Peru, one of Latin America and the Caribbean’s largest economies, possesses significant agricultural potential, yet its rural populations face deep challenges. After decades of economic progress, poverty in the country is rising, reaching 27.6 percent by 2024. Rural areas are particularly affected, with nearly 40 percent of small-scale farmers living in poverty. These communities struggle with limited access to markets and financial services, fragmented land ownership, inadequate public infrastructure, and a minimal state presence. In addition, Peru’s rural regions are highly vulnerable to climate change, while their location in the Amazon rainforest positions them as key stewards of the planet’s biodiversity.
Despite these challenges, agriculture remains a promising avenue for economic growth. The sector employs a quarter of Peru’s workforce, half of whom are in rural areas, yet it contributes only seven percent to GDP. Development strategies that extend beyond technical assistance to include market access, innovation, territorial development, and institutional strengthening can unlock the sector’s full potential. Investments in small-scale agriculture and livestock farming also present opportunities to advance environmental sustainability and climate adaptation, critical for Peru’s future.
IFAD has played a pivotal role in improving rural livelihoods in Peru over nearly five decades. Its investments have focused on the highlands and rainforests, promoting inclusive family farming value chains and sustainable natural resource management. Through 12 investment projects totaling US$254 million, IFAD has positively impacted more than four million rural households. Notably, the Avanzar Rural project, financed jointly with the Government of Peru, was recognized in 2024 as IFAD’s best-performing active project worldwide, exceeding its overall and youth participation targets by 70 percent. Key to this success were partnerships with farmers’ organizations and the private sector, which strengthened local value chains and supported business growth. The project has enhanced climate adaptation, market access, and productivity technologies, particularly benefiting women and youth, improving the lives of over 20,000 rural households.
Peru’s rich natural diversity, spanning deserts, mountains, and rainforests, makes it one of the world’s 17 megadiverse countries, home to 70 percent of global biological diversity. Indigenous communities possess invaluable traditional knowledge for sustainable living, offering lessons for building resilient food systems and ensuring national food security. IFAD’s collaborative efforts with these communities demonstrate that transforming rural economies is possible, proving that sustainable development in rural areas benefits the entire country.
