China and Peru strengthen trade cooperation! But the coffee industry will be affected by climate

Recently, China and Peru announced the signing of the Memorandum of understanding between the Ministry of Commerce of the people's Republic of China and the Ministry of Foreign Trade and Tourism of the Republic of Peru on the substantive completion of negotiations on the upgrading of the China-Peru Free Trade Agreement.

In the memorandum, the two sides confirmed that the two sides have substantially completed the negotiations on the upgrading of the China-Peru free trade agreement, will speed up the completion of legal review and domestic procedures, and strive to sign the upgrading protocol as soon as possible. It is believed that this will help to tap the potential of trade and investment between the two countries.

Moreover, recently, Peruvian President Boruarte is also on a five-day state visit to China, and the Peruvian President of "investing in Peru" held in Shanghai also invited powerful Chinese enterprises across the Pacific Ocean to invest in Peru. He also believes that the investment of Chinese enterprises will help Peru enhance the country's productivity and competitiveness, and better integrate into the global value chain, which is beneficial to the Peruvian people and more conducive to bilateral trade.

For the Peruvian coffee industry, China's coffee consumption is growing, and China and Peru can increase trade, which will help to increase Peruvian coffee exports and enhance the international influence of Peruvian coffee.

It is understood that Peru has also been developing in recent years, with exports worth 16.384 billion US dollars in the first quarter of 2024, an increase of 150 million US dollars over the same period in 2023. This increase is due to the increase in mining production. At the same time, the rising prices of some domestic export commodities such as coffee, fruit and gold promoted the growth of exports, of which coffee grew by 69 per cent.

In addition, the Qiankai Port project, which has been invested by Chinese companies in Peru, which also includes container terminals and related infrastructure, will be completed and opened in November.

According to Peru's minister of foreign trade and tourism, the terminal will export 25% of Peru's total agricultural exports, helping to reduce transport costs for various types of goods and enhance the competitiveness of Peruvian products. In addition, because of its geographical location and freight capacity, the port of Chankai will become "an important gateway from South America to Asia", through which neighboring countries such as Brazil can carry out international transportation. As the shipping time of the port to Asia will be shortened by 12 days.

In addition, an earlier coffee industry report pointed out that during fiscal year 24 of 2023, Peru was affected by the El Ni ñ o phenomenon, which led to a rise in local temperatures, insufficient rainfall, and the continued occurrence of coffee leaf rust, affecting the growth of coffee plants. However, in the following quarters, Peru began to shake off the control of El Ni ñ o, coffee production began to recover, and coffee production is expected to return to 4.22 million bags (69 kg / bag) by the marketing year 2024.

Although it seems that the Peruvian coffee industry has a great opportunity for development, it is also about to face a climate crisis. According to the Peruvian National Meteorological and Hydrological Service (Senamhi), Peru will enter winter in July, but the temperature in the coastal areas will be lower than normal this winter due to unusually cold sea conditions.

But in Peru, coffee producing areas are basically located in the country's Andes, and close to the coast, and coffee is grown in areas 1000-1800 meters above sea level, high-altitude mountains will be hit by colder weather.

Moreover, the La Nina phenomenon is more likely to return in the second half of the year, which may aggravate the impact of cold weather, and the temperature will continue to fall below the historical average and remain until September. However, during the Peruvian coffee harvest season from May to September, the cold weather will affect the harvest progress, and local conditions are fragile, and low temperature weather will be a worrying problem.

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