CEPAL - SERIE Recursos Naturales e Infraestructura
N° 74
Box 3
IMPACT OF THE CHOLERA EPIDEMIC ON THE FOREIGN TRADE OF PERU On 4 February 1991 the National Institute of Health (a decentralized entity of the Ministry of Health) isolated Vibrio cholerae, confirming the presence of a cholera epidemic along the central and northern coast of Peru. Since then there has been a significant level of fear at the international level, which has resulted in a number of prohibitions on the entry of persons and goods arriving from Peru. Initially, the prohibitions extended to virtually all products of marine and vegetable origin. Some countries even applied them to fish meal and conserves. Quality controls were required (to detect any bacteria present in accepted shipments), and also the fumigation of vessels and aircraft arriving from Peru. The scale of these prohibitions has caused great alarm in the Peruvian export sector for two main reasons. First, they affect exports of fish products, which constitute 15% of Peruvian exports. Secondly, although vegetable and fruit exports were low in relation to total exports, they constituted a growth activity with good future potential. The loss in fruits was lower as the onset of the epidemic coincided with the end of the export season. The restrictions became more technical in subsequent weeks, which reduced the initial estimate of losses and led to reflection on the need to make technical changes based on the sanitary requirements of the importers. The epidemic also led to substantial indirect costs in the export sector which included costs due to: •
sales agreements not fulfilled (lost shipments);
•
the penalty of lower prices for Peruvian products on the international market;
•
higher export costs due to a longer storage period in foreign ports caused by delays in acceptance by the purchasing countries;
•
higher export costs because of more exigent quality controls to guarantee the absence of cholera;
•
technical studies on cholera prevention and the dissemination efforts of exporters to guarantee safety and improve their image in the international community; and
•
the lower level of production caused in sectors economically connected with the exporters, in view of losses incurred for the reasons described above.
In addition to the direct and indirect costs, the cholera epidemic brought about a process of restructuring in view of the more stringent sanitary requirements of the importers, the increase in exporters’ costs for hydrobiological products, vegetables and fruit, and also the temporary loss of income owing to lower international prices. Because of the epidemic, the European Economic Community required exporters of fresh and frozen Peruvian products to adapt to the sanitary and quality control standards of the European market. This process of adaptation required investments in facilities, as well as significant technical and technological changes for the packaging and refrigeration processes, in an adverse situation of reduced demand. Taking into account this situation, it is expected that small-scale exporters will be unable to cover the higher export costs resulting from the epidemic, and this may have initiated a process of modernization in terms of centralization and concentration.
Source: Petrera and Montoya (1993).
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