Peruvian Economy II: Agrarian Reform

The Agrarian Reform was enacted by President Juan Velasco Alvarado in 1969, aiming to redistribute land from large estate owners (haciendas) to rural, often indigenous, populations. This radical reform sought to dismantle long-standing feudal structures and empower rural communities with land.
The government used agrarian bonds to compensate landowners for expropriated land, offering payments spread over 20-30 years with 4-6% interest.
The reform's radical nature is evident in the expropriation of 71% of irrigated land, 92% of dryland crops, and 57% of natural pastures. However, only a quarter of rural families (approximately 370,000 families) benefited directly, with many cooperatives failing due to mismanagement and lack of resources.

Before the reform, haciendas were vast estates inherited from the colonial era, with indigenous peoples working as low-paid or unpaid laborers.
The 1920 Constitution and 1936 Civil Code had already granted legal recognition to indigenous communities, but land ownership was still concentrated in the hands of a few.
By 2000, over 5,660 indigenous communities were recognized, though they continued to face difficulties in securing and retaining land.

1962: Under the government of Ricardo Pérez Godoy, the Agrarian Reform Law D.L. N° 14328 was introduced, but its implementation lacked follow-through.
1963: The government of Nicolás Lindley passed the Decreto Ley No 14444, creating the Institute of Agrarian Reform and Colonization (IRAC) and starting reform efforts in areas like La Convención and Lares Valley (Cuzco).
1964: Fernando Belaúnde Terry's administration introduced a more limited agrarian reform law (Ley de Reforma Agraria N° 15037), which faced significant opposition from APRA and Unión Nacional Odriista, thus reducing its effectiveness.
Peasant mobilizations and protests, particularly from the Confederación Campesina del Perú (CCP), pushed for deeper land redistribution and reform.

Velasco's reform was one of the most radical in South America, with 10.5 million hectares (56% of Peru's agricultural land) expropriated and redistributed to approximately 370,000 families.
Cooperatives and associative enterprises were formed to manage the expropriated land. However, these efforts were marred by mismanagement, lack of technical and managerial expertise, and economic crises that began in 1975, which led to the eventual collapse of most cooperatives.
The lack of effective training for cooperative management and the absence of technical support were major factors in the failure of the cooperative model. Many cooperatives were parcelized and distributed into small family units.
Agricultural productivity suffered, with 18% declines in output across the 13 main crops from 1971 to 1980, while productivity in other Latin American countries grew significantly during the same period.
Studies from the Instituto Nacional de Estadística e Informática (INEI) and other sources indicated that rural well-being declined under the reform, exacerbating food insecurity and malnutrition. For example, the basic food basket that took 27 hours of labor to afford in 1971 required 89 hours by 1985.

Cooperativization led to the creation of approximately 1,200 cooperatives, but these were often plagued by poor management, a lack of technical personnel, and internal conflicts. The cooperatives became unviable as they lacked the necessary business expertise to function effectively.
Many cooperatives were dismantled by their own members, who parcelized the land into family units. This was driven by the fact that workers were both owners and laborers, creating tensions between the two roles.
The failure of the cooperatives was compounded by an acute economic crisis from 1975 onwards, making it even harder to sustain agrarian reforms. Many cooperatives also faced external pressures, including from oppositional campesino movements.

While the reform aimed to empower rural populations and reduce the power of landowners (gamonales), many of the benefits did not reach the broader population.
A significant portion of the rural population remained in poverty. Despite the redistribution of land, poverty remained widespread: 72.5% of rural Peruvians were still poor, and 40.3% were living in extreme poverty.
The reform did not significantly improve rural infrastructure, agricultural technology, or productivity, and the broader economic model of land redistribution was inconsistent. The reform itself was often seen as contradictory, as it subsidized food imports while simultaneously redistributing land.

After Velasco's ouster in 1975, the Morales Bermúdez regime continued with a limited form of the agrarian reform. However, by 1980, the agrarian reform era was largely over.
The transition back to constitutional democracy under Fernando Belaúnde Terry saw the return of land to private ownership and the dissolution of most cooperatives.
While some areas benefitted from economic liberalization, the legacy of the agrarian reform remains mixed, with rural areas still struggling with low agricultural productivity and poor standards of living.

By the 1990s, Peru’s agricultural sector shifted focus, largely due to economic liberalization, improved irrigation projects, and the opening of global markets.
Agroexports skyrocketed, with Peru becoming a top producer of blueberries, avocados, grapes, quinoa, and asparagus, generating nearly $7.5 billion in exports by 2020.
Despite these advances, agricultural productivity in Peru remains low compared to regional peers like Chile and Brazil.
Regional disparities persist, with Ica's productivity being 14 times higher than Huancavelica's.

Critics of the agrarian reform point out that while the reform redistributed land, it did not address deeper structural issues in the agricultural sector:
- Loss of capital and infrastructure in rural areas, including machinery and technical knowledge.
- Technological decline: Agricultural production fell due to lack of technical and managerial expertise.
- The continued poverty of rural areas: Despite land redistribution, the reform did not address the underlying economic inequalities.
- The inconsistencies in the economic model, which subsidized food imports while promoting land redistribution.
Supporters argue that the reform was a redistributive justice measure, disempowering the old landowning elites, and giving rural peasants a greater say in their social and economic destinies.
The long-term success of the reform is still debated, with its lasting impact on rural Peru being a subject of controversy to this day.

Sources

Instituto de Estudios Peruanos (IEP): "Medio Siglo de Reforma Agraria en el Perú" (IEP Report)
Wikipedia: "Reforma Agraria Peruana de 1969" (Wikipedia Article)
Instituto Nacional de Estadística e Informática (INEI): Data on agricultural productivity and rural well-being.
Infobae: "La reforma agraria: causas y consecuencias de la polémica medida que todavía se pueden ver en estos días" ([Infobae Article](https://www.infobae.com/peru/2024/07
Photo: https://buenazo.pe/notas/2021/02/17/maiz-blanco-urubamba-joya-ancestral-293

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