VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #4772/01 3561933
ZNR UUUUU ZZH
R 221933Z DEC 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 3453
RUEHQT/AMEMBASSY QUITO 0904
INFO RUEHBO/AMEMBASSY BOGOTA 4204
RUEHBR/AMEMBASSY BRASILIA 7144
RUEHBU/AMEMBASSY BUENOS AIRES 2719
RUEHCV/AMEMBASSY CARACAS 0032
RUEHLP/AMEMBASSY LA PAZ DEC SANTIAGO 1019
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUMIAAA/USSOUTHCOM MIAMI FL

UNCLAS LIMA 004772 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA/AND,/EPSC, EB, OES, E, OES 
TREASURY FOR J. LEVINE 
STATE PASS TO EXIM, OPIC, TDA 
 
E.O. 12958:  N/A 
TAGS: EFIS ETRD EAID SENV PE
SUBJECT: PUNO: TROUT AQUACULTURE BOOMING 
 
REF: LIMA 2507 
 
¶1. SUMMARY.  Trout ranching is a new economic activity for the poor 
Lake Titicaca area and has great potential for expansion.  With 
private sector leadership and USAID support, the industry made great 
strides since 2004 and will export 700 tons to some of the most 
competitive markets in the world, including Canada, Japan, Norway 
and the United States.  Passage of the PTPA would be a great boon to 
this poor region, encouraging exports and enabling local exporters 
to purchase prized U.S. equipment, currently priced out of the 
market by high duties.  END SUMMARY. 
 
TROUT BACKGROUND 
---------------- 
¶2.  Trout ranching is a new economic activity for the Lake Titicaca 
area, with great potential for expansion. Several varieties were 
introduced to the 3810m-high lake in 1940 as a fast-growing, 
sizeable food source to combat malnutrition in the population that 
was dependent on small native fish.  After the voracious trout 
decimated the local fish, aquaculture was introduced to control the 
trout and produce a stable food source.  Small trout pens even 
support the locals who live on the famous Uros floating islands to 
which tourists flock. 
 
¶3.  For decades, trout production suffered due to weak supply and 
distribution channels, weak quality control, poor management and 
ill-conceived state interventions.    While trout was consumed 
locally and sold in limited amounts to Lima, until recently it was 
not exported.  Starting in 2004, with private sector leadership and 
USAID support the industry made great strides and now exports to 
some of the most competitive markets in the world.  The year-round 
cold temperature (51 degrees Fahrenheit) in Peru's 65 percent 
section of Titicaca's 8300 hectares (HA) and 324 smaller lakes is 
perfect for trout, a fast-growing species whose flesh is prized by 
Europeans, North Americans and East Asians.  There is also a high 
domestic consumption  and a lively artisanal (and unregulated) 
export industry to Bolivian consumers. 
 
TROUT AQUACULTURE IN PRACTICE 
----------------------------- 
¶4. Econoff visited several trout pens anchored in Lake Titicaca. 
With a three-month cycle, fish are brought to market quickly. The 
traditional wood pens buoyed by plastic bottles are giving way to an 
easily-cleanable and -repairable steel modular system that can be 
expanded as the owner obtains more financing for expansion.  Anchovy 
fishmeal had been the traditional feed, but with fishmeal's high 
value most of that production is now exported to China.  Soy or 
local grains such as quinoa are now the primary feed. 
 
EXPORTS TAKING OFF 
----------------- 
¶5.  A mini export boom started in 2004 when a partnership between 
the Huancayo-based Piscifactoria de Los Andes (Piscis) and USAID 
successfully established a $1.2 million investment in thirty-two 
floating cages and a processing factory.  Piscis's existing 
marketing, supply channels and quality control systems were combined 
with USAID technical assistance in production technologies, quality 
control for small producers and community relations.  Noting the 
great potential of the Lake Titicaca area (including the surrounding 
lakes), Piscis has decided to move its headquarters and concentrate 
its operations in Puno. 
 
EXPORTS TO U.S. 
--------------- 
¶6. The primary export markets for the frozen product are Canada, 
Japan, Norway and the U.S.  A visit to the efficient processing room 
showed why Piscis quality control commands a loyal high-paying 
clientele: the workers (majority women, prized more for their manual 
dexterity) use surgical forceps to pluck every trout bone.  The U.S. 
market includes both frozen fresh and smoked trout, mostly Rainbow. 
Piscis is actively expanding its export opportunities, and hoping to 
also increase its 100-person work force - all formal sector 
employees.  Piscis is the only Puno firm that has achieved 
quality-control standards sufficient for formal export. 
 
POTENTIAL 
--------- 
¶7.  The current potential for expanding production is considerable, 
according to Association of Trout Ranchers (APT) executives.  APT 
General Manager Luis Molina noted that trout production in Puno went 
from 50 tons in 1987 to 3000 in 2006.  In 2005, over 3200 persons 
were directly employed in trout ranching, feed provision or 
transport. 
The Ministry of Production has authorized 17,000 ha for trout 
production, of which only four percent is in use.  Under a 
promotional scheme, the Ministry now charges only document 
processing fees to get into the business, around $120.  Starting in 
2010, the Ministry will charge an annual permit fee.  The cost for a 
modern, "starter" four-pen system, manufactured in Lima, has been 
around $20,000. Now two Puno manufacturers are producing the pens 
for about $13,000.   The main barrier to expansion of the industry 
is poor access to credit. 
 
CHALLENGES: POLLUTION, TRAINING, CREDIT 
--------------------------------------- 
¶8.  The Minister of Housing and Sanitation, Hernan Garrido-Lecca, 
told Econoff some weeks ago that cleanup of Lake Titicaca was a high 
national priority.  Most contacts in Puno said that improving the 
water quality of Lake Titicaca was the top development priority for 
the region.  Most current aquaculture is located near Puno city, the 
main population center on the lake.  There is no human sewage 
treatment and precious little wastewater treatment, with effluents 
running directly into the lake or into rivers that feed the lake. 
(Note: the extensive algae scum in Puno Bay is readily apparent to 
the visitor.  End Note.) 
 
HOW THE FREE TRADE AGREEMENT WILL HELP 
-------------------------------------- 
¶9.  There was general agreement that the Peru Trade Promotion 
Agreement would be a boon for the trout industry.  Piscis, APT and 
outgoing Regional President all saw the U.S. as a source for 
increased exports  APT and Piscis both import trout eggs from the 
U.S.  While the modern pens are now made locally, U.S. outboard 
motors and trout production equipment are prized but expensive under 
the current import duty regime. 
 
TRANS OCEANIC HIGHWAY AND CHILEAN INVESTMENTS 
-------------------------------------------- 
¶10. There was also consensus that the highway under construction to 
connect Brazil to Southern Peru (passing through Puno) will be 
important to augment trade in the region. Chilean investors had 
already set up a number of pens along Lake Titicaca. 
STRUBLE