Agrarian contracts, relations between agents, and perception on energy crops in the sugarcane supply chain: The Peruvian case

1 Introduction

The growth of sugar consumption, the search for new sources of renewable energy, and the development of derivative products (by the sugar-energy sector) have increased the demand for sugarcane [1]. There are a number of questions emerging out of the new agrarian political economy created by the “biofuels era.” In ref. [2], an overview of political economy, political sociology, and political ecology related to the biofuels sector is presented, seeking to provide a framework for understanding the new agrarian relations. Sugarcane production is in the order of approximately 540 million metric tons per year basis globally and the top-three producing countries in Latin America being Brazil, Mexico, and Colombia ,respectively [3]. The increase in raw material production may increase the efficiency of the sugarcane agroindustry, either by reducing total costs, by decreasing investments in land purchase, by reducing idle capacity, or by increasing energy cogeneration through burning of sugarcane solid waste. on the other hand, the agrarian contract has gained importance in many developing countries [4,5]. Empirical studies were carried out in different sugarcane-producing regions of the world that seek to analyze the relationships between the sugarcane industry with access to land and its social impacts. Based on collected data in fieldworks, the impact of sugarcane expansion in Brazilian sugarcane producing regions is analyzed in ref. [6] and it is reported that in general terms there is a good acceptance of the mills in the local community. Although, the expansion has generated conflict mostly related to environmental and social issues. In other empirical investigation related to the case of the sugarcane industry in Nepal, it was suggested that a friendly relationship between sugarcane producers and buyers (sugar mills) might be favorable for setting sugarcane price workable for both parties [7]. In a study in Ghana related to farmers in the oil palm sector it was found that agrarian contracts, specifically, could help to improve the smallholders farmers’ welfare [8].

In Peru, empirical studies that relate the sugarcane industry with agrarian contracts and access to land in the open literature are scarce. Although, in an empirical study carried out in a small town in the La Libertad region in northern Peru, the practice of agrarian contracts (specifically tenure and sharecropping) in the sugarcane sector is recorded [9]. Due to the lack of (financial) resources to meet the demands of production, small farmers began to rent their land. At the same time, tenancy began to generate income for these farmers [10]. As of 1990, after the trade liberalization and the agrarian restructuring, Peruvian farming took off. It is estimated that the agricultural sector’s share has increased from 0.6% (1970–1990) to 4.9% (1990–2012) of the gross domestic product [11]. Investigations based in the Peruvian agricultural census indicate an advance of the agricultural frontier, a restructuring of the array of crops and animals, changes in the demographic profile (greater female participation), and an increase in the education level of producers, among other phenomena [12].

The objective of this article is to analyze the role and participation of the agents involved (landowners, landless peasants, intermediaries, and mills) in the supply chain of sugarcane to Peruvian mills and their relationships in the practice of agrarian contracts as a means to access the condition of sugarcane producer. This article also seeks to obtain information on the vision of the agents regarding bioenergy and their predisposition to plant energy crops. It is about looking at the possibilities that mills have to guarantee and increase the raw materials on non-owned lands and how this can contribute to the sustainability of the entire sugarcane chain supply.

2 Sugarcane industry in Peru: A brief overview

The sugarcane regions of Peru produce sugarcane throughout the year with a high average productivity that is in the range of 130–140 t ha⁻¹, while the world average productivity is currently in the range of 80 t ha⁻¹ [13]. Sugarcane planting in Peru began in the 15th century and by 1549, there were already four sugar mills to grind sugarcane and with the essential equipment to make sugar [14]. From the historical point of view of land tenure in northern Peru, where sugarcane agribusiness has been important since colonial times, in the early 1870s there were about 25 large landowners in the Chicama Valley, in the department of La Libertad [15]. At the beginning of the 20th century, there was a strong concentration of land destined for the sugarcane agribusiness, owned by national companies (i.e., Roma, Casa Grande, and Cartavio), for group hands Larco, Gildemeister, and Grace, respectively. At that time, there was a strong growth in the sugarcane industry, mainly in the north of Peru [15]. The sugarcane industry has remained an important economic activity in Peru, especially in the valleys of the northern coast: Lambayeque, La Libertad, and Ancash, and in the last two decades, the Chira valley in Piura Region was also incorporated [16]. During the 1950s and 1960s, Peru was one of the largest sugar producers in the world [17].

Before 1969, the Peruvian sugarcane agroindustry comprised 12 companies, 8 of which were latifundium located in Lambayeque (Cayalti, Pomalca, Pucala, and Tuman), La Libertad (Casa Grande, Cartavio, and Laredo), and Lima (Paramonga), while the other four were small companies located in Arequipa (Chucarapi-Pampa Blanca), Ancash (San Jacinto), and Lima (Andahuasi and Ingenio). Casa Grande, Cartavio, Tuman, and Paramonga farms stood out as the most important ones. The share ownership of the sugar mills was in the hands of foreign citizens or companies (65%). Only Pomalca and Cayalti farms, as well as the smaller farms of Andahuasi, Ingenio, and Chucarapi were completely owned by Peruvians [18].

In most of the Peruvian countryside, the intrafamily and intergenerational form of access to land represents the central cause of the extreme fragmentation of land ownership. There are also communal forms of access to land. These are large areas of land belonging to certain communities, from which the so-called commoners benefit [9].

In 1969, with the Agrarian Reform Act, the sugarcane farms on the coast were expropriated and then assigned to their workers, who were organized in cooperatives and the sugar industry suffered a sharp decline in the 1970s and 1980s. In 1973, the sugar mills reached a negligible performance in comparison to 1930 [14]. Peruvian sugarcane agroindustry was a leader in Latin America before its expropriation and conversion to the cooperative model in the 1970s. However, it lost the leadership due to the inefficient management of the sugar mills during the long period in which they operated as cooperatives. Productivity and profitability indicators deteriorated, thus reflecting the sector’s crisis. This crisis began to reverse when these farms abandoned the cooperative model and received new capital inflows through strategic partners [18]. In the mid-90s, the Peruvian government initiated the reform process of the sugar industry based on private capital inflows into the cooperatives [19]. In each of these periods, one form of organization replaced the other.

Since 2000, with new regulations for Agricultural Sector Development, sugar companies could transform into corporations and restart their recovery. The expectations of the Free-Trade Agreement signed with the United States encouraged private capital inflows into the local companies through the option to purchase shares [20]. In the last two decades, due to growth projection in the biofuel market and the start of major irrigation projects in the northern Peruvian coast, the cultivation and industrialization of sugarcane led to the emergence of modern and prosperous cities. Large areas with access to water resources and irrigation technology were incorporated into the sugarcane cultivation. Sugarcane industries expanded their production areas on their own lands [13]. So, sugarcane industry, after many years of deterioration, has mostly returned to the hands of the private sector, increasing productivity thanks to significant investments in equipment and technology and currently, Peru has a production surplus [13]. Following the global trend for the use of clean fuels, researchers analyzed the feasibility of producing energy from sugarcane derivatives and demonstrated the great potential for generating electricity from sugarcane residues in Peru. Among other factors, this is due to the high productivity of sugarcane and the production of sugarcane during all months of the year in Peru [21]. According to the Ministry of Agriculture, 492,000 people depend directly or indirectly on the sugarcane agroindustry, and in the last 15 years, this activity has generated more than 2 billion PEN (1 USD equals 3.30 PEN) in public revenue through taxes and has fostered the development of large irrigation projects such as: Chavimochic, Olmos, and Alto Piura [22].

There is no current data available on the percentages of participation in leasing and sharecropping in the sugarcane sector. To provide an overview of the Peruvian agricultural sector regarding the practice of leasing, sharecropping, and other forms of land access, data from 1994 and 2012 Agricultural Censuses are used [23,24]. Figure 1 shows the number of establishments according to the condition of the producer, by stratum of total area, based on data from the Agricultural Censuses of Peru (1994 and 2012). In general, from 1994 to 2012, the number of establishments under lease and the area under lease increased.

Figure 1

Number of establishments by area strata managed by tenants and commoner in 1994 and 2012. Source: Agricultural Censuses of 1994 and 2012.

3 Methodology

This section presents the premises and procedure used for the fieldwork to collect data. Descriptive statistics were used in this research to analyze the agents involved and the characteristics of agrarian contracts practice in the sugarcane industry in Peru, and also, to obtain preliminary information of stakeholders’ perceptions regarding sugarcane bioenergy. The data collection and data analysis are carried out by following four steps: identification of agents, setting themes, data collection, and data analysis. Each step is detailed in the following subsections.

4 Fieldwork results

This section presents the main quantitative results of the fieldwork and their analysis.

4.1 Agent identification

According to the information gathered in the fieldwork, the raw sugarcane supply chain in Peru is represented in Figure 2. It was found that the sugar mills obtain its raw materials from two sources, one from production on own land and the other from third-party production. On one side of the supply chain, within the third-party production, it is observed that independent sugarcane producers supply raw materials, which includes producers with their own land, tenant farmers and sharecroppers, and agricultural cooperatives. On the other side of the supply chain are the sugar mills that purchase the raw materials. Part of the production flows directly between these two agents. However, there is another agent, known as middleman, who acts as liaison between the producers and the industries. A large part of the production of independent producers and the cooperatives flows through the middlemen to the industries.

Figure 2

Agents in the sugarcane agroindustry.

From a first qualitative analysis of the fieldwork results, it was found that landowners have small areas ranging from 4 to 6 ha. Sugarcane production on these small areas of land varies among the owners who produce directly or tenants who produce on those lands. Some cooperatives group several small landowners that plant sugarcane for later marketing, e.g., Cooperativa Cayalti (Lambayeque), which was formerly a sugar mill.

Most of the tenants are small farmers. Although some of them have high economic capacity to rent bigger land area and usually work as middlemen too. The middleman is an intermediary responsible for buying sugarcane from small farmers, selling it to mills, and negotiating the payment.

In Peru, sugar mills handle approximately 70% of the total harvested area of sugarcane, while independent producers handle 30%.^[1] Peru’s leading sugar producer is Casa Grande, with 23% of total production, followed by Laredo (14%), Cartavio (14%), Paramonga (11%), San Jacinto (9%), Pomalca (7.4%), and Agro Olmos (9.8%). All these companies represent 88.3% of national production; the other 11.7% is made up of the following companies: Pucala, Andahuasi, Chucarapi, Caña Brava, and Tuman [27,28]. Most of the sugarcane mills in La Libertad have benefited from the Chavimochic irrigation project which planned to put 70,000 ha of desert under irrigation and to improve the irrigation of more than 74,000 ha of old land located in the valleys. Also, in Lambayeque, the Olmos irrigation project plans to irrigate 43,500 ha, of which 5,500 ha belong to the farmers of Valle Viejo and the village of Santo Domingo de Olmos, and 38,000 ha are new areas included in the first stage of the project [30].

4.1.1 Middlemen

In order to obtain information on the role of middlemen in the sugarcane agroindustry in La Libertad and Lambayeque regions, we conducted interviews with these agents. The production of both La Libertad and Lambayeque regions in 2020 was 7,528,644 t of sugarcane in an area of 62,208 ha, with an average productivity of 121 t/ha (Table 3).

From the information collected, it is estimated that there are 12–15 middlemen working in these two regions. Only three of the middlemen interviewed provided more precise information on the amount of their own sugarcane production, both on their own land and on rented land, as well as information on the amount of sugarcane they collect from third parties. These three intermediaries together have an annual production of approximately 501,999 t of sugarcane and harvest approximately 300,000 t of sugarcane from third parties. This represents a total of 801,999 t of sugarcane per year, which is equivalent to 10.65% of the total production and it covers an area of 6,628 ha. The sugarcane marketed by each intermediary is an average of 167,333 t per year from own production and 100,000 t per year from third-party production. Considering that there are 12 middlemen with the same average production and commercialization, which is closer to reality based on the information gathered in the interviews, there is a total production of 3,207,000 t of sugarcane from own production and third parties. This would be equivalent to 42% of the total production and would correspond to an area of 26,512 ha. Based on these estimates, it is possible to observe the degree of participation of intermediaries in the Peruvian sugarcane market, which indicates that in practice almost all sugarcane production outside the mills is mediated by middleman.

In the case of own production, it is estimated that each middleman plants 1,382 ha. The average area of own land cultivated with sugarcane is 137 ha. This indicated that about 10% of own production is on own land and approximately 90% is on rented land.

In the case of sugarcane purchased from third parties (storage), 50% are informal contracts and 50% are formal contracts; with 50% being standing crops, 25% is financing to the producer, and 25% is an advance commitment to purchase.

Figure 3 shows a summary of the most common conditions of the sugarcane purchase agreements made by middlemen in La Libertad and Lambayeque.

Figure 3

Conditions of the sugarcane purchase agreements made by middlemen in La Libertad and Lambayeque.

Middlemen answered that in the purchase contracts, only in a percentage of the contracts, clauses are established regarding the tonnage per ha (50%), the date of cutting the cane (50%), the area to be harvested (50%), the maximum brix degree (75%) and the weight of the sugar cane (50%).

When middlemen were asked if they financed the harvest of third-party producers, 40% did not answer, 40% answered “totally,” and 20% answered “partially.” When partially financed, middlemen finance seeds (75%), soil preparation (75%), fertilizers (75%), agrochemicals (75%), money (50%), and other labors (25%). The land ownership records and notarized letter are the warranties used for financing.

Middlemen were also asked about the method of payment for sugarcane purchased or financed. Twenty-five percent mentioned that it is calculated at market price, another 25% said that it is calculated in parts according to the progress of the land. The amount of payment is calculated according to the tons per hectare produced. Payment includes: burning, cutting, piling and loading, and transportation of the sugarcane to the mill.

Middlemen sell the raw sugarcane to more than one mill, choosing the highest price. In this case, the contract is 100% formal and at market price. Sugarcane acceptance specifications are: brix degree, minimum volume, cleanliness, sucrose percentage, and purity. Payment methods are: payment with finished product (50%), invoice on a fixed period basis (50%), prepayment via financing (25%), and payment on delivery (25%).

4.2 Overview of characteristics of tenants and owners

The average age of the tenants surveyed is 46.8 years and 90.1% are not retired. The average age of landowners is 56 years. Tenants expressed that working the land is a satisfying activity, they considered the land as the best place for leisure, they have a strong connection with the work, and for 32% of them and their family, livelihood depends on the land productivity. Regarding the permanence on the rented or sharecropped area, 18% of respondents are only present during the agricultural work, 13% live permanently on the land, 64% do not live full time, and 5% did not answer.

Regarding the education level, Figure 4 shows an overview of the level of education of tenants and landowners of the sample in the fieldwork. The average age and level of education indicate that landowners are not young and have a relatively low level of education. In addition, in general, the education level of landowners is lower than that of tenants.

Figure 4

Comparison of education level of tenants and landowners.

4.3 Agrarian contract characteristics

Based on the data collected in interviews, the characteristics of agrarian contracts among landowners and tenants in the sugarcane sector are analyzed. Formal contractual relationship is understood as some type of document signed by both parties. Data seem to indicate that in many cases, the clauses of the contracts are by negotiation between the agents. Below is presented the point of view of tenants and landowners.

4.3.1 Tenants and sharecroppers

In the fieldwork, it was detected that the contractual relationship between the landless producers and the landowners is in the practice of the land leasing type. Nevertheless, the contractual relationship of tenant producers with middlemen is in the practice of the sharecropping type. Likewise, the contractual relationship of small landowner producers with middlemen is of the sharecropping type. In most cases, these contractual relationships are sugarcane sales-type contracts. The relationship between tenants and sharecroppers with landowners was investigated and 95% of respondents answered that the relationship with the owner is good and 5% answered excellent. The size of the area under tenancy (or sharecropping) in La Libertad region was 7 ha and in Lambayeque region was 14.5 ha on average. Figure 5 shows the percentages of formal and informal contracts. Formal contracts are 67.5% and informal contracts are 27.5 and 5% did not respond. Despite the declared good relationship between tenants and owners, 57.5% of tenants do not renew their contracts. This may indicate that there is no good financial performance for the tenant in the lease period.

Figure 5

Type of contracts and percentages of contracts renewed.

Regarding the contract duration, some respondents answered in terms of number of harvests and others in terms of years. Each harvest can have an approximate duration of 15–18 months depending on the variety of sugarcane. A harvest is hereby considered to last 1 year, so that the data can be expressed in terms of harvest. Therefore, 12.6% of respondents answered 6 harvests, 30% answered 5 harvests, 40% answered 4 harvests, 5% answered 3 harvests, and 12.4% did not answer.

Regarding the method of payment, 8% of the respondents did not answer and 90% answered “cash before planting.”

Additionally, Figure 6 shows the results obtained from tenants on the questions about contractual clauses related to restrictions and facilities in land use, investments, machinery, and conservation of the property.

Figure 6

Contractual clauses on facilities and land use restrictions.

4.3.2 Landowners

Interviews with landowners were more extensive and it was possible to obtain more information about the characteristics of the contracts and their vision regarding the best tenant profile for good fulfillment of the contracts. According to the results of the fieldwork, 90% of the landowners answered that their main interest in tenancy and sharecropping is to obtain income, 2% answered it is an attractive method of payment, and 8% did not answer. Regarding the relationship between tenants and sharecroppers with landowner, 94% of the respondents considered the relationship with the tenant and/or sharecropper as good and 6% considered it excellent. The 6% of landowners did not know the tenant and/or sharecropper and 94% did. The answers of the landowners coincide with the tenants’ and sharecroppers’ perceptions.

Figure 7 shows the main contractual clauses related to restrictions and facilities in land use, investments, machinery, and conservation of property adopted by landowners. In general, owners do not apply strong restrictive clauses in the land use but tenants shall request permission in case of any improvements. In addition, landowners do not supply machinery. These data from the fieldwork coincide with those collected in the interviews with tenants and sharecroppers.

Figure 7

Overview of restrictive contractual clauses.

Figure 8 shows the results for the question on the best tenant and/or sharecropper profile. Most of the landowners (60%) prefer tenants or sharecroppers who have investment capital or can obtain it easily.

Figure 8

Best tenant and/or sharecropper profile.

Figure 9 presents the main criteria adopted by landowners to select a tenant and/or sharecropper. In practice, the main criterion adopted by 47.5% of the landowners is the level of wealth and the next criterion adopted by 37.5% of the landowners is the farming experience. Findings at the regional level indicate that in La Libertad region, the main criteria are the level of wealth (50%), experience in farming (32%), and friendliness (16%). While in Lambayeque, the main criteria are the level of wealth (47%), experience in farming (42%), friendliness (8%), and professional qualification (3%).

Figure 9

Main criteria adopted by landowners to select a tenant and/or sharecropper.

Regarding the method of payment, 92% of the respondents answered cash and 8% did not answer. Respondents were asked about the land rent value (money or quantity of product). In La Libertad region, the rent value on an average is 1.712 PEN (1 USD = 3.65 PEN) per ha per crop, while in Lambayeque region, it is 2.632 PEN per ha per crop.

Landowners were also asked about how long have they rented and/or sharecropped land in the region. Figure 10 presents the periods adopted by landowners to rent land. The contract period more used was 5 harvests with 40%. In regional level, there are significant differences. Thus, in La Libertad, 61% answered 5 harvests, 6 harvests (31%), 4 harvests (4%), and 3 harvests (4%). In Lambayeque, 48% answered 4 harvests, 5 harvests (20%), 3 harvests (20%), 8% did not answer, and 4% none.

Figure 10

Period of land rent by landowners.

Also, it was found that the main criteria for land transfer to lease are crop rotation, fence reconstruction, and irrigation method.

4.4 Bioenergy perceptions

About the knowledge of energy crops, the tenants and owners have a good knowledge of sugarcane as an energy crop. Corn is identified in second place, while soy is less known as an energy crop.

Regarding the perceptions of energy crops, the fieldwork focused on the perceptions of active farmers. In this case, the tenants and sharecroppers decide if energy crop will be planted on the land. Each of the 40 tenants interviewed indicated their level of agreement/disagreement to 8 statements (Code subjects BIO-1 to BIO-8). The general analysis by subjects with code number from BIO-1 to BIO-7 helps to understand which themes present greater contrast of views between local tenants’ perception and the concerns of world civil society.

The general results are described in Table 4. The themes with a moderate and high level of disagreement with negative global concerns are BIO-1 and BIO-3 statements, respectively, and related with impacts of energy crops on the environment. Those themes also present the highest rates of standard deviation, meaning larger differences of answers among the respondents with different interpretations. The themes with a high level of agreement with positive global concerns are BIO-2, BIO-4, BIO-5, and BIO-7 statements related with benefic impacts of energy crops on the environment. Those themes also present small rates of standard deviation, meaning minor differences of answers among the respondents with different interpretations. The BIO-6 subject related with the perception “Land is a subsistence resource” has a high level of positive agreement and the lowest rate of standard deviation, meaning few differences of answers among the respondents.

Table 4

Tenants’ perception on bioenergy aspects in the sugarcane sector regarding the stated matter

Matter	Mean	Standard deviation	Frequency of “no opinion” (%)	Frequency of 4 (%)	Frequency 4 and 5 (%)
BIO-1	3.0	1.2195	0	42.5	50.0
BIO-2	3.957	0.8619	0	65.0	87.5
BIO-3	2.625	0.9789	0	32.5	32.5
BIO-4	4.825	0.4464	2.5	12.5	97.5
BIO-5	4.85	0.3616	0	15.0	100
BIO-6	4.975	0.1581	0	2.5	100
BIO-7	4.825	0.6751	0	7.5	97.5
BIO-8	3.135	1.2944	7.5	20.0	40.0

Tenants agree that land is a source of livelihood and should be used to solve the environmental issues, and that energy crops are in harmony with natural processes and significantly benefit the land. They strongly disagree that land should only be used to benefit themselves or their families.

Regarding the planting energy crops, the landowners and tenants were inquired more directly about their interest in planting energy crops on their rented and/or sharecropped land (Code subject BIO-8). Figure 11(a) shows the percentages of landowners interested or not interested in planting bioenergy crops. It was found that 40% are partially or fully interested in planting energy crops, 42.5% responded that “I would be interested if I knew better about this kind of crops,” and 5% answered, “I am not interested”. Figure 11(b) shows the percentages for tenant interviews. For the question about the tenants interest in planting energy crops, 0% are totally interested and 44% of them are partially interested. The rest 56% answered that “I would be interested if I knew better about this kind of crops.”

Figure 11

(a) Interest of landowners in energy crops; (b) Interest of tenants in energy crops.

5 Discussion

Currently, the main sugarcane-producing region in Peru is the northern coast region with 87% of sugarcane production. Most of the landowners and tenants are small farmers, although some of them have greater economic capacity to rent bigger land area and usually work as middlemen. The middleman is an intermediary responsible for buying sugarcane from small farmers, selling it to mills, and negotiating the payment. It is evident that the tendency of large mills is to grow through the purchase of land and sowing their own sugarcane, and they usually have a large area of land ranging from 5,000 to 10,000 ha in each establishment. This tendency responds to guarantee greater security and productivity. Although it seems that this land area is not enough for the mills’ operation and they have to buy raw sugarcane from third-party producers.

The role of the middleman lies in his purchasing power to finance the sugarcane production and his ability to adapt to the method of payment used by the mills. Middlemen are continuously looking for sugarcane ready for harvest, as they have to fulfill orders from the large mills. Therefore, middlemen also tend to own large areas of land, while they rent their land to have the necessary stock. When they find sugarcane is ready for harvest, they will buy it in cash and will be responsible for verifying the quality to meet the requirements imposed by the mills.

Tenants are generally small producers, relatively young, and with a middle level of education. Most of the contracts are formalized and non-renewable, the most common method of payment is in cash and before planting, and the term of the contracts varies according to the number of harvests. The main objective of the tenants is to use third-party land for agricultural production and profits. A significant number of tenants do not live full time on the rented and/or sharecropped land.

The main interest of landowners in renting and sharecropping is to obtain income. On the other hand, the main disinterests in signing contracts are working with own capital and insufficient income. For them, the best tenant and/or sharecropper profile is a capitalized, experienced, and qualified person. On the tenants’ and/or sharecroppers’ side, the main criterion toward landowners is to fix the number of harvests. Contracts between landowners and tenants are mostly formalized through documents signed by both parties and have a duration of 3–5 years. These contracts are mainly paid in cash, depending on the negotiation of the contractual terms.

A large number of landowners and tenants are familiar with the notion of energy crops, particularly in relation to sugarcane and have a positive vision about them for the environmental sustainability. However, the large percentage of the some of the answers “partially interested” and “I would be interested if I knew better” may indicate that in their current condition within the sugarcane supply chain, they do not see a concrete future benefit for them.

Considering the scarce availability of land, competition with other crops, and the social environment close to their geographic area of local influence, Peruvian mills have the challenge to strengthen the sugarcane supply chain to sustain and increase their sugar production and biofuels, as well as increasing bioenergy cogeneration using greater amounts of biomass residues. One way is the use of agricultural contracts that are sufficiently beneficial for the producers and the other agents participating in the supply chain of raw sugarcane.

The strongest players in the production chain should review their market and technological practices to seek business models that increase both their income and the income of independent farmers, in order to provide greater economic and social stability to the sugar agroindustry. Likewise, a complementary alternative is to promote government or non-government sugarcane purchasing centers for small producers; however, more research needs to be done in this matter and future research will seek to address this topic.

6 Conclusion

In the fieldwork, the following agents involved in the raw sugarcane production chain were identified: small landowners, tenants/sharecroppers, middlemen, and mills. In general, there is a high degree of land division on the side of small landowners. An important characteristic of landowners is their low level of education. The land area of independent sugarcane farmers ranges from 4 to 20 ha with an average area of 12 ha for the fieldwork sample. It was observed that the practice of leasing is widespread among smallholders and is usually with private formal contracts between smallholders and tenants. Most of the tenants do not work full time on the rented land. The lack of economic resources and the increase in employment in urban areas encourage tenants and sharecroppers to leave rural areas. This fact is confirmed by the low renewal of lease contracts in the analyzed regions.

The middleman acts as a key player in the relationship between the sugar agroindustry and independent sugarcane farmers. The middleman can be a landowner or a tenant and is often a sharecropper for many smallholders and small tenants. In practice, when an agroindustry buys sugarcane from third parties, it does so through the middleman. Based on data collected in the fieldwork, it is estimated that the total participation of intermediaries in the supply of sugarcane to the mills can reach 30–40% of raw sugarcane production, that is, they intermediate almost all production of sugarcane from third parties. Government data indicate that sugar mills handle approximately 70% of the total harvested area of sugarcane, while independent producers handle 30%. Estimates obtained using fieldwork data are in agreement with global government data.

A large number of landowners and tenants are familiar with the notion of energy crops, particularly in relation to sugarcane and have a positive vision about them for the environmental sustainability. However, when asked about their interest in planting energy crops on their land under tenancy and/or sharecropping, only 20% of the landowners answered that they are fully interested, while none of the small tenants were interested. This may indicate that most farmers looking at their current condition within the sugarcane supply chain do not see a concrete future benefit for them.

The agrarian contracts contribute as a relevant instrument for the inclusion of small landowners and tenants or sharecroppers in the sugar production chain of Peru. These agrarian contracts also contribute to maintaining sugarcane production and supplying the raw materials required by mills. It is also noted that this intermediation considerably benefits the middlemen at the expense of farmers. This has been encouraged by the mills by favoring this intermediation in their market practice.