SLUG: 5-47481 Peru Coke Pt. 2 DATE: NOTE NUMBER:










INTRO: Rising prices in Peru for coca leaves, which are used to produce cocaine, may threaten U-S backed efforts to persuade peasant farmers to grow legal crops, instead of coca. The United States is spending 200-million dollars in the multi-year effort, but progress is slow. Correspondent Bill Rodgers has more in this second of two reports on the impact of rising coca leaf prices in Peru.

TEXT: Both U-S and Peruvian experts acknowledge coca leaf prices are rising in Peru's eastern Amazon jungle area.

Some believe the price hikes are a result of the coming crackdown against cocaine and coca cultivation in neighboring Colombia under the U-S backed Plan Colombia. They say drug traffickers are moving back into Peru and paying higher prices for coca leaf in anticipation of coming shortages.

Whatever the reason, those involved in the U-S backed programs to wean Peruvian farmers from growing coca are concerned about the impact these higher prices will have on these efforts. According to U-S estimates, the amount of land in Peru devoted to coca cultivation has declined by 66-percent since 1995. Some of this land is now planted with legitimate crops such as coffee, cacao, and tropical fruits.

An American company, Winrock International, is under contract with the U-S Agency for International Development to promote these alternative crops. But Executive director Alejandro Rodriguez warns these efforts may be in jeopardy if coca leaf prices continue to rise.


In terms of effective results, this is a process. Always, the price of coca plays an important role in reducing the land used for cultivating coca. The reduction of land used for growing coca since 1996 was positive because coca prices fell. Until May of this year, prices were low, but since October they have almost doubled and I think this is because of expectations surrounding Plan Colombia. We have been told by our field workers that these higher prices are motivating farmers to begin growing coca again and this could put the whole alternative crop program in jeopardy.

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The head of U-S-A-I-D's alternative crop program, Michael Maxey, is less pessimistic saying he sees no evidence yet that Peruvian farmers are switching back to growing coca. But he acknowledges coca leaf prices are rising at the same time that prices for coffee and cacao have dropped substantially on international markets. Both are the major alternative cash crops in major coca growing areas of eastern Peru.

U-S-A-I-D has spent 81-million dollars promoting alternative crops since 1985, that is out of 200-million dollars budgeted through the year 2003. Mr. Maxey says 17-thousand farmers are involved in the projects, in a growing area of about 27-thousand hectares.

But introducing viable cash crops has not been easy. A Canadian priest who lives in Aucayaco in Peru's Upper Huallaga Valley says he has seen little improvement in his area. Father Joe Devlin tells V-O-A that farmers feel they have little choice but to continue growing coca.

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They have done the infrastructure like the roads and schools, but they have not done anything that has been successful. Nothing that will give the farmers a living. Some things have been produced, but there is no market for it...the area is great for producing papaya, but if the farmers do not have a market for it, and the price is unstable, they can not survive on it.

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Getting legitimate products out to a wider market remains a major stumbling block for promoting alternative crops. To help address this, U-S-A-I-D has sponsored projects to improve the infrastructure in eastern Peru. Program head Michael Maxey says almost one-thousand kilometers of rural roads have been restored and 30-bridges have been built during the past three-years.

But some experts say the problem goes beyond simply improving infrastructure. Roger Rumrrill, a Peruvian Congressional advisor on drugs and the Amazon region, says what is needed are international trade agreements to promote exports of tropical agricultural products from Peru and other developing nations.


One possible solution is to negotiate agreements to establish prices and markets agreements with the World Trade Organization, for example, that would establish preferential prices for alternative crops. This is what is needed negotiations at the government-to-government level and with the W-T-O so that a niche can be provided on the world market for these alternative products. So there are solutions, what is lacking is the political will.

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In the meantime, coca leaf prices continue to rise in eastern Peru reaching levels not seen for several years. It is not yet clear if these higher prices will continue over the long-term, and if they do, whether farmers will once again turn to growing coca as the main source of their income.

What is clear, according to experts in the area, is that higher coca prices present a major challenge to the viability of the alternative crop program in Peru. (SIGNED)