What is the background of Grupo Rocio?
The company was founded in 1967 as a poultry business, a small 2,000-chicken operation in the Northern Peruvian desert. It was a chicken company until 1990 when the constitution was changed to allow investors to own private property on agricultural land. We went to Israel to learn drip irrigation technology and brought it to Peru, where were had been told it was impossible to do agriculture in the desert. This technology along with the tons of chicken manure from our poultry operation enabled agriculture to flourish in the desert. From a four metric ton per year average, we jumped up to 30 metric tons per year with this new technology. We were focused on asparagus until 2005 when we decided to diversify into avocado by bringing technology from Chile and California and adapting it to local conditions. In 2005, we also started raising dairy cattle, and are now the biggest producer of milk in the country. Three years ago we also started cultivating blueberries, and we have become competitive with this crop because we can ship it by boat in 45 days without affecting the quality of the product.
Last year, exports of blueberries reached $28 million, a 60% increase from 2013, and Peru is on course to export 17,000 tons of blueberries by 2020. How do you evaluate the potential of this segment?
Northern highbushes, the traditional varieties, have been present for 100 years. Southern highbushes are fairly new in the blueberry world, so we are just seeing the first stage of improving evergreen varieties. Northern highbushes have historically been regarded as having better taste, while the commodity variety Biloxi has worked very well in Peru in terms of production cost, though the taste is good but not great. Now new breeders are cultivating varieties with a better taste, a bigger size, and a better quality. Usually a big berry is related to poor quality, which is not true anymore and the new varieties are big, hard, and sweet; and the bigger the berry, the higher the yield. Another factor is that production in Peru does not depend on the climate and we can produce 365 days a year by deciding the pruning time of the bush. We can custom program a plan for every hectare and every retailer, depending on the variety that they want. We can be very predictable in terms of the volume that we can offer and this is very important for the retailers.
What markets do you mostly distribute your product to, and where is the biggest potential?
The US market is our most important market and accounts for about 65% of exports. The remaining goes to Europe and the UK, which we separate, as they are different markets in terms of volume and quality. Asia is also going to play a very important role in the future. People there are just discovering blueberries, not only in terms of consumption, but also as investors. The computer manufacturer Lenovo has made a major investment in China to grow 1,000 ha of blueberries and to build the country's blueberry distribution channels.
How will you capitalize on the recently established FTA between China and Peru?
The FTA has been signed but we do not have a sanitary protocol and regulation to export in place yet. We are discussing this issue with the authorities in Peru. There are many import sources that China is considering, but they only allow negotiations of one product per year per country, and blueberries are currently being negotiated. We expect that the market will be opened by the second half of next year or early 2017. It is still unclear what role China will play in our exports, but it could easily reach at least 30% of the market—as big as Europe, or possibly as large as the US in 10 years.
How much are you investing in R&D?
We have to conduct a significant amount of research on how to adapt market needs to niche products; every company in Peru that is focused on agro exports has to. Blueberries have evolved into a viable commodity, but they started as an R&D project, as did avocados, mangos, grapes, and pomegranates. The industry has learned and matured over time and what was a spontaneous investment in R&D has become a structured and budgeted part of our economy. An ideal scenario is for one or two out of 10 R&D products to become successful products over a five-year research period. The goal is not to follow the market but to be ahead of it, to innovate and try things that have not been done before. We have challenged the industry by bringing blueberries to the desert and we are doing the same with new commodities like peaches and nectarines—stone fruits that were traditionally developed by high latitude countries. Part of our R&D efforts are not only toward planting things in the ground to see how they work, but also having a scouting division. These are people who travel around the world, scouting for new products and genetics to see if something can work here for specific markets, which is how we found peaches. As with berries, we now are adapting and developing technologies to cultivate stone fruits and we already have the first peach and nectarine plants in Peru. We are also pursuing a low-chill cherry variety. R&D is driving Peruvian agriculture right now.
What are your main projects and ambitions for 2016?
We are working on four different projects, but they are not going to be ready for 2016 or even 2017. We will continue to grow our current divisions in terms of hectares so nothing new will be coming to the market for the next two years. Our target is that in three to four years we will have two or three successful new products.