Peru Ica Valley Promotes Connected, Digital Agribusiness

The region concentrates 15.2% of the nation’s agricultural exports through a 500-km logistics corridor that connects different farming areas in the department with the Callao port and airport. More than 80% of the business structure is composed of small and medium-sized enterprises in the agricultural and logistics sectors. Still, this region faces significant challenges to improve water management and land use, reduce transport times and product losses in storage and cargo, as well as to optimize harvesting processes, but especially to optimize integrated value chain management.

Despite its economic relevance, digitization of the agricultural export chain is considered to be relatively low. Only 9% of agricultural companies use the internet to distribute products online, while the percentage of businesses in this sector in European Union countries is 13%. In the case of the logistics and transport sector, indicators are even more critical. In general, companies show a low level of adoption of B2B platforms, and use of new services such as the Internet of Things, cloud storage services, Artificial Intelligence or Big Data is still incipient. Can digital infrastructure and new technologies boost productivity of the production and export chain in the Ica Valley?   

At CAF—development bank of Latin America—, we have been leading, together with ECLAC, ASIET, the Ibero-American Council for Competitiveness and Productivity, and with the support of Telefónica, a regional initiative to develop the Industrial Internet in Latin America and the Caribbean to enhance digitization of economic sectors. In the first phase, under the leadership of Peru’s Ministry of Production, we aim to boost productivity of the Ica Valley agro-industrial cluster and its logistics corridor, promoting the adoption and use of digital technologies across all links in the value chain.

With proper digital development, there are countless opportunities to integrate logistics and agricultural SMEs into the value chain of large exporting companies. Innovation and digitization of the production apparatus would help boost productivity not only in the Ica region, but across Latin American economies

Against this backdrop, there is a need to integrate SMEs into the digital industry, and thus facilitate their integration into increasingly global and digitized value chains and curb the widening in productivity gaps. This will be a critical success factor in the development of Industry 4.0 in Latin America, if we want to improve the efficiency boundaries of businesses, enable production chains and new opportunities for these companies to join global value chains.

If productivity and competitiveness of agribusiness in the Ica Valley depend on efficiency in water resource management, soil management and optimization of logistics processes, then process integration platforms between carriers, customs, port systems and collection centers, as well as information management and verification systems using technologies such as blockchain will be vital. Digital infrastructures and technologies that enable Industry 4.0 (e.g. IoT, cloud, big data, analytics, M2M, blockchain) play a critical role in facilitating a true transformation of the entire agricultural export chain.

Throughout the development of this initiative, the nation’s public authorities and companies in the value chain will address different initiatives around critical factors such as digital infrastructure, financing, policy and technology transfer, industry 4.0, hubs and accelerators for startups, networking, promoting development of clusters and technology centers, education and training, policies for SME integration in value chains, regulations and crowdfunding, among others.

The ultimate goal is to encourage companies to use digital technologies that enable data collection and processing, and thus, flexible and efficient monitoring of production. The required changes are not exclusively technological, but also organizational, changes in business models and operational processes of companies.

In conclusion, digital transformation in Latin American countries requires promotion of digitization of the production apparatus, especially with the advent of the fourth industrial revolution, and the necessary improvement in productivity of small and medium-sized enterprises. To this end, CAF’s Digital Agenda supports the development of strategies that promote availability of new technologies that will revolutionize quality of life of the people, jobs, forms of production and relationship between governments.