Industry Insight: How Land Reform Shaped Peru's Coffee

In the late 1950s, the coffee growers of La Convención, a valley near Cusco, decided they'd had enough. They farmed small plots on big estates, and while coffee paid them reasonably well, they also had to work for free for the landowner, who could evict them whenever he chose. In 1958 they formed a union, the first time Peruvian farmers had organised to fight in this way (Folkrörelsestudiegruppen).

Their demands were modest at first: receipts for hours worked, payment for improvements if they were evicted, and tools when they worked the landowner's land. When landowners tried to get rid of union activists, the growers went on strike at harvest time. The tactic worked so well that it spread, and in 1962 the government banned the system of unpaid labour (Folkrörelsestudiegruppen).

The movement in the La Convención and Lares valleys, an area specialised in coffee production and export, is closely linked to Hugo Blanco, who had arrived in 1958 to work as a tenant on an estate in Chaupimayo. In 1963, Peru's military government responded with an agrarian reform decree that began land reform in La Convención and Lares. Blanco was captured that May and sentenced to 25 years in prison (Heraclio Bonilla).

Peru's great land reform didn't start in government offices. It started, in part, with coffee farmers.

Before the reform

For centuries, much of rural Peru was organised around haciendas. In the Andes, the traditional haciendas relied on the labour of the people who lived on and around them. Tenants farmed the owner's poorest land and paid for it in labour or produce (Heraclio Bonilla).

Coffee's history in Peru had its own twist. Under a deal with British creditors known as the Grace Contract, Peru handed over its railways and millions of hectares of highland land in return for cancelling its war debts. Much of that land became coffee estates, worked by people from highland indigenous communities, some through debt bondage. When the British withdrew, many of those families acquired or reclaimed the land, which was the start of Peru's smallholder coffee tradition.

So by the 1960s, smallholder coffee already had roots in Peru. The land reform would push that change much further.

1969: the haciendas fall

Earlier reforms in 1962, 1963 and 1964 went only so far. The 1964 law left out the big estates on the northern coast, and Congress blocked it from being applied (Wikipedia). Then, on 3 October 1968, General Juan Velasco Alvarado overthrew the government. On 24 June 1969, his military government passed a new Agrarian Reform Law, and this time there were no exemptions for large estates.

The scale was huge. Between June 1969 and June 1979, more than 9 million hectares were expropriated. According to anthropologist Enrique Mayer, the reform benefited some 370,000 families; another study puts the figure at around 334,000 of the roughly 700,000 families who had no land in 1969. Landowners were compensated with government bonds, repayable over 20 to 30 years.

The land wasn't simply handed out in family plots, though. At first, expropriated estates were kept whole and run collectively: 15,000 of them became 1,708 cooperatives (Wikipedia). In coffee, the reform redistributed estates, organised farmers into cooperatives and made Cusco a centre of cooperative-led production.

The quota years, and what came after

For a while, the new system had a safety net. Under the International Coffee Agreement's quota system, state-supported cooperatives exported over 80% of Peru's coffee in the 1970s. But with quotas guaranteed, many of those cooperatives grew stagnant, marked by inflexibility, nepotism and corruption.

The wider reform was also running into trouble. From the mid-1970s, Peru fell into a severe economic depression, and in 1975 Velasco was removed in a bloodless coup (Wikipedia). When civilian rule returned in 1980, the cooperatives were turned into businesses that their members could easily dissolve. Over the following years, most of the cooperative land in the Andes was shared out among indigenous communities and smallholders.

Then the safety net went. When the International Coffee Agreement collapsed in 1989, prices and Peru's export systems collapsed with it. Neoliberal reforms under President Alberto Fujimori dissolved the Agrarian Bank, leaving farmers without credit. Rural insecurity and the violence of the Shining Path conflict drove many in southern Peru into growing coca.

Those who stayed in coffee often turned to organic and Fairtrade certification. According to Crop to Cup, that didn't immediately improve cup quality, but it did raise incomes.

Peru's coffee today

Today, Peru's coffee is overwhelmingly a smallholder crop. Peru has more than 202,000 mostly smallholder coffee farms, averaging just over a hectare each, and smallholders grow over 70% of the country's coffee (World Coffee Research). Only around 20% of those smallholders belong to cooperatives.

Certification has become one of its strengths. Peru is the world's leading producer of certified Fairtrade and organic arabica, and ranks ninth among the world's coffee exporters (World Coffee Research).

The map has shifted too. Chanchamayo, in the central highlands, once produced around 70% of Peru's coffee, but coffee leaf rust pushed much of the production north. Northern regions such as Cajamarca and San Martín now grow nearly half of the crop.

What this means for us, and for you

Peru's coffee comes from a huge number of very small farms, and only around one in five smallholders belongs to a cooperative. Importer Crop to Cup describes Peru as a country of immense quality potential that still lacks the systems to bring its coffees forward.

The Peruvian lots we've listed from Khipu Coffee show some of the ways producers are tackling that. Khipu works directly with producers in Cajamarca and Amazonas, in Peru's north. Manuel Marlo Baca, a fourth-generation grower in Amazonas, used to sell mainly through regional associations and cooperatives in Jaén, until Khipu bought his entire Pacamara harvest. In San Ignacio, Franklin Peña set up Finca La Familia in 2020 to bring his father Rogelio's family and their neighbours together to process and sell their coffee directly. It now covers 25 hectares and six families.

So when you roast one of these coffees, you're roasting coffee from Peru's smallholder system, and from producers finding new ways to get their coffee to market.