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Abstract
We analyze to what extent engagement with fresh produce global value chains (FP-GVC) may contribute to a country overcoming the middle-income trap (MIT). We propose a conceptual framework for analyzing the FP-GVC-MIT nexus and apply it to Peru, which has become a global powerhouse in FP exports. The framework connects GVC and MIT analysis, two areas generally discussed in separate literatures. It highlights the role of global and product-specific factors, which are a given for any country, and country-specific factors, which may change as a result of government interventions and political economy considerations. We show that FP-GVC participation can only make a limited contribution to overcoming the MIT due to conflicts between production expansion and water availability and inclusion, as well as limited sector-transcendent impacts. While global and product-specific factors circumscribe the possibilities of a FP-GVC-MIT nexus everywhere, government policies can expand the boundaries in some areas. We conclude that an escape from the MIT warrants active industrial policies for a multi-pronged strategy, where FP-GVC participation can be but one element.
Acknowledgments
We thank an anonymous referee for their very helpful suggestions and Favio Leiva and Valeria Vergaray for excellent research assistance.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 Global GAP, BRC Food, and IFS Food are examples of certifications regarding food safety, and SMETA, GRASP, Rainforest Alliance, ISO 14001:2015 are major certifications for social responsibility, ethics, and sustainability.
2 A general breakdown of the consumer price for grapes in European markets, for example, shows that the exporter/packer captures 32 per cent, the importer 8 per cent (plus handling costs), logistics/freight account for 10 per cent; and retail (including marketing, distribution, losses and VAT) receives 50 per cent (Centre for the Promotion of Imports from Developing Countries [CBI], Citation2023).
3 We use the term ‘industrial policies’ for any government policies, which aim to foster higher value production, whether in the manufacturing sector or other sectors like high value fresh products.
4 Maertens et al. (Citation2012), for example, find that the wages of workers in the Senegalese export sector are more than 50 per cent above the regional average, and that the gender gap in export industries is three to six times lower than in other sectors
5 INEI and World Development Indicators, online.
6 Authors’ calculations based on ADEX trade data.
7 For agro exporters as a whole, in 2017, 51 per cent were multi-product exporters accounting for 82.7 per cent of agro export value. 52.6 per cent of all agro exporters exported to multiple destinations, accounting for 95.4 per cent of total agro export value (Martínez & Puch, Citation2019, pp. 22–23)
8 The extensive presence of trans-Latin American companies is not unique to Peru, but has been a key characteristic of capital accumulation in the agricultural sector in Latin America in recent decades (Borras, Franco, Gómez, Kay, & Spoor, Citation2012).
9 Authors’ calculations based on data from the Ministerio de Desarrollo Agrario y Riego.
10 Authors’ calculations based on BCRP (2021) and the World Bank’s World Development Indicators.
11 In 2016, labour productivity (measured as 1000s of soles per worker) was 10.3 in agriculture, compared to 35.7 for the economy as a whole, and, during 2008–2016, agriculture contributed only between 0.2 and 0.1 percentage points to economy-wide productivity growth (Nolazco et al., Citation2019).
12 Coastal lands have 1.8 per cent of the country’s endowment of water resources, yet they nearly have of all the irrigated land (World Bank, Citation2017, p. 124).
14 For examples at the national level see https://freshfruit.pe/2021/03/14/la-palta-con-precios-mas-bajos/, https://agraria.pe/noticias/malos-precios-de-la-palta-hass-peruana-en-Citation2022-generarian-qu-30421, https://www.simfruit.cl/temporada-2021-Citation2022-envios-de-arandanos-peruanos-crecen-7-en-volumen-y-bajan-3-en-valor/. Between 2010 and 2021, the number of countries exporting more than $1million rose from 21 to 41 for avocados, 20–39 for blueberries, and 50 to 72 for grapes (authors’ calculations based on ITC Trade Map).
15 Authors’ calculations based on ADEX database.
16 In a study of avocado GVCs in Tanzania, Thomas and Makundi (Citation2020) also find inclusion of small farmers, which they attribute to the collaboration of a key exporter with horticulture researchers at a regional university to build smallholder capacity.
17 Authors’ calculations based on Ministerio de Trabajo y Promoción del Empleo (MPTE), Citation2022, Plantilla Electrónica. The figure does not include higher skilled workers like agronomists; operators and machinists who likely work under different terms.
18 According to household surveys, in 2019, unskilled workers, and farmers and skilled workers accounted for the vast majority of the 4.96 million workers in agriculture: 52.2 and 31 per cent, respectively (INEI, Citation2021).