President Ollanta Humala's government is allocating $35 million to help coffee growers pay off debts and cope with "la roya," a stubborn fungus known as coffee rust.
The fungus, which creates orange spots on leaves and damages the bean, has devastated coffee plantations across Central America, Colombia and Peru this year.
Peru was hit particularly hard.
The Andean nation became the world's leading organic producer last year and is the world's eighth largest overall coffee producer behind Brazil, Vietnam and Colombia.
In 2012, coffee exports accounted for a full quarter -- about $1 billion -- of all revenue from Peru's agricultural exports, but this year are unlikely to produce anything close to the same yield, depriving Peru of critically needed funds.
The fungus and low coffee prices on international markets have triggered a 30 percent drop in production, according to coffee grower associations.
Peru exports coffee to 46 countries, but the bulk -- 60 percent -- goes to Europe. Germany is Peru's largest single customer.
"This is the country's main crop, with 400,000 hectares (988,000 acres) under cultivation, as well as the main agricultural export," Agriculture Minister Milton Von Hesse told AFP.
He defended the government aid as a tool to fight drug traffickers and rejected critics who call the move a populist strategy aimed ultimately at winning votes.
Many coffee farmers used to grow coca in the mountainous jungle valleys, selling it to drug traffickers to be made into cocaine.
"Coffee has been an efficient tool against drug trafficking, eradicating coca plantations in the countryside and providing a dignified standard of living to those who opted for it," Agriculture Minister Milton von Hesse told AFP.
The European Union and the United States have backed programs promoting coffee and cacao beans as alternative crops to wean farmers off the lucrative coca business.
In Peru, 14 companies formed by ex-coca farmers now grow coffee, cacao, palm trees harvested for their edible hearts and another kind of palm grown for its oil.
The ventures are backed by the United Nations Office on Drugs and Crime (UNODC).
Those associations bring together nearly 27,000 families of former coca farmers, working on 78,644 hectares in parts of the jungle that include the rough and tumble area where the Apurimac, Ene and Mantaro rivers meet.
Drug traffickers, as well as remnants of the Shining Path Maoist guerrilla group patrol the troubled junction, killing soldiers and police who dare stray into the territory.
Peru ranks alongside Bolivia and Colombia as the world's main producers of coca, grown exclusively in the Andes of South America, mostly on the eastern slope.
Some 62,000 hectares of coca crops produce more than 280 tonnes of leaves a year, according to the latest government figures from 2012.
The White House Office of National Drug Control Policy estimated in July 2012 that Peru's cocaine production was 325 tonnes, ahead of Bolivia (265 tonnes) and Colombia (195 tonnes).
During a recent protest march, farmers walked from their homes in the central highlands to the capital Lima demanding economic aid and technical help to fight the roya coffee blight.
The government promised to finance their debt, and got them to halt the protest just in time to celebrate Peruvian Coffee Day.
"It is great that they have addressed our demands. The financing of our debt was demanded by thousands of our coffee-growing brothers," said Isaac Porras, head of the Association of Coffee Growers of the Central Jungle.
Many Peruvians blame the spread of the roya blight on temperature changes caused by climate change.
Sober heads acknowledge that there are other issues, too.
"We did not take advantage of the good times, and there are still structural problems in our sector, such as low productivity and a meager post-harvest infrastructure," said Peruvian Chamber of Coffee and Cacao chief Ricardo Huancaruna.