BIO announces first direct SME investment in Peru

An USD 1.5 million loan to Fundo Fangelica, an asparagus farm.
BIO has committed USD 1.5 million to set up Fundo Fangelica (FF), a green asparagus production farm in the desert of Peru at Pisco Valley, 200 km south of Lima, producing both organic and conventional asparagus for the export market. This is BIO’s first direct SME investment in Peru, a partner country of the Belgian Development Cooperation. The project is expected to achieve a considerable impact on the local community in terms of job creation, know-how transfer and social conditions.

FF is an extension project of an existing production company and aims to meet the increasing demand by consumers in developed countries for year round fresh asparagus. It will complement the first location in terms of extension of the supply period of asparagus), better utilisation of the packing plant, economies of scale and risk reduction due to geographical diversification.
Asparagus is the leading export crop in Peru. Peru exports 99% of its production (fresh, canned, and frozen) and ranks as second largest producer (250,000 T, of which 83% green asparagus) behind China. In the past five years, green asparagus have gained popularity to the point where most off season fresh asparagus are of green varieties. This situation has favoured imports from Peru.

Today Peruvian asparagus growers use surface irrigation which must be periodically halted to break life cycle of the gall midge, a harmful insect that uses surface water for breeding & survival. This periodic water deficiency comes at the expense of the plant yield. In the case of Fundo Fangelica, the introduction of a new irrigation technology called SDI (Subsurface Drip Irrigation) will achieve, next to the increase in yield, a reduction in water consumption by 25%, and decrease expenditure on pesticides and insecticides by 25%.
Local banks are reluctant to finance start-up SMEs in Peru and to provide long term loans in general. The global financial crisis has worsened this situation. With the provision of an USD 1.5 million loan to FF, BIO will make the resources available to set up the business (in particular irrigation equipment and land investments). The project is expected to create around 120 jobs and will bring along a technology & know-how transfer (SDI irrigation & organic asparagus production). The salaries will be above the minimum wages and at least 50% of employees will be women.

BIO has already made two investments in Peru in microfinance institutions (Edyficar and Confianza). BIO is also indirectly supporting SMEs through the financing of investment funds.
“This first direct SME investment in Peru reasserts our commitment to Latin America. Our goal is to provide long-term finance to companies who lack the necessary resources to expand their business but have a strong potential and can contribute to a sustainable economic growth within their local community or region”, says Hugo Bosmans, CEO of BIO.