“In Peru, many concessions and investment projects are carried out on lands that belong to the State and are duly registered in the Public Registry. If after hundreds of millions of dollars have been disbursed, the State tells investors: You know what? What I sold you is no longer yours, the backbone of the country’s legal security is seriously affected.” said Milton von Hesse, former Minister of Agriculture.
Von Hesse’s statements are an accurate description of what the company is experiencing. Cerro Prieto Agricultural with a ruling by the Constitutional Court that, although amended at the time, has left some gaps that not only put at risk the future of this agro-industrial firm, but also the agro-export sector in Peru.
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As we reported a few days ago (Perú21, 19.08.24), in 2009 the Constitutional Court (TC) stripped Agrícola Cerro Prieto of the land it had acquired from the State in an international public tender, within a process in which it later recognized that the plaintiff, Aspillaga Anderson Hermanos, did not act in accordance with the principle of good faith. In fact, the State itself, which was the defendant, hid this information.
The water problem
Although the Constitutional Court later sought to amend its decision in a 2012 resolution, it did not address the magnitude of the problem it caused with its initial resolution, which is the right to access water that Cerro Prieto acquired when it purchased the wasteland from the State.
As Von Hesse explains, a piece of desert without water has no value. Therefore, when the State sells Cerro Prieto the 6,192 hectares of uncultivated land for US$2.3 million, it also sells the right to the water of the Jequetepeque-Zaña Special Project, which is an irrigation project.
However, the TC in its 2012 resolution ordered the Registry Office of Chiclayo to maintain the registration of ownership of the vacant land in favor of Cerro Prieto, only in the part that it purchased from the State, and to compensate Aspillaga Anderson Hermanos for the rest of the adjacent land.
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And the Constitutional Court does not take into account that the State, by guaranteeing Cerro Prieto the right to water, authorizes it to build the canal on state land that provides it with such access. As Von Hesse points out, without water the land had no value, and the water was not next to the land, so the company had to build canals and reservoirs on land that it did not necessarily buy from the State.
Now, Aspillaga Anderson Hermanos maintains that the land on which Cerro Prieto built the canal and the water reservoirs is theirs, which means that if the Constitutional Court and all the justice bodies do not enforce the commitments that the State assumed with Cerro Prieto, they will not only endanger the sustainability of the company, but will also create a bad precedent that “will destroy the agro-export system,” warned Von Hesse.
“If you look at Olmos, Chavimochic, Majes Siguas I and II, all of these are lands that the State has had registered in its name at the former National Development Institute. Imagine if all this investment, based on this ruling by the Constitutional Court, starts to be claimed by third parties, ignoring the expropriation processes of the last 50 years. This puts future agro-export activity at risk,” concludes Von Hesse.
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