Archives for February 1, 2017

DAY 42 – Creating a real Fair Trade value

DAY 42 – Creating a real Fair Trade value

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Breads made with kaslala quinoa.

Looking at the quinoa market from the producer perspective, the Fair Trade producer earns 4% of the total value of the quinoa they produce.  Producers however, consistently say this is not enough.  To cover production costs including their own labor, they need to earn 800Bs a quintal ($114 for 220 pounds) or $.51 a pound.  Plugging this amount into the current quinoa production costs it brings us to a FOB of $2,778 per ton.  This is 6% more than the current Fair Trade price.  To continue down the value chain through distribution to wholesale re-packagers down to consumer retailers, the final product arrives at a consumer price of $8.12 a pound – a 12% increase over the current Fair Trade, organic quinoa price.

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The proposed pricing for a pound of premium, heritage variety gourmet organic quinoa sold to consumers for $8.12 a pound and providing a living wage for farmers.

My UMass students conducted a market study of organic Bolivian Quinoa Real with the Mark of Original and found consumers willing to pay up to 25% more for a premium quinoa product that has higher nutritional values and cultural connections.  The Bolivian Quinoa Real is hand processed and 87% is blessed – both at planting and harvest – for the earth mother (Pachamama) to bring forth abundance, love and compassion for the farmers and the grain itself.

Being here in the Quinoa Real fields, I am noting that amongst the standard red, white and black varieties of Quinoa Real, there are many eco-types and sub-varieties with distinct properties and culinary uses which US consumers would value.  Some like the white Kaslala are great for bread making and baking while others like the white Toledo cook quickly.  Currently these are mixed and sold simply as “white quinoa” at low market prices.  From a marketing perspective, it appears there exists a unique, profitable, premium market for the rare, distinct varieties of Quinoa Real that Bolivian farmers carefully plant and harvest, but get mixed together in the general export sales of quinoa by color.  It seems that consumers are ready for the option – the challenge is to create the new market space and investment for this.

DAY 41 – Farmers earn less than 30 cents a pound for organic quinoa.

DAY 41 – Farmers earn less than 30 cents a pound for organic quinoa.

So what is the real cost of quinoa?  Looking at the entire value chain of quinoa there are complexities and challenges in all directions from the world markets competing for consumer dollars to the producers themselves, scraping to make a living from an undervalued grain that is not covering its production costs.    Here we will look at the quinoa value chain starting from the middle – the cost per ton for quinoa at the world market pricing of FOB from the Chilean seaport of Arica where sales are made to work markets.

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Quinoa price differences at the FOB point of sale form the Chilean port of Arica.

Prices are from the end of January 2017 and vary depending on the quality and origin.  Small grain industrialized conventional quinoa from Peru and elsewhere is selling at $1,900 per ton while conventional Bolivian quinoa is offered at $2,100 a ton.  Organic quinoa that is largely only found in Bolivia and is most likely is the Quinoa Real variety is $2,350 a ton and the Fair Trade certified, organic Quinoa Real from Bolivia has a value of $2,600 a ton – a 27% higher price than the cheapest quinoa from Peru.  In February Bolivia expects to have the European Community legally accept their Seal of Denomination of Origin for their Quinoa Real variety which has the distinct qualities of a large, creamy seed, the highest protein and mineral  contents of any quinoa, is organically produced on small farms, and only grows within in a 30-mile radius around the salt flats.  This can help to secure a new level of pricing for Bolivia’s quinoa, or at least make it more competitive in the world market at current prices.

Fair Trade organizations, based in both in Europe as Germany’s World Fair Trade Organization (WFTO) and in the US as Fair Trade USA(FTUSA), are set up to protect farmers’ rights, grow community and ensure producers receive a living wage.  Just recently Fair Trade has recognized Bolivian quinoa as a potential Fair Trade product and has been offering membership and price guarantees to Bolivia producers.  Currently there are about 20 quinoa growing associations signed on as certified Fair Trade producers.  This membership comes with costs and rules – organizations pay hundreds of dollars for audits and must uphold commitments to transparency, inclusiveness and democratic decision making. In addition to receiving a minimum price guarantee, regardless of market movements, producer groups also receive an annual premium based on a % of total sales that year.

I will offer a value chain analysis of the current Fair Trace price of quinoa and see where it arrives both for the consumer and the producer to determine the fairness of that price.  Next I will offer an alternative that can help farmers get what they consider to be a fair price, and what once was the Fair Trade minimum for quinoa in 2015.

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Price break out for a pound of Fair Trade, organic Bolivian quinoa sold to a US consumer in a local grocery store.

At $2,600 a ton FOB from Arica, Chile – Bolivia’s closest sea port, Bolivia’s Fair Trade, organic quinoa prices out at $1.18 a pound.  Private Fair Trade companies are buying this quinoa from producers at 450Bs a quintal ($64 for 220 pounds) or $.29 a pound. This represents 25% of the FOB price.  The rest goes towards covering the costs of commercial processing and cleaning ($.14 or 12%) and the administration, documentation and transportation from the farm to the plant to the port ($.75 or 64% of production).  This same $1.18 a pound of quinoa is shipped by container to the US (in this case) where it is sold to wholesale buyers.  The buyer (importer) sells the container of quinoa to large companies such as Pepsi and Kelloggs who then repackage the quinoa in small quantities under different brand names and sell it to stores who then place it on their shelves for consumer purchasing.  Each step in the supply chain has its own price points.  For example in the retail food industry the common store markup for packaged food products is 30%.

Taking a $7.17 per pound price for a box of organic quinoa in my local food coop – which has a 30% markup on their packaged foods – we can work out way backwards to the FOB to see where costs are incurred in the quinoa value chain.  The store gets $1.65 per pound on the product it sells (23%), the re-packager gets $2.60 (36%) which also covers the cost of packaging, branding and administration, the importer gets $1.86 (or 26%) which covers their administration, distribution and sales costs.

Day 40 –  40 years of quinoa development

Day 40 –  40 years of quinoa development

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Traditional housing in the remote quinoa lands.

How did the small, remote, impoverished quinoa communities of yore grow into a multimillion dollar international market?  The answer is years of development projects, investment, experiments, failure and success – starting in the 1970s

The 1970s was the time of the agriculture revolution in the development world with mechanized, chemical farming of massive acreages producing high yields of carefully developed crop varieties.  Quinoa was not overlooked in this period as hundreds of thousands of development dollars poured into the quinoa region to help develop this ancient grain for commercial use.  It was certainly a time of trial and error for the region – a place with delicate, volcanic soils, little rainfall and minimal organic material for building soil strength (nutrients).

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The vast, isolated quinoa landscape and llama.

Farmers tell tales of foreign agronomics arriving with different fertilizers, pesticides and industrialized farming methods – each time being “outsmarted” in the long run by the native wisdom and organic farming techniques of the ancestors.  Miguel Huyallas tells of the Dutch development worker who in the 1980s came with urea and other processed fertilizers for the quinoa farmers.  Miguel challenged him to a quinoa growing “contest” and offered a piece of his land to the Dutch agronomist. The first year, the Dutch’s quinoa grew better than Miguel’s – larger, taller, with higher yields.  However by the second year, the Dutch’s soils were already exhausted and his quinoa produced much less than Miguel’s organic quinoa fed with organic llama manure.  The agronomist explained Miguel, never returned after that.

There are patches of desert land where nothing grows, explains a Bolivian agronomist in Salinas.  The soils, he says, are burnt by the rigorous use of chemical fertilizers by USAID projects which did not take into account the slower decomposition of matter in arid environments and the lesser amounts of carbon in the volcanic soils.

Gladys of Chuvica talks of the pesticides which were used in abundance in 1970s development projects in her community.  She explains how the people did not have proper training in applying and caring for them, often saturating their skin and breathing in the fumes.  She attributes her mother’s early death at 50 to poisoning from the pesticides and believes there is a high rate of undocumented cancers in her region because of this.  The other day a woman farmer in Quillacas told me how once when she was hand fumigating her crop, the backpack style tank that is filled with pesticides leaked all over her clothes and through to her skin before she realized there was a leak in the tank. The farmers do not want to fumigate.  They understand the dangers of the chemicals and no one I have visited in the highlands is using chemical fertilizers in their production.

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The quinoa fields of Otuyo, Salinas.

Never-the-less, development progressed and through decades of trial and error, an export quality, semi-industrialized quinoa industry was developed.  The first quinoa producers’ association ANAPQUI was founded in the 1980s.  France helped finance the association’s presence in international trade shows in the 1990s – helping to build awareness and markets for the tiny seed.  Belgium helped fund the first tractors being used in quinoa production through CECOAT, a Bolivian NGO, revolutionizing how the tiny hand-grown mountain grain was produced.  Tractors cannot function on the traditional mountainside fields of the quinoa, so a valley method of production was created on the flat plains of the salt flats, opening up hundreds of thousands of acres of new land for quinoa production. According to long time quinoa agronomist, Genaro Aroni, by 2014 Bolivia’s quinoa industry reached $200 million a year in sales with over 60 businesses worldwide grappling for access to the Bolivian “grain of gold,” and what the United Nations termed the high protein super food for the future of mankind.

The development came at a cost though.  Aroni estimated that by 2016 there were over 2,000 tractors tearing up the delicate soils of the altiplanos plains.  With the recent drop in quinoa prices however, farmers are no longer planting the 30 to 60 acre lots they once managed opting for 21 acre plantings instead and are seeking to sell their tractors.  Worse though are the thousands of acres of desert lands now left fallow.  The slow growing tola plants and pampa grasses have been removed leaving the land to dry and soils to be carried away by the wind.  Worse, there is no longer forage for the llamas and wild vicunas which once dominated Bolivia’s vast plains.  Projects to “reforest” the plains with tola plant seedlings are underway but it’s a long, slow process.

In addition, with the new lowland farming of quinoa, new insects arrived which were never present before – including a moth whose larvae eat the immature quinoa seed heads.  This has proven to be a huge challenge for farmers who value organic production and ancestral knowledge.  Never had these insects been present before, so there was no ancestral knowledge to pull from.  Over the years both conventional and organic pesticides have been used to fight the “worms” as they are called locally, but with mixed results.  The conventional pesticides such as cyprometherine work but ruin the organic certification of the seed while organic pesticides are still in an experimental stage and not very efficient.

Perhaps the most knowledgeable in the recent history of quinoa development is agronomist Aroni.  A quinoa grower himself from the Uyuni region, he’s spent 30 years on the quinoa development largely working with Proimpa, a Bolivian NGO whose mission is to, “Promote the conservation and sustainable use of natural resources, sovereignty and food security, and the competitiveness of agricultural products for the benefit of producers, the agricultural sector and society as a whole; Through research and technological innovation.”  Many of Proimpa’s programs and come from collaboration with the Collaborative Crops Research Program (CCRP) funded by the McKnight Foundation.

A recent example of a McKnight funded collaboration is the development of pheromone traps with Dutch academics.  The traps which each contain 10 different pheromones, attract male moths to prevent them from fertilizing the eggs of the female moths.   The moth larvae, a caterpillar, eats the valuable quinoa seed heads before they are formed causing thousands of dollars of damage and lost production.  This year is the first time the traps were put into use and farmers reported satisfaction with how the traps worked – noticing a substantial reduction in the number of caterpillars they were finding on their quinoa plants.

Aranoi speaks of the needs of the farmers in the areas of more funding for organic pest control systems and more investment into improving the delicate soils.  He is currently working with integrative systems where quinoa is intercropped with native grasses that hold down the soil and add much needed organic matter and nutrients to the soil.  One such plant is the k’ela, a wild leguminous tarhui that is a nitrogen fixer and can also be foraged by animals.

As far as the future of quinoa, Aroni sees more diversification in production being key for the people in the quinoa region.  Traditionally quinoa was grown in balance with llama production with both industries complimenting each other – the llamas provided manure and transportation for the quinoa and food for the families and the quinoa stalks and 2nd quality seeds provided supplemental food for the llama.  Now llamas and quinoa are often managed separately and the sizes of the herds have not kept up with the quinoa growth. In addition, there is not as developed of a market for llama meat, especially in the international arena.  Bolivia’s low fat, high protein, free range, organic llama meat is naturally low in cholesterol and is an excellent protein source.  Aroni sees the development of the llama industry as a way for quinoa farmers to move forward in their economic development and well-being.  He also sees the development of effective organic pest control systems and a clear, transparent, realistic pricing system for the quinoa as key to the sustainability of this industry in Bolivia.  A sustainable price for quinoa producers?   800Bs a quintal – the same price that farmers themselves have been asking for from all across the salt flats.

DAY 39 – L’kalla quinoa from 1000 BC

DAY 39 – L’kalla quinoa from 1000 BC

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Marita demonstrates how quinoa was (and still is) processed by foot – grinding the grains in a course stone bowl to remove the bitter husks. This quinoa grinding bowl is 3,000 years old!

So how long has quinoa been cultivated and consumed in Bolivia? If you ask the people from the salty frontier towns of Santiago, Chuvica and San Jaun – huddled at the base of the mountain range circling the salt flats just a few miles from the Chilean border – they will tell you 3,000 years.   In this region is the ancient city of L’kalla, a large array of huge chunks of meticulously placed coral and stone forming round rooms with windows that align with each other – looking out in the four directions over a vast expanse of dry sand and distant salt flats.  Narrow corridors wind amongst the vast array of structures, leaving one to wonder what the hilltop city would have looked like 3,000 years ago when it was said to have been a busy seaside port.

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Pottery shards, an arrowhead and turquoise trading beads found at the L’kalla site.

Evidence of trade and prosperity still exist.  The town is encircled on the one side by a vast array of chulpas, stone tombs where the remains of ancestors were stored – mummified in baskets, and brought out for village celebrations. Though the mummies were removed and sent to museums long ago.  Tiny arrowheads used for fishing, pieces of intricately decorated pottery, turquoise beads once used for decoration and trade along the Chilean coast and carefully hand carved bone and shell buttons can still be found in the sandy soils amongst the abandoned village.  Years ago, a small study of the city was done dating it to 3,000 years old.  Grains of quinoa and quinoa grinding bowls can be found there as well.

DAY 38 – The royal quinoa legends of the salt flats

DAY 38 – The royal quinoa legends of the salt flats

Jacha Inti founder, Sergio Nunez, with a sheath of quinoa - yet to be processed.

Jacha Inti founder, Sergio Nunez, with colorful sheaths of quinoa.

Here is the legend of where Royal Quinoa came from:

In ancient times the Bolivian people lived like fisherman, eating the fish from the vast, deep inland seas that covered the altiplano.  Then one day they dried up andante people and nothing to eat.  They were sick, starving and prayed to the gods for help.  They claimed mounting and begged forgiveness.  The ancient goddess Quiua took pity on them and said not to work she would send them a plant that did everything – it would serve as bread, soup, meat, salad and rice.  She sent her beautiful daughter down to help plant the seeds.  The girls walked around the dread seabed and soon tiny green plants began appearing where she had walked.  The princess/daughter loved to dance and would spend the afternoons dancing around her tiny green plants, her skirts a different color each day: organic, golden yellow, maroon, light pink.  One afternoon the princess disappeared and was seen no more.  The huge, tall seed heads of the plants she left behind turned the colors of her skirts and thus the magnificent colors of the quinoa were made.

Another story:

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The Uyuni salt flats as seen from Fish island.

Uyuni means “resting place” in the local language of Aymara.

Quinoa Grower Gladys Caral’s grandfather remembers the times before electricity, cars and money – where the quinoa was the currency which people traded for other foods – the “grain of gold” as it’s known.  At different time of the year, farmers would load up their llamas with blocks of salt cut from the salt flats and sacks of quinoa.  Llamas can only carry about 60 pounds so long trains of 10-50 llamas driven by 1-3 families would be readied with their cargo.  The farmers would walk with their llamas for about a week to reach the Chilean towns where they traded their quinoa and salt for pears. Two weeks later, the children of the quinoa lands would run and greet their fathers returning with vast cargos of delicious fruit.  Other times farmers would load up their llamas and take salt and quinoa to Argentina in exchange for flour or to Tupiza in Bolivia in exchange for corn.  Thus Uyuni was the resting place – where all would return from their trades.

To prepare the llamas for crossing the salt flats, tiny leather shoes were made which would be wet and slipped over the llama’s delicate feet to protect them from the salt.  When dry they would shrink to the form of the llama’s foot.  In addition, to protect the llamas from the harsh sun glare of the white salt flats, the hair around their eyes was painted black – making it look like there were wearing sunglasses (which did not exist in that time).  Donkeys were also used to carry loads but did not need the black eye protection since they were already black.  They did not need boots either since their feet were harder and fitted with iron horseshoes.