Historical, Political, and Economic Context for Peru

It was Jesuit missionaries traveling from Ecuador who brought coffee to Peru, first cultivated for domestic consumption in the northern areas of Chinchao (Huánuco region), and later Chachapoyas (Junín region). A century later, the Grace Contract of 1886 reshaped Peru’s agricultural landscape: after defaulting on British bonds, the government transferred mining rights, infrastructure, and 1.8 million hectares in the highlands to creditors in exchange for canceling debt from the War of Independence. Nearly half a million of those acres were converted into coffee plantations, sparking export growth at the turn of the 20th century.

Labor on these plantations came from Indigenous peoples already living on the transferred lands. This system persisted until the withdrawal of the British after WWII, when plantations were returned to the workers and divided into small farms. Today, about 223,000 Peruvian households grow coffee—fewer than a quarter organized into any form of association or cooperative. 

Government recognition in the 1960s and ‘70s spurred cooperative development, and under the International Coffee Organization (ICO) framework these cooperatives became gatekeepers to credit and export markets. This centralized structure bred inflexibility, corruption, and mismanagement, leading many coops to collapse during the coffee crisis of the 1990s, triggered by the end of the ICO’s price quotas following the fall of the Soviet Union. The resulting price freefall gave rise to certifications such as Fair Trade, created to address the rural poverty caused by sustained record-low prices.

Misfortune compounded when President Alberto Fujimori came to power in 1990, dismantling state support for cooperatives and dissolving the Agrarian Bank. His neoliberal reforms coincided with the rise of the rural guerrilla movement Sendero Luminoso (Shining Path), which—like Nicaragua’s Sandinistas—drew support from impoverished coffee farmers left without institutional backing

Later, a Truth and Reconciliation Commission estimated that 70,000 people were killed by both guerilla and government forces during this time of conflict. The result was rural flight, plummeting production, and the collapse of support and credit. Although the Shining Path movement declined after the capture of its leader Abimael Guzmán Reynoso in 1992, many displaced farmers had already turned to coca cultivation, opening the door to cartel influence.

Meanwhile, certification programs—originating in Mexico—offered a lifeline, reviving cooperative structures and reconnecting smallholders to stable markets. Within a few years, Peru became the world’s leading producer of certified organic coffee. While the quality had been there all along, the Cup of Excellence auction brought attention to Peru’s premium production when it came to the country in 2017. Today, more than 233,000 hectares of coffee are under cultivation nationwide, with the United States accounting for roughly 27–28% of total exports (2023).