Day 6 – How do you win in the market if you don’t know the rules?

Day 6 – How do you win in the market if you don’t know the rules?

Quinoa is entering into Stage 3, Maturity in its product life-cycle. This is where Stage 2, Growth, is now coming to a grinding halt as the market becomes saturated with product and prices begin to fall due to the increased competition and easy availability of product. Until this year, Bolivia was the largest quinoa producer in the world. Coupled with Peru it made up 92% of the world’s quinoa supply.  Now new quinoa producing countries such as Ecuador, the US (Colorado and Nevada), Canada (Ontario), and Argentina are entering into the market devising new ways to grow this high protien Andean grain which loves cool, dry salty soils and plenty of sunlight. These four countries make up 8% of quinoa production.  Even Kenya and the Indian Himalayan region are beginning to grow quinoa.  Consumers now have many more options when it comes to purchasing quinoa.

economics4 2When product supply exceeds customer demand, as happens in the Stage 3 Maturity product cycle stage, prices go down. This is devastating for the thousands of small, highland Bolivian farmers whose sons left city jobs to return to the country-side to grow the lucrative grain and families who have taken out loans based on raising future prices of quinoa. Quinoa growers do not know about supply and demand curves.  They just know that market prices have fallen.

This May the Bolivian market price for quinoa plummeted to $1 a pound, 50% less than what it was a year ago. Until now quinoa prices had risen at an average rate of 70% a year, increasing five-fold in just 7 years.   What the farmers also don’t know is that the market has cycles and there are ways to work within these cycles. As a product enters Stage 3, maturity and begins moving towards Stage 4 Saturation (the final stage is stage 5, decline), they can gain a foothold in the market by branding their product, creating value-added benefits for it,

Organic, Fair Trade quinoa product.

Organic, Fair Trade quinoa product.

, and making its origin important. The government can help too by cerating internal markets such as school lunch meals and providing technical assistance and incentives for creating new in-country uses for quinoa.

Meanwhile, without knowledge of market cycles and supply and demand curves, my Bolivian counterparts report that today’s quinoa growers feel that people are lying and cheating about the low quinoa prices and the others are trying to undermine their sovereignty and well being by suddenly dropping these prices.  I will study this more closely when I get to Bolivia on Friday.

Tomorrow’s blog: Delicious authentic quinoa recipes – from Bolivia!

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