Trade in Quinoa: Impact on the Welfare of Peruvian Communities

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This report presents the results of an International Trade Centre (ITC) study looking at the impact of fluctuating global quinoa prices on rural Peruvian households dependent on the product for their basic food security.

Peru is one of the world’s leading producers of quinoa. Over the last 10 years, this protein grain has become a much sought-after product, especially in North America and Europe. As a result of increased demand, the price of quinoa nearly tripled between 2004 and 2013. 

This price rise garnered international media attention in 2013. Several articles published that year argued increasing quinoa prices were reducing the welfare of rural Peruvian households because families could no longer afford to buy this basic food staple. Other reports contradicted this, saying rising quinoa prices were ‘the greatest thing that has happened’ to rural Peruvian families.1 Amidst all this, campaigns emerged discouraging consumers from buying quinoa in order to make it more affordable to poor Peruvian families.

Throughout this debate, there was little data to support arguments on either side. For this reason, ITC decided to conduct primary research with the University of Minnesota and Towson University to measure the impact of changing quinoa prices on the welfare of households in the Peruvian altiplano. ITC’s study surveyed 150 households in Peru’s traditional quinoa-producing regions of Cusco and Puno, between
September 2014 and August 2015

Contrary to the media’s assertions in 2013, ITC’s study found that when quinoa prices fell substantially, so too did the well-being of rural, Peruvian families. Towards the end of the 2015 harvest, quinoa prices fell 40%. As prices fell, total food consumption of surveyed households declined by 10% and wages fell by 5%. 

ITC’s study also presents key results from companion research on the impact of quinoa price fluctuations, based on data collected by the Peruvian Government. Both ITC’s study and the companion research confirm that the well-being of households in Peru’s quinoa-growing regions has risen and fallen along with quinoa prices. The evidence strongly suggests that quinoa consumption in developed countries contributes
positively to the development of poor, rural communities in Peru.

ITC’s study found that with falling prices, producers increased the amount of quinoa they stored. Farmers showed a willingness to purchase silos to improve their storage capacity and prevent loss from pests. Also, more than 80% of quinoa farmers said they would be interested in increasing quinoa biodiversity by planting additional varieties of quinoa in exchange for payments as little as $10. 

Based on these results and the companion research, ITC’s study makes three key recommendations for policymakers. In terms of storage, the study suggests considering an incentive structure for motivating the distribution of metal silos among quinoa cooperatives, as a way to mitigate the volatility of quinoa prices, and allow farmers to protect their crops from pests and rodents. To enhance the biodiversity of quinoa species and diversify income sources for smallholders, policymakers may wish to establish a payment for ecosystem services scheme.

Lastly, quinoa producers in Peru’s altiplano are less competitive than those in coastal regions. In order to reduce this competitiveness gap, trade and development promotion programmes should focus on helping rural cooperatives to differentiate their quinoa according to the nutritional benefits of its wide range of varieties and the organic nature of their produce, as well as by building improved business capacity.

Authors: 
Marc Bellemare
Authors: 
Seth Gitter
Authors: 
Alexander Kasterine
Authors: 
Ann-Kathrin Zotz
Authors: 
Efrain Obregon
Publisher: 
International Trade Center
Year: 
2,016