On Wednesday 4 June a new agrarian law that will provide tax breaks to agricultural corporations, intended to boost agricultural exports, narrowly passed its first reading in the Peruvian Parliament. The proposed law, which now awaits a second reading, has, however, met with widespread criticism from farmers’ organisations and trade unions active in the sector.
The Peruvian National Agricultural Convention (Conveagro), as well as various agricultural and rural organizations such as the National Association of Organic Producers of Peru (Anpe Peru), the National Confederation of Workers of Peru (CGTP), the National Central Union of Peasant Patrols of Peru (Cunarc), the Confederation of Peasants of Peru (CCP), the National Agrarian Confederation (CNA), the National Board of Water User Organizations of Peru, and the National Federation of Workers in the Agrarian Industrial Sector (Fentrair), among others, have expressed their rejection of the proposed reforms.
They insist that the new law unfairly allows large exporters to access tax benefits designed for low-income sectors, which violates the principle of tax equality, widens the competitiveness gap in the agricultural sector, and prioritizes tax privileges over revenue collection.
Agricultural unions argue that this law perpetuates inequality with disproportionate tax incentives and undermines the sustainability of thousands of family producers. The National Federation of Agroindustry Workers (Fentagro), for example, stating that “We will not allow the exploitation or the plundering of the country’s resources to further intensify, at the expense of the majority of the population and for the benefit of a select few.”
The union saying that “this measure disproportionately favours large agro-exporting groups, especially the ten largest, which account for more than 60% of export value, while excluding family farming from effective access to benefits, public investment, or proportional tax relief.”
They also warned that, if passed, the new law would provoke rejection and social unrest among the millions of small-scale family farmers who represent 97% of Peru’s agricultural structure, which would exacerbate the country’s overall governance crisis.
The new law, coming after twenty years of an existing “unjustified set of tax privileges and an exploitative and discriminatory labour regime”, which according to the Peruvian Economic & Finance Ministry has seen profits increased by 74 % in 2024. The total value of exports by the Peruvian horticulture sector, which has quadrupled in just over a decade, now exceeds the total export value of the global banana trade, at over $12 billion.
That the new legislation also wipes over half a billion dollars off the government’s tax income, has drawn criticism even from the International Monetary Fund.
In the video below (in Spanish), Laureano del Castillo, executive director of The Peruvian Center for Social Studies (CEPES), reviews the history and evolution of agricultural legislation in the country, highlighting how the new law heralds the productive, competitive, and sustainable transformation of the agricultural sector. However, will it truly be effective? Who will benefit? Will it be the agricultural export sector, which has received tax benefits for almost twenty years, which have been maintained and expanded?
Wages and working conditions
Meanwhile, for the over half a million workers employed by producing companies like Camposol, ACP, Beta, Danper, Drokasa, Viru and TALSA, wages are typically well below living wage levels and working conditions are poor. The hostility towards trade unions in the sector can be extreme, meaning that the general levels of freedom of association do not exist in practice in the vast majority of workplaces.
Banana Link’s partner in Peru, which also has member union committees in some of the banana exporting organisations in Piura, is FENTRAIR, the National Federation of Agrricultural, Irrigation & Allied Workers, which estimates that less than 1 % of the women and men working in the sector are organised. Outside the biggest company in the sector, Camposol, collective bargaining is almost non-existent. In companies where trade unions had managed to organise, they have been dismantled by company managements. Only in one or two cases have workers managed to recover from such organised opposition.
Risks for Human Rights Due Diligence
Retailers in Europe and elsewhere have become increasingly dependent on supplies from Peru, but all too few of them have so far shown a willingness to recognise the very real risks for the people working to produce the fresh produce which they are importing in greater and greater quantities.
That Peru has in place a National Action Plan for Corporate Due Diligence, which is being implemented by the Human Rights Directorate of the Justice Ministry, is just one lever which buyers, aware of the risks, could use to support tangible progress on social dialogue over the range of issues that face workers.
If any buyers reading this are interested in knowing more, be they at trader or at retail level, then they can contact Banana Link.
Sources: agraria.pe, rpp.pe, elcomercio.pe, elperuano.pe, cepes.org.pe
Photo: agraria.pe
