Translation provided by JIGGSLAW®. The cancellation of a fertiliser purchase agreement between the Peruvian Agrarian Productive Development Program, Agro Rural, and the Paraguayan company Direcagro at the end of 2022 has prompted the company to seek a dispute board before proceeding to international arbitration, where it will seek $9 million.
In a press release issued on December 2022, Agro Rural, which belongs to Peru’s Ministry for Risk and Agrarian Development (Midagri in Spanish), announced the cancellation of the sale to Direcargo: “In order to protect the state‘s interest and the sustainability of family farmers‘ operations.
According to the document, the following reasons were given for the cancellation: “the state has other mechanisms that are more efficient, such as FERTIABONO, to meet farmers’ demand on fertilisers; the capacity to deal with the delay caused by the current management, and the limitation of timely attention to needs in the process of resolving the dispute with the provider.”
The Peruvian government issued a decision on December 29, 2022, notifying the termination of the agreement and stating expressly: “TERMINATE purchase order N°00381-2022 issued in favour of the contractor, GROUP 06 SA- DIRECAGRO, for the acquisition of nitrogen urea fertilisers for agricultural purposes.”
According to the Peruvian press, DIRECAGRO purchased 44,000 metric tonnes of fertiliser for $25,5 million, and the fertiliser company would seek over $9 million in compensation. (See “Compra de urea fallida: Direcagro demandará al Estado por más de US$ 9 millones“,) Karen Guardia Quispe, Gestión, 29.01.2023.