You would think it might rain from the gray morning skies in northern Peru but in all likelihood it won’t. The clouds will give way to a scorching sun that glares down on threadbare pebbly plains of shrubs, the dirt that wafts in the air, the hoods of motorbike-taxis and a scattering of houses in construction. Locals are not used to having much water in Olmos, but their region now has a complex system of dams, canals and pipes channeling Amazonian water to smallholder farms and swathes of unused land. If successful, this network could expand and pave the way for similar developments across the country.
“I think it’s very necessary,” says Maria, an elderly woman on the plane, when asked about the changes Brazilian company Odebrecht has brought through the Olmos Irrigation Project.
Her children had left the rural area to find better opportunities in Lima and Buenos Aires, but she believes the project will now breathe new life into the regional economy and its young population.
“The amount of water had been in decline for a long time.”
With US$350 million spent on the project works with a tunnel through the Andes and a further US$280 million invested in the agricultural element, the name Odebrecht resonates with most people in the nearby city of Chiclayo, where airport officials are on a first-name basis with company representatives.
This comes as no surprise considering the initiative’s implications, activating 38,500 hectares of new agricultural land that is expected to trigger 40,000 direct jobs, complemented by 5,500 hectares for local Olmos smallholder growers.
“The Olmos riverbed was dry and the population had not been accustomed to having water there, but today thanks to this project that transfers water from the Huancabamba River by crossing the mountains through the Transandino tunnel, this natural riverbed is flowing,” says Odebrecht Infrastructure commercial sales manager Juan Carlos Urteaga, adding the project draws on around 45% of the Huancamba’s water resource.
“We are in charge of the irrigation system but for those smallholder growers the regional government is seeing how to make the minor investments to provide water to each grower.”
The diverted water is first stored in the 44-cubic hectometer Limon Dam before passing through the 20km tunnel, where it then flows through a ravine to reach the Olmos River. From there it passes through a series of reservoirs and catchments with filtration systems to ensure the water is of high quality for farming.
“The Palo Verde reservoir has a capacity of one million cubic meters as a regulating storage area, and this is where the two pipelines start to deliver water to each of the 51 lots of new land,” says commercial services representative Jose Manuel Lecaros.
“In the glass-reinforced pipes (GRP) the diameter reduces as you go down the line delivering water, so as to not lose pressure. It starts with a diameter of 2.3 meters and finishes with 60cm – we are talking about close to 45km of pipes installed.”
Of the total amount initially offered only 5,250 hectares remain on sale, across six individual lots of which one covers 250 hectares at a price of US$8,500 per hectare, and five 1,000-hectare lots selling for US$7,500 per hectare.
In addition to a wide range of local fruit and vegetable producers including Complejo Agroindustrial Beta, Danper and AQP, international investors have also come on board such as Denmark’s Ingleby Farms, while Grupo Arato has planted avocados that will be ready for harvest by 2016 to supply U.S. multinational Mission Produce.
Urteaga added that Grupo Gloria had the largest amount of land on the project, growing sugarcane for processing in a plantation that would help reduce Peru’s reliance on sugar imports.
Another company that has come on board is U.S. entity AgroVision, through its Peruvian subsidiary.
“As a group the company already has production in the area outside of the project, and we saw it as a good opportunity to get involved in the Olmos project,” says farm manager Renato Nagaro.
“We have the issue of delivering water which is essential, and adding to the infrastructure that comes with this like roads and energy, this complements an ideal situation for developing an agricultural business with good climate and favorable soils.
“In other words we could say this is an ‘agricultural condominium’ – all the services are at hand and guaranteed, which doesn’t happen in other areas where you have to build wells or the water available is limited and access to energy is sometimes complicated when you consider the investment of bringing it to the fields.”
The company just recently started planting grapes, and has licensed a few patented U.S. blueberry varieties for a trial on 30 hectares of land.
“What is certain is that the grapes are already planted and there is not much more analysis needed; it’s simply about adjusting the final area and choosing the varieties,” he says, adding the first crop will be ready for harvest in 13 months.
“We also have a small lot for blueberries to see how the crop goes in the zone, and if it’s positive we’ll develop more in that area; Other trials in the area are on two or three hectares each, but we have 30.
“The crops to develop here for the medium to long-term are permanent crops, and in the interim we’ll do rotation crops like quinoa, cotton and peppers.”
He says target markets include the U.S., Europe, Asia and Russia.
Like most companies involved in the project, Nagaro’s crop will be exported from the port of Paita 200km away, while Lecaros adds northwestern Brazil may be an option for market development once the Yurimaguas port is developed in the Amazon.
The big challenge now will be access to labor, but as part of the initiative the government has been tasked with developing an adjacent town to house workers.
“I think it will be interesting with some complicated moments. We have formed an association of property holders so that in a way we can coordinate and establish certain meetings, but the competition for labor will be significant,” says Nagaro.
“At the level of the association, we have had meetings with the Ministry of Agriculture and the Ministry of Work. There has been a lot of conversation and relations with the government.
“They have to support the issue as private companies can’t do it alone. It’s also planned that there’ll be the creation of a new city that should alleviate the labor force demand in the area.”
Can Olmos set a standard for the rest of Peru?
While Urteaga and Lecaros are focused on selling the remaining land to agricultural users, the long-term vision is much grander.
“It is planned to expand this project to 110,000 hectares which is part of the concession. For that we’d have to build new irrigation channels for the following lands, in the next stage of Olmos,” says Urteaga.
“It would use the same Limon Dam, but what has to be built is a new irrigation system with more independent channels and for that you have to transfer from other rivers using the Limon Dam.
“This will depend on time and the success of this project. Our interest is not just on selling land but we’ll stay as concessionary for 23 years, accompanying our users and being in charge of the infrastructure for maintenance and operation.”
If Olmos proves successful, he says Odebrecht hopes to replicate the project in other parts of Peru, whether it be in Ica, Areqipa or elsewhere.
Stay tuned for an update with the views of a Chilean farmer who started growing grapes and established a packhouse in Olmos prior to the project’s completion.