacerbate other challenges facing exporters
Exporters in Uganda face many disadvantages on world
trading markets. High operating costs, particularly for
transport and energy, were the most commonly reported
challenge, followed by market competition (Figure 6).
Many exporters were struggling to compete with overseas
producers and meet market requirements. Low and
inconsistent product quality was a concern for exporters of
coffee, cocoa, cotton and fruit.
Ugandan exporters lose market share due to limited storage
facilities and poor infrastructure. Infrastructure bottlenecks
can lead exporters to stop buying products. As a result,
farmers lose income and post-harvest losses can be high.
Furthermore, as Uganda is landlocked, products must pass
through other countries such as Kenya. Consequently, trade
takes longer, is more costly and can depend on the politics of
the transit country.
Two-thirds of exporters believed climate change was of equal or greater importance than their greatest
export challenges. The main concern was decline in production quantity. One exporter said changing
climates overseas were also relevant. For example, longer summers in Europe can increase production
and thereby reduce demand for Ugandan fruit.
Figure 6. Key trade challenges for agri-food exporters (% of survey responses)
Source: Authors’ elaboration based on survey
3.2. Direct and indirect impacts
All exporters surveyed reported changes in seasonality associated with climate change in the past 5-10
years. Around 40% had experienced temperature variability and 40% experienced unpredictable rainfall.
Only 8% had experienced extreme weather events, although many reported excessive rainfall, hailstorms
and droughts.
25%
25%
25%
25%
33%
42%
58%
access to finance
infrastructure
quality
price volatility
product yield
market competition / competitiveness
operating costs
“Market demands have changed and
sustainability has become a very important
requirement, even a must”
-Coffee exporter, Kampala 2013
“The more the temperature and humidity
increase, the more areas where cocoa and
vanilla can be grown”
-Cocoa and vanilla exporter, Kampala 2013
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
16 DMD.14-269.E
Figure 7. Perceived climate impacts in the past 5-10 years
Source: Authors’ elaboration based on survey
The most notable consequences of these climate impacts were crop losses, reductions in performance and
quality, delays, and additional business costs.
Crop losses: Prolonged rains have increased the incidence of landslides, erosion and runoff affecting
cotton, coffee and fruit exporters in particular. Cotton exporters reported out-of-season rains to be the main
concern, with some flowers rotting in 2012. Banana yields have declined as a result of pest outbreaks.
Poor drainage in many agricultural regions means that
farmers cannot cope with excess rainfall. Drier weather and
higher temperatures also affect fruit production. Passion fruit,
once harvested in January and June, is now harvested only
in June. This has reduced revenue by up to 50% for
some exporters.
Productivity and quality: Several exporters reported
declining crop yield and quality. Unpredictable weather has
reduced performance and quality of spices, fruit, maize and
cotton in particular. Higher temperatures have caused early
flowering and reduced yield and size for fruits, lowering farmers’ incomes. Tea has matured too quickly,
reducing quality. Tea companies have estimated losses of 5%-10% in their income due to temperature
variations. Drought has cut coffee production and trade in central and south-west Uganda. Extended rains
have reduced harvest quantities of vanilla.
Processing delays and additional costs:
Processing delays have affected exporters,
adding to production costs. Prolonged rain has
hampered road access, affecting the transit of
coffee and tobacco, while heavy rainfall has
also made energy supplies unreliable.
Processing plants run below capacity as
quantities are reduced. Fruit processors are
unable to use the sun and warm air for drying.
Exporters’ sales have become more volatile
and unpredictable. Changes in supply-chain
operations have strained relationships between
exporters and their suppliers.
100%
42% 42%
8%
58% 58%
92%
change in seasonality variability in temperature variability in rainfall extreme weather events
no
yes
“Climate change can be quite dramatic as
our company depends on climate both for
production and processing. It leads to
insecurity. Even if the crop is good, there is
uncertainty as to whether it can be
processed at a competitive cost.
-Fruit exporter, Lutembe 2013
Flooding causes transport delays in Kampala, Uganda (© flickr/350.org)
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 17
“A failure of the crop due to the lack of rain is a
disaster for the farmer and has a financial
impact that can be felt for a long period. Almost
four out of seven seasons have been disturbed
by unpredictable rains.”
-Cotton exporter, Kasese 2013
3.3. Sector impacts
In Uganda, cotton, coffee and tea exporters are particularly concerned about climate change.
Coffee: Droughts in the coffee sector, particularly in central and south-west Uganda, have reduced yields
and slowed the ripening process. During the harvesting season, droughts wither coffee trees and turn
green leaves pale. Rain helps coffee cherries ripen and enables them to absorb water, which allows
swelling and coloration. Without rainfall, the cherries turn yellow with little or no mucilage, making them
hard to pulp. On the other hand, heavy rain disrupts exports as it leads to problems in drying the berries,
storage and transportation. Over time, higher temperatures are likely to decrease the suitability of some
coffee-growing areas. Coffee exporters have built resilience by sourcing from diverse regions around
Uganda. Smallholder farmers that rely on their own production are more vulnerable.
Cotton: Drought in the cotton sector can cause crop
failure. In 2009, a severe drought during the ideal
planting window (June to early August) led to a
decline in production. Extended rains in 2012 reduced
cotton harvest by 10,000 bales as the cotton rotted.
Exporters found that smallholders had begun to shift
away from cotton production during drought periods,
making it difficult to maintain export viability.
Tea: Climate change reduces the quantity and quality of tea harvested. Traditionally, tea in Uganda is
grown in colder, relatively higher altitudes. A report released by the International Centre for Tropical
Agriculture (CIAT, 2011) predicted that rises in average temperature will make some of Uganda’s most
lucrative tea-producing areas unsuitable for tea production. Furthermore, rising temperatures lead to
increased attacks from pests and diseases and steep declines in tea production.
Fruit and spices: Some fruits and spices, including passion fruit and vanilla, will not flower when it rains,
and fruit can die at higher temperatures in insufficient shade. One vanilla exporter reported estimated loss
in sales of almost 50%.
Cocoa: Changes in climate have had a positive impact on cocoa production in Uganda. More regions will
become suitable for cocoa growing if temperatures continue to rise in the coming years (Box 4).
Box 4. Case study cocoa: Could Ugandan exporters benefit from climate change?
In contrast with most other products, exporters perceived that cocoa production would benefit from changes in
climate, particularly predicted rises in temperature and humidity levels. In Uganda, cocoa has traditionally been
grown in the Bundibugyo area bordering the Democratic Republic of Congo. However, as seasons become less
pronounced and rainy seasons extend, the sector is considering opportunities for expansion. Specifically, there
is interest in converting tobacco and coffee plantations to cocoa plantations.
Cocoa can already be produced year-round, causing fewer buying peaks than other cash crops. This benefits
farmers who can develop a constant income stream and more readily manage their finances. Buyer
relationships in cocoa are also less strained.
However, many exporters face high transaction costs for entering the sector. In the 1970s, the Government of
Uganda made some efforts to support cocoa growing by establishing nurseries and processing facilities.
According to Esco Uganda Ltd, limited support is available and the country is missing out on an industry with
significant domestic potential.
Despite limited support, Esco developed several nurseries and employed field staff to promote cocoa plantations
on smallholder farms under a cost-sharing relationship with GIZ. Esco Uganda has also invested in storage and
processing capacity for cocoa since 2000. Cocoa plants take three years to produce fruit, so support for the
upfront investment is needed to encourage a shift in smallholder behaviour. While Esco has made this
investment, it also bears the risk that new buyers will enter the market once production is established and
expected returns will not be captured.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
18 DMD.14-269.E
3.4. Agri-food exporters’ resilience and adaptive capacity
The vulnerability of agri-exporters to a changing climate depends on their sensitivity and their capacity to
adapt to climate change. Following the framework set out in chapter 2 (Smit et al., 2001) agri-exporters
described their resilience in terms of the seven factors influencing adaptive capacity: natural resources,
financial resources, technology and informational resources, infrastructure, institutional/policy environment,
human and social capital. In Uganda, financial resources were perceived to be the greatest challenge to
building exporters’ resilience.
Figure 8. Perceived impacts of climate change on adaptive capacity
Source: Authors’ elaboration based on survey
Financial resources
All but one exporter believed their financial capacity was inadequate to respond to climate change.
Ugandan exporters have limited access to economic resources, partly due to corruption and high interest
rates. According to exporters, interest rates can be as high as 20%-25% per month, and in some cases
more than 100% a year. Cooperative exporters (owned and managed by smallholder farmers), such as
those for cotton, found it particularly difficult to access loans. As trust between farmers and banks is
already low, climatic events and associated crop losses can create difficulties both in repaying debt and
accessing finance and insurance.
Natural resources
The majority of Uganda’s exporters believed that climate change would affect natural resources. Ugandan
farmers face difficulty with optimal management of land resources due to lack of land ownership and
increasing land fragmentation associated with deforestation and urbanization. Lack of land ownership
creates a disincentive for farmers to appropriately manage natural resources and obstacles to
implementing adaptation measures. For example, according to fruit exporters, growers have difficulties
guaranteeing organic quality.
Increasing population density and urbanization have fragmented farm land and average farm size has
been shrinking. This makes it difficult for farmers to realize economies of scale and to diversify production
in order to build climate resilience. Tea and cocoa exporters, for example, have been unable to expand
production or purchase new processing facilities due to higher land prices.
Climate change-driven water scarcity is also a concern for exporters of cotton, tea, cocoa and vanilla.
Many are taking steps to construct dams and plant shade trees to reduce water losses.
0%
25%
58%
58%
67%
75%
92%
institutional and policy context
information
infrastructure
human resources
social capital
natural resources
financial resources
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 19
Social and human capital
Coffee, tea and cotton exporters are part of national
associations or cooperatives. The tea association in
particular has helped exporters by improving the
sector’s ability to contribute to government negotiations
and access finance. Developing and strengthening
these partnerships is important for developing both
formal and informal skills and sharing knowledge and
innovative solutions between value chain actors.
Almost 60% of exporters surveyed thought that poor
human capital could affect their resilience to climate change. The knowledge and skills to help small-scale
farmers adapt to climate change are limited, and high levels of illiteracy affect the uptake of new
technologies. For example, vanilla exporters shared concerns that harvest was picked too early, reducing
quality. The number of extension workers is also insufficient. For example, the cotton growers’ cooperative
has five extension workers for 15,000 farmers.
Infrastructure
More than 58% of exporters saw infrastructure as inadequate for responding to climate change. Freight
and cargo costs reduce the competitiveness of Ugandan exports relative to neighbouring countries, such
as Kenya and Tanzania. Storage facilities are also inadequate for some products, contributing to post-
harvest losses and reduced quality. Poor infrastructure creates difficulties in maintaining quality
consistency and responding to unexpected market fluctuations.
Almost all the surveyed companies complained about the unreliable and expensive electricity supply.
Consistent electricity shortages and low voltage damage machines, which must be repaired regularly. High
electricity bills, machinery repairs and damage to crops in storage considerably increase costs of
production for exporters.
Exporters in the fruit sector have tried to reduce their reliance on electricity by improving the efficiency of
dryers and investing in biogas to lower energy consumption. Biogas digesters are also being tested out in
the coffee sector for drying.
Transport costs account for nearly three-quarters of exporter costs. Most surveyed companies commented
on the improved road network, especially compared to the situation five years ago. However, the situation
is still challenging for some of the companies, especially during the rainy season and for those operating in
hilly or mountainous areas. Fruit producers, for example, were unable to access farmers during the rainy
season due to poor road networks. As a result, exporters are more frequently obliged to heavily invest in
expediting crops from the field to meet buyer contracts.
Information resources
Access to timely market and climate information via reliable
and affordable Internet and telecommunications links can
increase exporters’ capacity to adapt to climate risks. For
example, weather forecasts are crucial for determining the
success of agri-enterprises. Exporters reported that few
meteorological centres remain in operation in Uganda, and
most are ineffective due to mismanagement. The
Government of Uganda recognizes the impact of inadequate
and inefficient flow of information to businesses, including
farmers (Republic of Uganda, 2007).
While a quarter of respondents viewed lack of information as creating climate vulnerabilities, half saw the
lack of reliable climate and weather data as a business risk, including cotton, chilli and coffee exporters.
There is little confidence among exporters that governments will revive meteorological institutes. One
exporter recommended that producer associations be supported to collect climate data.
“It is hard to plan with the farmers. We encourage
them to grow (a particular crop), but due to the
shift in seasons, the produce becomes available
when we don’t have the market anymore. This
leads to a lot of frustration and problems.”
-Fruit exporter, Kampala 2013
“Building and maintaining trust with farmers
is very important and sometimes very
challenging. Farmers lose trust if you are not
able to link what you teach them to reality.”
-Coffee exporter, Kampala 2013
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
20 DMD.14-269.E
Checking for pests and diseases in Kawanda, Uganda (© Neil Palmer –CIAT)
Internet access has improved in Kampala, but remains fragmented in regional areas. This has forced most
exporters to base trading operations in Kampala in order to maintain access to price data and
communicate with buyers.
Institutional and policy environment
Uganda has made some progress in liberalizing trade, such
as through the East African Community (EAC) Customs Union
and the Common Market for Eastern and Southern Africa
(COMESA). Most exporters think they are operating in an
effective policy environment. However, they remain concerned
about the prevalence of non-tariff barriers. For example, tea
exporters are subject to 48 different taxes.
Specifically on climate policy, exporters feel that there remains a disconnect between agriculture, trade and
environment policies. The government has limited capacity to fund research and development in climate-
resilient crop varieties. Nevertheless, exporters did not perceive that climate impacts had weakened the
institutional and policy environment.
3.5. Agri-exporters’ adaptation responses
Three-quarters of Ugandan exporters were taking some action to build resilience to climate change. One
exporter claimed it was not acting on climate change, but was promoting good agricultural practices among
suppliers to reduce vulnerability to weather variation and extremes. Of the other two exporters not taking
measures, one perceived climate change impacts to be too big to tackle as a small business, the other
claimed a lack of capacity and know-how on how to reduce climate risks.
Sustainable agriculture practices
Of the exporters already taking
action, the strategies to improve
resilience have been mostly at the
producer end of the supply chain.
Exporters have encouraged or
supported suppliers to plant trees
(especially shade trees) and
implement more sustainable
practices for soil conservation and
water management. One exporter
had supported suppliers in
implementing drip irrigation.
Forest and wetland conservation
was also seen as an important
measure. Several exporters saw
deforestation and increasing
population density as the root cause
of rainfall variability. However, they considered such measures as the responsibility of government rather
than individual exporters.
Diversified supplier base
Two exporters were responding to climate variations by expanding or shifting their pool of suppliers to new
regions. Because climate hazards such as drought and storms have often been localized, exporters have
managed risk by building relationships with buyers in different regions.
“Climate variability is a reality in the country.
Everybody agrees that something should be
done.”
-Coffee exporter, Kampala 2013
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DMD.14-269.E 21
Technologies to improve supply-chain efficiency
Fewer exporters were taking actions to improve
climate resilience in processing and transport. An
exporter of pineapples and bananas had shifted to
solar dryers and was looking at the viability of biogas
produced from pig farming. Cocoa and coffee
exporters had invested in heavy-duty vehicles to cope
with Ugandan roads. Cocoa, coffee and cotton
exporters had also added drainage systems around
their processing facilities to adapt to periods of
intense rainfall.
Improved climate information
Only one exporter had taken steps to collect additional data on weather and climate patterns. Data are
collected from farmers’ rain gauges and combined with satellite weather information. The exporter works
with a consultant to evaluate supply-chain implications.
3.6. Support needs identified by agri-exporters
The most common adaptation measures that would support exporters in Uganda in adapting to climate
change were perceived to be access to finance, improved climate information and better networks and
partnerships (Figure 9). Three-quarters of respondents highlighted the need for improved financial services
in order to invest in climate adaptation. Three-quarters also believed that improved knowledge of climate
change impacts would help them to prepare for and manage risks.
Figure 9. Additional measures needed to respond to climate-change impacts
Source: Authors’ elaboration based on survey
Access to finance
Exporters thought that poor access to finance limited their capacity to invest in sustainable practices or
infrastructure improvements to adapt effectively to climate change. Some exporters also demand finance in
order to expand and diversify their facilities. One exporter would like finance to be able to establish
weather-monitoring and climate-research activities. Smaller exporters and cooperatives had the most
difficulty accessing finance, with larger, international companies facing fewer constraints. Finances were
also important for exporters to shift sourcing to new regions or diversify their export base. Improving
42%
58%
58%
67%
75%
75%
export diversification
infrastructure improvements
climate resilient crop varieties
networks and partnerships
improved climate information
access to finance
“Climate hazards do not yet have a crucial impact
as we buy in the whole of the country. (Uganda)
has so many different regions with their own
flowering periods that there is always enough
production. Climate change is not an issue yet, but
it does form a future threat.”
-Coffee exporter, Kampala 2013
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
22 DMD.14-269.E
access to financial services, in particular savings and credit products, would increase opportunities for
smallholder farmers and exporters to adopt more efficiency technologies and improve resource allocation
to build resilience.
Climate information
Additional climate information was important for exporters looking to build climate resilience. Uganda has
limited meteorological services and climatic data are limited. Access to reliable information is needed to
enable producers and exporters to respond to climatic extremes.
Due to the costly nature of weather and rainfall data collection, exporters in the coffee industry suggested
that data collection could be coordinated by the industry through the Uganda Coffee Federation (UCF).
Other exporters noted the need for building the capacity of the Uganda Meteorological Department and
Uganda Bureau of Statistics (UBOS) and creating weather information centres at village level. This is done
by involving local farmers, pastoralists, extension workers, schools and other actors in collecting,
summarizing and interpreting hydrological, meteorological and impact data on crop yields and
ecosystem changes.
Networks and partnerships
More than two-thirds of exporters saw that improved networks and partnerships were required to assist in
adapting to climate change. Stronger relationships between farmers and buyers were seen as particularly
important in coordinating responses to climate volatility and reducing harvest and post-harvest losses. New
partnerships or exporter associations could benefit Uganda to deliver effective extension services. To date,
exporters have not been successful in delivering adaptation training to farmers because of poor
understanding and a lack of incentive to implement changes. Networks and partnerships could form new
ways to share information and collectively respond. In addition, spice exporters said new partnerships
could provide a mechanism for undertaking research, funding seed banks and attracting government
support to respond to climate change.
Crop varieties
Around half of exporters expressed a need for improved climate-resilient crop varieties. One coffee
exporter had begun to host breeding trials for drought-resistant coffee varieties and optimal production
systems for soil and water conservation.
Infrastructure
Exporters agreed that improved infrastructure was needed to reduce the cost of trade. Investment in road
access, alternative energy and additional storage were needed to improve competitiveness. Although
infrastructure used in primary processing, disease control, quality assurance and water use was seen to be
inadequate, several exporters also saw the need to increase irrigation infrastructure or introduce new
technology for irrigation efficiency. For example, drip irrigation had proven useful for those fruit and spice
producers that could afford it.
Export diversification
Exporters identified the need to diversify exports in response to climate volatility. Several exporters were
looking at diversification, such as integrating cocoa exports into their trade mix. Some exporters believed
that farmers needed additional support to diversify production to build climate resilience. For example,
several banana growers rely on Matoke banana monocultures, which can be vulnerable to extreme
weather events. The benefits of diversification though the planting of shade trees, such as mango, were
also reported.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 23
Chapter 4 Perceptions of agri-food exporters in Peru
Agri-food production and trade in Peru1.
Agri-food exports have increased rapidly in Peru since the 1990s, when the government implemented a
number of reforms to liberalize trade. Several international agreements have helped promote the
expansion of agricultural exports, notably the United States Andean Trade Preference Act (1991), the Law
on the Promotion of the ecological agriculture (Law 768-2006-CR) and a number of free trade agreements,
including with the United States, the European Union, Japan, Mexico, Singapore, Chile and China. Today,
agriculture (including hunting and forestry) employs 24% of the Peruvian labour force and contributes 7%
of GDP (BCR-PROMPEX, 2014).
The main agricultural exports of Peru are coffee, preserved vegetables, grapes, asparagus, avocados and
chillies (Figure 10). Coffee is the primary product and amounted to one-third of total agricultural exports in
2011. Exports increased by an average 34.7% a year between 2009 and 2012. Cocoa (including beans,
butter, powder and paste) represents 2.6% of total agricultural exports. Between 2009 and 2012, cocoa
exports grew an average of 16.7% a year. Globally, Peru is recognized for its coffee and cocoa products
and is the top exporter of green coffee beans (FAO, 2014a) and the second-largest exporter of
organic cocoa (MINCETUR, 2009).
Most production is undertaken by smallholders, with a farm size averaging 3.2 hectares. Around one-third
of production takes place in the arid coastal area, partly due to better infrastructure and soil quality; the rest
is undertaken in the rain-fed Andean highlands and jungle areas. The highlands lack water-storage
capacity and transport costs are high given the rugged mountainous terrain. Less agricultural production
takes place in the jungle areas, which are often too wet for cultivation and are subject to a number of land
use restrictions.
SMEs manage most coffee and cocoa production and trade. An estimated 600,000 Peruvians are involved
in coffee production and trade, and another 200,000 in cocoa production and trade (MINAGRI, 2013).
Many of these are smallholders in rural and marginalized communities. The majority of small producers are
grouped in cooperatives or associations, enabling them to coordinate post-harvest management, as well
as negotiate better prices (Box 5).
Figure 10. Agriculture and livestock exports 2011 (US$ 4.5 billion)
Source: FAO, 2014b
33%
8%
6%
6%
4%
3%
2%
1%
1%
36%
Coffee (green)
Vegetables preserved nes
Grapes
Asparagus
Avocados
Chillies and peppers dry
Mangoes mangosteens and guavas
Cocoa beans
Cocoa butter, powder and paste
Other
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
24 DMD.14-269.E
1.1. Coffee exports
Nearly all Peruvian coffee is exported as
green beans. In 2011, exports reached a
record value of US$ 1.6 billion before
dropping to US$ 1.0 billion in 2012. The main
markets are Germany (33.9%) and the United
States (18.3%) (Figure 11).
Trade is dominated by three major exporters:
Perales Huancaruna, Comercio and Cia, and
Internacional del Café. These three
companies account for 40% of coffee exports.
Most remaining exports are traded by
producer associations and cooperatives.
Box 5. Industry associations and cooperatives
Most coffee and cocoa producers in Peru are associated in cooperatives. This has enabled small producers to
establish strategic alliances within the value chains and improve their competitiveness on international markets.
The larger associations have up to 2,000 members and collectively manage more than 7,000 hectares. The
majority of associations trade products directly and have long-term relationships with coffee traders. Through the
cooperatives, smallholders negotiate better prices, reduce costs of post-harvest management and develop
marketing strategies.
In 2009, there were 78 registered coffee cooperatives and 180 associations, a network comprising more than
50,000 families and 165,000 hectares of coffee, including 120,000 hectares of certified coffee
(Mogrovejo et al., 2012).
The Peruvian Chamber of Coffee and Cocoa (CAMCAFE) promotes exports of coffee and cocoa. The National
Coffee Board (JNC) and the Peruvian Association of Cocoa Producers (APPCacao) guide production and
market access.
The Peruvian Chamber of Coffee and Cocoa (CAMCAFE)
The Peruvian Chamber of Coffee and Cocoa was founded in October 1991. It provides services to producers,
exporters and manufacturers, largely the promotion of Peruvian coffee and cocoa products worldwide. The
Chamber implements research and capacity building projects funded by member contributions and supported, in
part, by national and international donors.
National Coffee Board (JNC)
The National Coffee Board (JNC), established in 1993, is an industry body aimed at promoting industry growth
on the national and international markets and supporting economic and social development in Peru. The JNC
provides services, such as training, market linkages and trade fair participation for its members. The board
brings together 44 coffee associations and cooperatives, representing 40,000 families from 14 coffee-producing
regions. The JNC is a member of the Sustainable Commodity Assistance Platform (SCAN) in Peru, which aims
at sustainable develop of coffee production, processing and marketing in Peru to improve the income of farmers.
Peruvian Association of Cocoa Producers (APPCacao)
The Peruvian Association of Cocoa Producers (APPCacao) was founded in May 2008 and represents
approximately 15,000 cocoa farmers, distributed among 20 producing organizations. APPCacao is supported by
member contributions and international and national donors. It aims to add industry value by generating and
promoting integrated and sustainable development and promoting Peruvian cocoa on domestic and
international markets.
Most Peruvian coffee is exported as green beans (©flickr/Dennis Tang)
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 25
Figure 11. Main destinations for Peruvian coffee, 2012
Source: BCR-PROMPEX, 2014
Coffee grows best between 600 and 1,800 metres above sea level and is suitable for almost all
geographical regions in Peru. Nearly 75% of coffee is grown above 1,000 metres, in the Andean and
Amazon jungle regions.
Production volumes are highest in Junín (25.2% of production in 2012), Cajamarca (21.3%), San Martín
(17.8%), Cusco (13.8%) and Amazonas (12.6%). The coffee grown is predominantly Arabica, followed by
Robusta. Other, less popular varieties include Coffea liberica, Coffea dewevrei, Coffea stenophylla, Coffea
congensis, Coffea abeokutae, Coffea klainii, Coffea zanguebariae and Coffea racemosa
(Agrobanco, 2007).
Production is most suited to humid areas with relatively high temperatures (20°C–25°C). Coffee is a semi-
shade plant and needs protection from the wind and frost. New plantations take two years to mature before
fruiting, with maximum fruiting occurring when the plants are 4-5 years old. Plants can be productive for up
to 20 years, after which yield and quality decline.
The most common pests and diseases affecting production in Peru are coffee berry borer (Hypothenemus
hampei), coffee rust (Hemileia vastatrix), coffee leaf miners (Leucoptera coffeella), Mycena citricolor and
Pillicularia koleroga. In 2012 and 2013, a serious outbreak of coffee rust significantly hampered
yields (Box 6).
Coffee production tripled in the past two decades (Figure 13). This is partly a consequence of increased
prices and export opportunities. Coffee prices have continued to improve since 2004, though there was
some evidence of a downturn in 2012.
34%
18%
14%
8%
4%
22% Germany
United States
Belgium
Colombia
Sweden
Other
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
26 DMD.14-269.E
Figure 12. Coffee production areas
Source: CPC, 2014
Figure 13. Coffee production and farm gate price, 1990-2012
Source: MINAGRI, 2013
0.00
1.00
2.00
3.00
4.00
0
100,000
200,000
300,000
400,000
1990 1995 2000 2005 2010
US$/kilo
MT
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 27
Table 4. Coffee production by region, 2012
Ranking Region Quantity produced Area harvested Yield Share of
production
Mt Ha Kg/ha %
1Junin 76,714 82,047 935 25.2
2Cajamarca 64,900 64,130 1,012 21.3
3San Martin 54,181 57,093 949 17.8
4Cusco 42,096 47,087 894 13.8
5Amazonas 38,317 48,319 793 12.6
6Puno 7,364 11,107 663 2.4
Total 304,121 338,004 900 100
Source: MINAGRI, 2013
1.2. Cocoa exports
Peru has significantly expanded its cocoa
production in the past 10 years and now
produces more than 50,000 tons of beans.
Cocoa is cultivated on the eastern slope of the
Andes. Optimal growing conditions are in
tropical areas with temperatures between 25°C
and 29°C. The main growing regions are San
Martín (33.3% of production), Cusco (18.4%),
Junín (13.7%), Ayacucho (11.2%) and
Amazonas (8.1%) (Figure 14).
The main varieties grown in Peru are Criollo,
Forastero, Trinitario and CCN51. Criollo is a
native cocoa and is recognized globally for its
high quality and low tannin content. It is difficult
to grow and has low yields, but it is used in fine
chocolate manufacture. In Peru, it grows in San
Martín, Amazonas, Piura and Junín. The cocoa tree grows in deep, fertile soils, rich in organic matter, and
with a good drainage. The crop is harvested several times throughout the year as fruit ripens. The large
oval-shaped fruit contains 20 to 40 seeds. The most common diseases affecting cocoa in Peru are caused
by fungus and include frosty pod rot (Moniliasis), witches’ broom disease (caused by M. perniciosa)and
black pod rot (caused by Phytophthora sp.). Most producers are smallholders cultivating one to two
hectares with 100 to 6,000 plants per hectare. Yields vary from 300 to 2,500 kilograms per hectare
depending on factors such as variety, plant age, diseases and environmental conditions.
Box 6. Yellow rust outbreak in 2012 and 2013
Coffee producers in all regions of Peru were affected by yellow rust in 2012 and 2013. Yellow rust is a type of
fungus that attacks branches and leaves, reducing coffee yields and quality. The rust outbreak was
exacerbated by the more humid climate in recent years, along with poor management practices. According to
news reports, it is estimated that yellow rust affected about 108,000 hectares of coffee and around 160,000
producers have reported difficulties in repaying debts as a result of crop losses. The government has
introduced mitigation measures, including distributing farmer kits with fertilizers and pesticides and issuing lines
of credit to support farmers in renewing coffee plantations and meeting debt repayments. While there are
organic solutions to manage the outbreak, farmers lack the knowledge or the resources to implement them,
and limited extension services are available.
There is a need to renew plants affected by the rust. While this creates short-term costs for producers, there is
an opportunity for growers to plant newer varieties with higher productivity and greater disease resistance.
Cocoa beans in Peru
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
28 DMD.14-269.E
Figure 14. Cocoa growing regions of Peru
Source: CPC, 2014
Figure 15. Cocoa production and farm gate price, 1990-2012
Source: MINAGRI and FAO, 2012
0.00
0.50
1.00
1.50
2.00
2.50
0
10,000
20,000
30,000
40,000
50,000
60,000
1990 1995 2000 2005 2010
US$/kg
Mt
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 29
Table 5. Cocoa production by region, 2012
Ranking Region Production
quantity Area harvested Yield Share of production
Mt Ha Kg/Ha %
1San Martin 18,369 20,617 891 33.3
2Cusco 10,165 27,324 372 18.4
3Junin 7,557 11,450 660 13.7
4Ayacucho 6,186 8,787 704 11.2
5Amazonas 4,484 6,683 671 8.1
6Ucayali 2,568 2,980 862 4.7
Total 55,111 87,112 633 100.0
Source: MINAGRI, 2013
The majority of cocoa production is for export. Cocoa exports have increased rapidly since 2006, alongside
strong increases in world prices, reaching record export revenues in 2011 (US$ 105 million). Peruvian
cocoa is exported either as raw or as a processed product, including cocoa beans and cocoa butter, and to
a lesser extent cocoa powder and cocoa paste. However, there are constraints to exporting higher value
products, including chocolate, due to limited resources for storage and trading, low human capital and
limited investment in machinery and equipment needed to add value (MINCETUR, 2009).
The main markets are the Netherlands, Belgium, Germany and Italy for cocoa beans; the United States,
France and the Netherlands for cocoa butter; and Brazil, the United States, Venezuela and Chile for cocoa
powder (Table 5). Around 15% of cocoa exports are certified organic or Fairtrade.
Major cocoa bean exporting companies and cooperatives include Amazonas Trading (15.6% of exports
in 2012), Cooperativa Acopagro (13.1%), Cooperativa Naranjillo (13.0%) and Sumaqao (10.6%). The main
cocoa butter exporting companies are Machu Picchu (58.6% of exports in 2012), Compañía Nacional de
Chocolates (17.1%) and Romex (14.5%). For cocoa powder, Machu Picchu is the dominant exporter
(73.4% of exports in 2012).
Figure 16. Cocoa exports, by type, 19902012
Source: BCR-PROMPEX, 2014
0
20
40
60
80
100
120
1990 1995 2000 2005 2010
million US$
cocoa powder
cocoa paste
cocoa butter
cocoa bean
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
30 DMD.14-269.E
Table 6. Main destinations for Peruvian cocoa exports, 2012
Ranking Country Export value Export quantity Share of exports
US$ Kg %
Beans
1Netherlands 12.4 4 840 19.1
2Belgium 12.1 4 819 18.7
3Germany 8.6 3 188 13.4
4Italy 8.2 3 058 12.6
5Malaysia 5.9 2 477 9.1
Total 64.7 25 132 100.0
Butter
1United States 6.0 2 450 27.9
2France 5.1 2 300 24.0
3Netherlands 3.9 1 601 18.2
4Turkey 2.7 1 140 12.4
5Germany 1.4 383 6.3
Total 21.4 8 833 100.0
Powder
1Brazil 2.8 560 22.4
2United States 2.5 414 19.4
3Venezuela 2.0 405 16.2
4Chile 1.5 325 11.7
5Bolivia 0.8 185 6.7
Total 12.6 2 511 100.0
Source: BCR-PROMPEX, 2014
1.3. 24BVoluntary markets, standards and certifications
Peruvian exporters participate in a number of voluntary certification schemes to improve farm management
practices and secure higher returns in global markets. These higher returns are awarded for exceptional
quality, native varieties (with unique characteristics) and sustainability.
54BSustainability certified exports of coffee and cocoa
Sustainable coffee certification has become a distinctive feature of Peruvian coffee production. This
includes coffee certified as organic, Fair Trade or Rainforest Alliance, among others. Peru has produced
organic certified coffee since 1989 (with OCIA certification) and Fairtrade certified since 1994
(Schreiber and Costilla Mora, 2011, Claro Fair Trade, 2008). It is now the world’s largest exporter of
Box 7. Coffee and cocoa as a substitute for drug production and trafficking
Since the 1990s, the Peruvian government has promoted coffee and cocoa as an alternative to coca production.
The “Alternative Development” strategy was part of Peru’s response to ongoing drug trafficking. In San Martin,
coca production during the 1970s and 1980s led to degradation of soils, biodiversity loss and pollution runoff.
Further, the industry caused insecurity and violence among communities.
International organizations, such as USAID, have supported the Peruvian government to promote the
replacement of coca crops with cocoa, coffee and oil palm. The substitution away from coca has been slow,
given the financial security it has provided smallholders. Farmers were provided large incentives, including
subsidies, infrastructure and employment opportunities. As a downside of this assistance, it is reported that
many farmers are dependent on financial support and have poor business skills and littlewillingness to innovate.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 31
Fairtrade coffee. In 2011, around 35% of Peru’s coffee cultivation area held at least one certification
(125 million kg) (Schreiber and Costilla Mora, 2011).
A significant share of Peru’s cocoa is also certified for export. Peru is the second-largest exporter of
organic cocoa (after the Dominican Republic)(Larrea and Lynch, 2012). Other major certifications include
Rainforest Alliance, Fairtrade International, UTZ Certified and IFOAM standard (Larrea and Lynch, 2012).
Climate variability and change are not a central focus of any certifications for coffee and cocoa. However,
Fairtrade and UTZ integrate climate-related issues and carbon emissions among other social and
environmental issues (ITC, 2014). While the price premium associated with certification can be marginal,
certified products often have price volatility, which can help in building resilience among smallholders
(Sinclair et al., 2007). A 2013 Rainforest Alliance survey found that certified farmers reported better farm
management and organization, improved access to education and training, and improvements in soil and
biodiversity. Another report suggests that organic producers achieve 46%–150% higher yields as a result
of improvements made to agricultural practices (Cueva Benavides, 2013).
Main sustainability export certifications in Peru
There are a variety of standards for which exporters can be certified (ITC, 2014). Most of these standards
are the same for coffee and cocoa. The main standards require independent monitoring and certification.
The Sustainable Commodity Assistance Network (SCAN) has been working in Peru since 2009 to support
the development of a common standard for producers to meet the four main certification
requirements (SCAN, 2014):
Organic: Organic coffee is produced without synthetic substances such as most chemical fertilizers,
pesticides and herbicides. As 80% of Peruvian coffee farmers have never used synthetic soil
additives, it is relatively straightforward for them to meet certification standards as long as the costs
can be met. Certification typically costs an exporter US$ 600–800 per year. Some certifications,
such as IMO Control, cost up to US$ 1,500 per exporter (Sinclair et al., 2007). There are an
estimated 25,000 certified organic coffee producers in Peru, receiving a price premium of US$ 250
300 per ton (Cueva Benavides, 2013).
Fairtrade: Fairtrade certification aims to promote higher social and environmental standards in
developing countries. Certification from Fairtrade International provides a guaranteed minimum
contract price and that exports are produced exclusively by smallholder farmers. Certification costs
US$ 1,170– 2,770 per year (FLOCERT, 2014).
UTZ: The UTZ certification includes requirements for good agricultural practices, safe and healthy
working conditions, abolition of child labour, and protection of the environment. There are
17 Peruvian coffee producer organizations that are certified, and 24 cocoa producer
organizations (UTZ, 2014).
Rainforest Alliance: Rainforest Alliance certification aims to conserve biodiversity and improve
livelihoods and workers’ welfare (Rainforest Alliance, 2014). The certification mandates a set of
sustainable farm-management practices set by the Sustainable Agriculture Network.
Other certifications include:
- “Bird-Friendly” (Smithsonian Migratory Bird Centre) – “Bird-friendly” shade-grown
organic coffee
- C.A.F.E. (Coffee and Farmer Equity) Practice – Starbucks’ ethical certification for coffee,
focusing on social responsibility and environmentally sound cultivation and processing.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
32 DMD.14-269.E
Table 7. Key coffee and cocoa certifications
Criteria IFOAM Fairtrade Rainforest Alliance UTZ
Third part auditing Yes Yes Yes Yes
Validity of certification 1 year 4 years 3 years 1 year
Cost of certification Depends on
certification body US$ 1,170 –
2,770 annually Depends on
certification body US$ 500 – 4,500
annually
Source: FLOCERT, 2014 and ITC, 2014
6BClimate change in Peru2.
Despite strong economic growth over the past decade, Peru still has high poverty and a number of
developmental and environmental challenges. Peru contains several diverse ecosystems and
microclimates. According to recent studies, Peru is vulnerable to increased temperatures, variable
precipitation, glacial melt and sea-level increase (USAID, 2011).
25BPeru’s climate2.1.
Peru’s climate varies from dry and warm on the Pacific coast, mild in the Andean valleys, cold in the
highlands, and hot and humid in the Amazon area. Temperatures vary from sub-zero to above 36ºC and
rainfall varies from less than 200 millimetres in the coast to 2,800 millimetres in the Amazon
jungle (SENAMHI, 2014).
Due to the El Niño phenomenon (Box 8), Peru is affected by inter-annual climate variability, air movements
and changes in water temperature. Consequently, the coastal area is prone to severe floods and heavy
rainfall as well as droughts. Peru is regularly exposed to devastating natural disasters, such as floods,
landslides, droughts and frost, which are frequently related to the El Niño phenomenon.
26BVulnerability to climate change 2.2.
The main climate risks expected to affect agriculture in Peru
include higher temperatures, glacial melt, periods of intense
rainfall and extreme weather events. Climate change is
expected to impede economic development through direct
effects on infrastructure, housing and human life
(Libélula, 2008). One recent study suggested that the cost
of climate change to Peru would reach US$ 400 million by
2030 (at least five times the cost of adaptation and
mitigation) (Loyola, 2009).
While trends are uncertain, the key climate impacts likely to affect Peru are (USAID, 2011):
Temperature: Climate models consistently estimate significant increases in average temperatures
in Peru over the coming decades. Since 1960, mean high temperatures have risen by an average
rate of 0.2°C per decade. It is projected that the maximum temperature will increase by
around 1.6°C by 2030.
Box 8. El Niño
“El Niño” (also El Niño South Oscillation, or ENSO) is an event defined by the persistent increase in sea surface
temperature and weakening of winds in the Central and Easter Equatorial Pacific, for at least four consecutive
months. It arrives every three to seven years and continues for 12 to 18 months, accompanied by a change or
disturbance in the South Oscillation (SENAMHI, 2004).
“(Climate impacts) could increase the existing
challenges imposed by the tropical
geography, strong dependence on agriculture,
rapid population growth, poverty and the
limited capacity to resist climate changes”
-MINAGRI, 2010
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DMD.14-269.E 33
Glacial melt: Peru is home to 70% of the world’s tropical glaciers. The glaciers provide a critical
supply of water for irrigation, electricity and household use. Over the past 30 years, Peru has
lost 22% of its total glacier area due to rising temperatures.
Precipitation: Although overall precipitation has not changed significantly, the intensity of rain and
drought has increased, and dry periods are longer.
Extreme weather events: Between 1970 and 2010, 72% of the natural disasters in Peru were
climate-related. These include hurricanes, severe droughts, landslides and floods (Libélula, 2008).
The occurrence of disasters is on the rise: flooding increased by more than 60% from 1970–1980 to
1990–2000, and mudslides by almost 400% in the same period.
Potential impacts on the agri-export sector2.3.
Rural smallholders are highly susceptible to extreme weather events due to lack of information, low
adaptive capacity and limited access to schemes of technical and financial support. Poverty among rural
Peruvians was 60% in 2008 and 90% in the southern Andean Region (MINAM, 2010a).
Peruvian agriculture has already been affected by climate variability. In particular, weather events related
to El Niño and La Niña, floods, frost, short summers and droughts have affected yields and quality of
production. Between 1995 and 2007, an estimated 444,707 crop hectares were lost due to weather events
at a cost of US$ 910 million (MINAGRI, 2011). The most affected regions included Puno and Apurimac in
the south, Junín and Huanuco in the centre, Cajamarca and Piura in the north, and San Martin in the east.
In 2006–2007, losses exceeded 85,000 ha and US $612 million as a result of El Niño events combined
with flooding and extreme cold temperatures.
Besides crop damage, agricultural producers and exporters are also vulnerable to infrastructure damage
(such as storage and transportation) and losses in human capital.
The Second National Communication of Peru to United Nations Framework Convention on Climate
Change (MINAM, 2010b) states that climate change could have both positive and negative impacts. On the
one hand, rains could delay flowering and harvest and reduce crop quality, and landslides and floods could
cause crop losses. On the other hand, higher temperatures may expand the potential cultivation area for
some crops at higher altitudes and may increase sugar concentrations in fruit. A study by Torres Ruiz de
Castilla found that higher temperatures in Peru could reduce mango yields by 3.9% and banana yields by
2.5%, but could boost yields for coffee (Torres Ruiz de Castilla, 2010).
Agri-exporters are not only affected by direct climate impacts on production, but also by the exposure of
support systems (such as water provision, energy and infrastructure) to climate risks. Energy production is
largely dependent on hydropower, and has in the past been hit by both water scarcities during droughts,
and infrastructure damage resulting from floods and landslides. Roads are regularly affected by floods
(especially along the northern coast and in the Amazon) and landslides (in the mountains), which can
delay or prevent the transport of cocoa and coffee.
Uncertainty remains about the impact on the coffee and cocoa trade, which could vary between producing
regions as follows:
Coffee:Several estimates suggest higher temperatures associated with climate change could
benefit Peruvian coffee. For example, AdaptCC (2010) found that more areas in Piura may become
suitable for coffee cultivation from 2020 to 2050. Torres Ruiz de Castilla’s 2010 study suggests an
18%–41% increase in coffee productivity by 2030 due to higher temperatures. However, these
potential improvements could be offset by changes in the timing and quantity of rainfall, which
affects coffee flowering and reduces quality.
Cocoa: Cocoa production is sensitive to temperature and soil conditions. Temperature deviations
below 15°C or above 30°C can reduce yields as well as daily temperature oscillations of more than
9°C. Cocoa trees depend on moist soil and require rainfall of at least 100mm per month (Leguía et
al., 2010). Research in Peru has found that the land area suitable for cocoa production in Peru will
decline due to climate change in San Martín, Huánuco, Loreto and Cusco (Leguía et al., 2010).
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
34 DMD.14-269.E
National policies for climate change mitigation and adaptation2.4.
The Peruvian government has introduced a set of tools and measures to mitigate and adapt to climate
change. The main instrument in Peru for adaptation issues is the National Climate Change Strategy,
introduced in 2003 and currently being updated. It aims to reduce the adverse effects of climate change
through a) studies to identify the most vulnerable areas and/or sectors towards which adaptation projects
should be targeted and b) controlling greenhouse emissions through renewable energy and energy
efficiency programmes (CONAM, 2002).
Peru has also adopted an Action Plan for Climate Change Adaptation and Mitigation including several
specific measures for the agriculture sector such as promoting sustainable land use, agro-forestry and
organic agriculture, and additional research and training on climate-related issues (MINAM, 2010). It also
calls for risk and vulnerability studies in various sectors, including water, agriculture, economy, fishing and
areas of high biodiversity.
The Ministry of Agriculture and FAO have also approved a Plan for Risk Management and Climate
Change Adaptation of the Agriculture Sector (PLANRMCCA-A) for 2012–2021 (MINAGRI and FAO,
2012). The plan includes an investment of US $700 million towards mitigating climate-change impacts on
the agricultural sector. The plan prioritizes 159 adaptation measures selected during regional workshops in
2011- 2012 and to be implemented by regional governments.
The PLANRMCCA-A considers strategies for reducing vulnerability and adapting to climate change. The
plan includes
Early warning systems for disaster prevention
Agricultural insurance scheme
Promotion of local contingency plans, along with surveillance and health monitoring of pests and
diseases
Promotion of native species and traditional farming practices
Water infrastructure
Reforestation and forest conservation
Knowledge and information management
PLANRMCCA-A also includes measures to improve hygiene to reduce disease risk, develop new drought
and frost resistant varieties, and expand the application of sustainable agriculture practices specific
for coffee.
A number of independently managed programmes are being conducted, mainly promoted by international
organizations, to facilitate climate adaptation in the agricultural sector (Table 8).
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 35
Table 8. Current adaptation programmes for agriculture in Peru
Project Name
Objective
Sector
Funding
source(s)
Geographic Focus
Years
Ongoing
Climate Change Adaptation
Programme in
Peru
(PACC)
To reduce climate vulnerability for the local populations
of Cuzco and Apurimac, focusing on water resources,
disaster prevention and food security.
General
SDC
Regions of Cusco
and Apurimac
2009
-
2016
Terraces Recuperation in
the Andes
To support research to scale up and find the technical
and financial feasibility to co
-finance pre-
Columbian
Andean terrace reconstruction as a practical way to
execute adaptation projects in the field.
Agriculture
(coffee)
IADB
Peruvian Andes
2010
-
2014
Adaptation for Smallholders
to Climate Change
(AdapCC,
2010)
To support coffee and tea farmers in Cafédirect’s
supply chain in developing strategies to cope with the
risks and impacts of climate change.
Coffee
tea
GIZ/GTZ/
Cafédirect
Kenya, Mexico,
Nicaragua,
Peru
, Tanzania,
Uganda
2010
-
Coffee and Climate
Initiative
To enable coffee farmers to effectively respond to
changing climatic conditions by:
combining best
-
practice farming methods and hands-
on tools / forming a network of all relevant
stakeholders in the field/applying a 360 precompetitive
approach/including the entire value chain
http://toolbox.coffeeandclimate.org/content/
Coffee
Various
International
2010
-
Sustainable development
model for Peruvian coffee
(SCAN)
To achieve comprehensive and sustainable
development of coffee production, processing and
marketing in Peru, to increase farmers’ income.
Coffee
SCAN Peru
Peru
2011
-
2014
Bringing agriculture
capacity, carbon
and
knowledge to REDD+
(Back to REDD+)
To illustrate how farming can shift from being part
of the problem to part of the solution to
deforestation and climate change.
Coffee,
cocoa,
tea
Solidaridad
Colombia, Mexico,
Peru
2012
-
2015
Source: USAID, 2011. Adapted from Peru Climate Change, Vulnerability and Adaptation Desktop Study.
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
36 DMD.14-269.E
Survey results3.
The results of the survey of agri-exporters conducted in Peru are presented in this section. The survey
assessed the perceptions of 24 coffee and cocoa businesses to climate change and was complemented by
focus groups and a multi-stakeholder workshop.
Perceived climate impacts on business3.1.
Climate risks are perceived to negatively affect exports
Almost all surveyed exporters perceived that climate risks had affected their exports in the past five years
(95%), with one-third of respondents reporting a severe impact (Figure 17). In the past 12 months, all
exporters were affected to some extent and, of these, three-quarters had been severely affected.
Exporters overwhelmingly perceived that current and future climate change would negatively impact
exports. These impacts included reduced harvest quantity and quality as a result in changes in rainfall
timing, pest outbreaks and possible flooding. Exporters also expected export volumes to become more
volatile and unpredictable. Exporters were more concerned about coffee than cocoa production, as coffee
crops are highly sensitive to waterlogging.
A small number of producers in Cusco and San Martin perceived that exports could be both positively and
negatively affected by climate change, depending on specific local impacts. For example, increased rainfall
could favour cocoa production, depending on its timing.
Figure 17. Perceived impact of climate hazards over the past five years
Source: Authors’ elaboration based on survey
Climate change is perceived to exacerbate other challenges facing exporters
Exporters in Peru face a number of challenges. Among the primary concerns of exporters are price
volatility, market competition and product quality (Figure 18). Some exporters also identified infrastructure,
access to finance, certification requirements and labour shortages among their top barriers to trade.
While only 30% of respondents identified climate change among their top three export challenges, the
majority (19 out of 24) perceived it to be of equal or greater importance to the other main export barriers
they encountered. Climate change was perceived to negatively impact prices, competitiveness and product
quality, among other challenges.
36%
59%
5%
seriously affected
somewhat affected
not affected
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 37
Figure 18. Key trade challenges for coffee and cocoa exporters
Source: Authors’ elaboration based on survey
Price volatility was raised as a concern for exporters as a result of a decline in world prices in 2012 and
2013. Competition from exporters in South America, Central America and Africa was also believed to
create additional pressure on exporters in Peru. Several exporters were concerned about market
intermediaries who offer farmers higher prices during harvest, creating incentives for farmers to break their
contracts with cooperatives. Intermediaries offering on-the-spot sales also enable farmers to avoid
transport costs associated with delivery of harvest to the cooperative warehouse.
Product quality was of concern to exporters, particularly the decline in quality associated with the
outbreak of yellow rust. Poor quality also made it more difficult for some farmers to meet international
standards for trade, thereby reducing market returns. Climate variability, especially intense rainfall and high
temperatures, had caused early ripening of coffee beans and reduced quantity and quality of the product in
the past two seasons. Climate variability was perceived to have intensified pest and disease pressures.
Poor roads and prohibitively high transport costs were another challenge. Smallholders in isolated
rural areas have limited infrastructure and transport options. In particular, during the rainy season, roads
deteriorate and delivery can be delayed. Many exporters reported that post-harvest infrastructure was
inadequate and a cause of delays.
While exporters find it difficult to respond to price volatility, they have taken steps to improve
competitiveness and product quality. These include certifying products, providing technical assistance to
suppliers (for attaining certification, improving quality and implementing best practices), and investing in
plant dryers, mills and trucks to reduce transaction costs and crop losses. Some respondents also
emphasized the importance of insurance to manage risks.
Direct and indirect impacts3.2.
Exporters had mixed perceptions about which climate-related challenges had affected them in the past 5–
10 years. Around two-thirds of respondents said that changes in temperature, changes in seasonality as
well as rainfall variability had affected their exporters in terms of trade volume and/or value (Figure 19).
One-third said extreme weather events also had affected exports.
The responses were mixed between regions, though all exporters in Piura perceived changes in
seasonality (Table 9). Four respondents reported all four challenges (in Cusco, Piura and San Martin),
while three respondents perceived none of the challenges to date (in Cusco and San Martin). Almost 50%
29%
29%
33%
46%
71%
infrastructure
climate change
quality
market competition / competitiveness
price volatility
% of respondents
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
38 DMD.14-269.E
of exporters in Piura reported that extreme weather events had affected trade, compared to fewer than a
quarter in other regions.
The most notable impact in Junín and San Martin was temperature changes. The main impact In Cusco,
where rainfall has declined in recent years, was rainfall variability.
Figure 19. Perceived climate impacts in the past 5 to 10 years
Source: Authors’ elaboration based on survey
Table 9. Perceived climate impacts in the past 5 to 10 years
Region Changes in
seasonality Changes in
temperature Rainfall variability Extreme weather
events
% % % %
Cusco 63 63 75 25
Junin 50 75 50 25
Piura 100 67 67 50
San Martin 20 60 40 20
* Total sample size 24
Source: Authors’ elaboration based on survey
Exporters perceived the most notable consequences of these climate impacts to be reductions in
productivity and quality, the emergence of pests and diseases, and soil deterioration.
Productivity and quality: In general, exporters thought that
climate impacts had reduced productivity and lowered
product quality, leading to a drop in export revenue. The
timing of pollination, flowering and ripening has changed,
resulting in declines in quantity and quality as well as delays.
For instance, excessive rainfall caused coffee fruits to ripen
more quickly, resulting in lower quality harvest. Extreme hot
and cold periods have also led to crop failure, and in some cases killed plants, generating extra costs for
plant replacement. Heavy rainfall has caused waterlogging, reducing crop quality and quantity. In some
cases, road damage has resulted in delivery delays.
Pest and disease outbreaks: Both coffee and cocoa exporters thought that climate change had increased
outbreaks of pest and disease such as Monoliasis, Phytophtora, Queresa and Sahrbegella singularis, for
cocoa in Piura; and yellow rust for coffee nationwide. In Piura, exporters reported that up to 35% of
production in some areas had been affected. Some coffee production systems are less resilient than
others. This is especially acute in organic coffee production, where pesticides are not used and alternative
pest management systems are sometimes are lacking.
63% 67% 63%
33%
37% 33% 37%
67%
Change in
seasonality Variability in
temperature Variability in
precipitation Extreme weather
events
No
Yes
“Production will be lower until coffee plants
adapt to new climates…which takes a long
time” -Coffee exporter, Cusco
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
DMD.14-269.E 39
Soil fertility: Several exporters said that climate change
could lead to further declines in soil quality. Events such as
floods and landslides have reduced topsoil cover and the
level of organic matter.
Perceived future impacts: Exporters said climate change
would affect production and trade in the future. The most
commonly perceived impacts were on quantity and quality of
production. These changes could affect competitiveness and profitability. While some exporters believed
that new varieties would emerge with greater climate resilience, the adaptation lags could affect
customer relationships.
Agri-exporters’ resilience and adaptive capacity3.3.
Exporters’ resilience to climate change is linked closely with their capacity to adapt. Based on the
framework set out in chapter 2, exporters described their adaptive capacity in terms of six
factors (Smit et al., 2001): natural resources, financial resources, technology and informational resources,
infrastructure, institutional/policy environment, and human and social capital. Among the respondents who
had perceived climate impacts in the past 5-10 years (all but three), all believed their resilience had been
affected. For all respondents, natural resources was a concerning factor for adapting to climate
change (Figure 20).
Figure 20. Perceived impacts of climate change on adaptive capacity
Source: Authors’ elaboration based on survey
Natural resources
Exporters of agri-food products rely heavily on natural
resources such as soil, water, phosphorus and various
minerals. These resources are likely to be directly affected
by climate change, including variations in temperature, the
level and timing of rainfall, and increased intensity and
frequency of climatic events. These impacts vary among
agricultural products, regions and production systems.
Exporters surveyed in Peru expressed concern that natural resources would be affected by excessive
rains, causing landslides, topsoil losses and changed maturation periods. Changes in temperature have
already triggered pest and disease outbreaks, particularly yellow rust in coffee. For cocoa, production
0%
5%
19%
43%
48%
57%
100%
institutional and political context, framework
human resources
information
social capital
financial resources
infrastructure
natural resources
“The rust outbreak has already affected our
livelihoods…Climate change will definitely
have a strong affect because of the harm it
will do to crops.”
- Coffee export cooperative, Cusco
“Before, the coffee harvest season began in
March. Now it begins in May or June.”
- Coffee export cooperative, Cusco
CLIMATE CHANGE AND THE AGRI-FOOD TRADE
40 DMD.14-269.E
quality is at risk from higher temperatures, which affect fruit maturation. Respondents were also concerned
about potential deterioration in soil fertility, causing reduced yields and product quality.
Infrastructure
Peru has limited port infrastructure and poor road infrastructure. For example, only one in seven roads is
paved (World Bank, 2014). These infrastructure deficits are an impediment to trade. In addition, changes in
climate create challenging circumstances as flooding and associated road blockages are already common.
Exporters on the Pacific coast are likely to be more resilient as they have better access to ports and rely
less on inland road infrastructure.
Exporters viewed climate variability to have exacerbated
infrastructure challenges in the past 510 years. Deliveries
have been delayed because of collapsed bridges, obstructed
or deteriorated roads, and landslides. In addition, weather
events had disrupted power supplies and
telecommunications infrastructure, with consequences for
the entire value chain from suppliers to buyers. Some
exporters were concerned that climate change could also increase storage costs as a result of
higher humidity.
Financial resources
While Peru has a relatively strong economy, agricultural businesses still face difficulties accessing credit
and trading across borders. Limited financial resources prevent exporting SMEs from adapting effectively
to climate change.
Climate variability affects the ability of SMEs to meet loan repayments and the perceived risky nature of
agricultural production has made it difficult for agribusinesses to secure access to credit. Exporters are
concerned that access to credit will become even tougher in the future and that interest rates will rise.
Social and human capital
Both formal and informal skills, knowledge, and partnerships are relevant for SME resilience. In Peru, the
majority of coffee and cocoa is exported through cooperatives, which provide a mechanism for knowledge
sharing and reduced transaction costs.
Exporters believe that relationships between suppliers and buyers were imperative to enhance climate
resilience. Concerns were expressed that climate change could impact these relationships, particularly
when contracts could not be fulfilled. Financial and emotional stress as a result of climate variability over
the past 510 years has strained some supplier relationships. Producers have had difficulty meeting
agreed volumes, and lower quality has meant that their payments have been reduced. This has created
disincentives to work in the sector, particularly among young people.
Information resources
Peru is not well connected to information technology services compared with other countries. In 2010, only
3.14% of the population had a fixed broadband connection, compared to the Latin American average of
6.66% and the world average of 7.75%. It has 10 times fewer Internet servers per capita than the world
average. On the other hand, Peruvians are well connected by mobile services (World Bank, 2014).
Climate-specific data are scarce, however, and public information is limited. The lack of relevant
information combined with low connectivity could pose an obstacle to adaptation for agri-exporters.
Exporters perceived difficulties accessing information on trade and climate. In particular, there were
concerns about weather events causing power outages and telecommunications failures. For exporters,
there is a risk to communication with both suppliers and customers that could affect trade.
“When roads are interrupted, it delays the
delivery process and it is not possible to meet
orders on time. Carriers also raise their rates.”
- Coffee exporter, Piura
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DMD.14-269.E 41
Institutional and policy environment
Despite some ongoing social challenges, Peru has become a stable country with a reliable policy
environment. More specifically regarding climate-change policy, Peru has made progress in developing
strategic guidelines and action plans at the national, regional and sectoral levels. Areas for further
improvement include the need for more detailed and practical action plans for climate-change adaptation,
better coordination between institutions, and more human and financial resources for the implementation of
these plans (UNDP and BCPR, 2013).
Adaptation responses of exporters3.4.
Peru’s coffee and cocoa exporters have begun to take action. All but one of the exporters surveyed had
implemented at least one measure to adapt to climate change. These measures most commonly included
investments in new technology and infrastructure, as well as training and extension services for producers.
One cocoa exporter was adjusting stock levels to build resilience against production volatility.
Technology and Infrastructure
Exporter cooperatives and associations have worked with their members to introduce new technologies to
build climate resilience. These include mechanical dryers or fitotoldos (shade covers) to prevent crop
losses due to high rainfall during the drying process, a shift towards newer crop varieties, providing
mowers to remove weeds and prevent disease proliferation, and upgrading irrigation infrastructure. In
Cusco and Piura, exporters were supporting small irrigation projects and building channels in streams to
take advantage of intense rainfall periods.
Training and extension services
The main activity supported by exporters’ training is improved agricultural practices and raising farmers’
awareness of climatic changes and, in particular, climate risk areas such as riverbanks and steep slopes.
Most commonly, this training is focused on installing covers or vegetation to improve shade management
and using trees and hedges to prevent soil erosion caused by rainfall. Also, extension services included
training in pruning, fungicide application and changes in the timing of planting and harvest response, as
well as advice on suitable crop diversification (such as cocoa in lowland areas and bananas in highland
areas). One export cooperative was training its members in business management, including finance and
risk management.
Support needs identified by agri-exporters3.5.
At this stage, exporters surveyed were not undertaking substantial measures in relation to climate
adaptation. Their management strategies were targeted towards managing short-term issues rather than
building longer-term resilience. Some actions, such as improvements in agricultural practices and enabling
suppliers to meet certification standards, were expected to help build climate resilience, although they were
not specifically implemented for this purpose.
Only two exporters believed they had the capacity to respond appropriately to climate impacts in the future.
The majority remained concerned that they did not have ade