A letter from Peru

-->I've been in Peru for the past few days gathering material for a series of reports that we hope will be ready for broadcast on The World Tonight and on BBC World Service later this month.

Why Peru? Two main reasons: first, because it has recently re-emerged as the world’s number one producer of cocaine, a title it lost 20 years ago to neighbouring Colombia. And second, because it also happens to boast one of the fastest growing economies in Latin America, thanks in large part to its reserves of gold and copper, much in demand by China, soon to be the world’s biggest economy.

Yesterday, I found myself trekking through thick jungle to reach a well-hidden, illegal plantation of coca leaves. In theory, the farmer’s coca crop had been destroyed as part of the government’s eradication campaign – in fact, deep in the jungle, far from prying eyes, the coca is still there, providing what farmers say is an essential income to enable them to feed their families.

Peru has reduced the amount of land being used to grow the coca plants from which cocaine is made. But it hasn’t reduced it by as much, or as fast, as Colombia has. That’s why it’s now back at the top of the coca league table.

I did meet some farmers who have successfully switched from coca production to other crops such as coffee, cocoa beans and bananas. But it takes time for the new plants to become established and productive, and even when they’re mature, the profits are smaller – and the effort much larger – than if the farmer had simply carried on with the coca, which just happens to be a remarkably easy crop to grow and harvest.

In the central Peruvian town of Tingo Maria, I was able to buy a small bag of coca leaves perfectly openly from a woman sitting on a street corner with a huge sack of leaves in front of her. The leaves have been grown here for generations, used as a stimulant and as a medicine. It is no easy task for the government to end a traditional way of life that brings substantial profit for minimal effort.

As for the economy, its impressive growth is not related to the coca trade but rather to China’s apparently insatiable appetite for the mineral wealth that lies beneath Peru’s soil. As China’s economic growth has slowed, however, so has Peru’s, and now the government says it is determined to encourage domestic demand and the industrialisation of the national economy to enable it to become less dependant on the vagaries of global commodity prices and China’s continued growth.

In the Gamarra district of the Peruvian capital, Lima, which is the centre of the country’s garment industry, I met Justina Janto Lopez, who runs a thriving business making 100-dollar evening dresses for customers in the emerging middle class. She started from nothing, now has 30 employees and six shops, and exports her clothes throughout the region. She’s exactly the kind of wealth-creator the government wants to encourage.

The bustling streets of Gamarra are one sign of a booming economy. Another is the growth in sales of beer, as Peruvians move away from the lethally dangerous home-brewed spirits that they used to drink and are now switching to beer.

It’s not difficult to find the illegal stuff – I simply walked into a shop in the dusty working-class suburb of Huaycan and asked for it – but shopkeepers insist that they much prefer to sell beer. Quite apart from anything else, it means fewer fights among drunk customers.

Conclusions? Peru is doing what it can to deal with its cocaine issue, but it knows it has to do more. And it’s confident that its economy is on the right path for sustainable growth, whatever happens to the price of gold and copper. Millions of Peruvians who have started to enjoy the life style that goes with a growing economy hope the government is right.