Archives for July 10, 2018

Day 5.  The European Fair Trade challenge.

Day 5.  The European Fair Trade challenge.

ANAPQUI, a member of European Fair Trade, is the oldest quinoa cooperative in Bolivia explained Celia Arcaine, the CEO of this multi-million dollar cooperative.  Managing 70 workers, 5,000 family farmers from the departments of Oruro and Potosi plus two processing plants is no easy feat, nor is it cheap.  Fair Trade Europe does not cover our costs, explains Arcaine.  The prices come from Peru, now the world’s largest quinoa producer, and the German Natural Products trade show where all orders are placed each year for all of Europe.  Fair Trade Europe needs to compete with other market forces to set a price the is as sellable and fair as possible.  “Today,” Arcaine said, “a ton of Fair Trade, organic quinoa is $2,200 – $2,400 FOB” (freight on board – this is to say at the time the shipment of quinoa leaves the port of origin for its export destination).

I think about this.  This is 15% less than it was a year ago – and even then, farmers were complaining the price did not offer them a “living wage” as Fair Trade guaranteed.  A previous study in mine in 2017 confirmed that $3,000 a ton FOB was a fair price.  This translates to a 800Bs a quintal price for organic quinoa farmers.  Today’s common market is at 570Bs. This gap has maintained itself since the extreme drop of quinoa prices in 2015, the year my study began.

Arcaine explains the extreme methods and special care the ANAPQUI takes with all of its production.  Besides having their own team of agricultural agents, they also give each member their own warehouse for their quinoa – locked with a ley and tag that can only be removed by the member itself.  When a sale comes that includes that member’s quinoa, they personally come to the plant to open their warehouse and submit their quinoa for final testing.  This way the quantity of their quinoa is always known up front to be 100% pure, organic and ready for market, explained Arcaine.

ANAPQUI owns and manages its own Fair Trade Europe certification and as a group chooses how to apply the premium they earn through their sales.  “Each year we rotate,” explains Arcaine.  “One year we favor the producer, another the region, and the then plant.”  She invited me to visit the new plant they had built in the El Alto industrial zone of La Paz, where they produce the highest quality gluten free, quinoa noodles and cookies.  This week is the annual assembly of the cooperative.  Leaders will come together to determine how the premium will be distributed, this time to the producers.  This year it is their turn, explained Arcaine proudly.

Arcaine spoke of her childhood in Salinas where she grew up as a quinoa farmers, growing quinoa and potatoes with her family for their own consumption.  Back then quinoa was easy to grow, no market pressures, and no insects, and animals eating it.  No droughts, dust storms or early frosts.  It was an easy time, she explained.  A hectacre of land easily produced 20 quintals of seed and the families consumed it themselves.  If it was sold, it was valued at a rate of two bags of quinoa for one bag of rice or sugar.  Arcaine explains how even today she continues to enjoy the traditional quinoa growing methods she learned as a child, working alongside her husband, in the Andean chachi-warmi style, to hand plant seeds; blessing them with a q’olla offering to the earth mother, Pachamama; nurturing them as they grow by decorating the fields with confetti, paper snakes and streamers during carnival; and hand cutting and collecting the robust, colorful seed heads for processing into quinoa.

Day 4. – What happens when US Fair Trade goes south?

Day 4. – What happens when US Fair Trade goes south?

US Fair Trade is managed largely by private import companies who contract out to farmers who together with the importers agree to follow predetermined guidelines of an adequate minimum trade price, good working conditions and a healthy production environment.  US Fair Trade in Bolivia is managed through Jisa, a quinoa buying and processing company owned by Andean Naturals in the US.

Today I talked with Eufraem Huyallas, the founder of APROCAY, a large quinoa association with 407 members who historically produced upwards of eight metric tonnes of quinoa a year valued at over $32,000.  We were in the city of Oruro, far from the Quillacas quinoa fields where I first met Huyallas in 2015.  For the past five years he explained, they worked with Jisa (once known as Andean Family farmers) as a Fair Trade producer.  They benefitted well he explained, receiving access to better natural pesticides, a mechanized processing plant, warehouse, and machines to make quinoa flakes and puffs.  All of this was purchased with the Fair Trade premiums they earned through their Fair Trade quinoa sales and investments made by the Association itself.

This year, that relationship ended.  As the quinoa market prices dropped so did Jisa’s sales from APROCAY plummeting from eight tonnes in 2015 to just two by 2017.  With fewer sales came less investment for future production.  Farmers for the first time since becoming Fair Trade members had to make personal investments into natural pest control and fertilizers.  Some members might not have purchased the highest quality products as before, explained  Huyallas, causing a container of quinoa to be returned in 2017 – at his own cost.  APROCAY’s quinoa did not pass Jisa’s strict organic standards in a laboratory test of random samples.  The second order came through OK but it turned out to be the final order from JISA.

“The returned my letter, (Fair Trade certificate)” explained Huyallas.  “Always they (Jisa) managed this and paid with our premiums and our money.” He continued.  He explained the certificate cost $4,000 a year to maintain not including the cost of maintaining the organic certification as well.  “I’m not a sales person,” lamented Huyallas.  “I produce quinoa.”   This year APROCAY will work with irrigation projects and will produce more quinoa.  However, they do not know where to sell it because the only (US) Fair Trade buyer is Jisa and Jisa is no longer giving them contracts.

Hyallaes ran through numbers talking about there much higher cost of producing quinoa according to Fair Trade organic standards including more expensive fertilizers, pest control and the added cost of certifications.  In all, he explained it would cost the farmers more than they could ever make back if they continued as an organic, Fair Trade producer group estimating that each farmer would lose about 50 to 70 Bs for each quintal produced (about a 12% loss).  He explained even with his past Fair Trade market access, the prices paid did not adequately cover production costs, though the premiums did help the strengthen the organization.

Now facing no Fair Trade market access at all and having to sell on the common market which he has had little interactions with for the past six years, Huyallas is considering dropping APROCAY’s Fair Trade and organic certifications.   “There is not enough to be made with organic certifications which cover the cost of that certification either,” explained Hyallaes.  Organic quinoa fetches a 10% higher market price than conventional quinoa and through organic certifications seem to cost about the same as Fair Trade ones, a 12% extra cost.

I asked what his next steps will now be since he does not have guaranteed access to the local markets.  He expressed interest in working more on his quinoa processing into puffs and flakes and selling quinoa as an ingredient for school breakfasts.

“Who knows?” he asks, turning to face me, “maybe we’ll end up producing onions.  If all goes well with the irrigation project we will be very good onion producers.”

Day 3: Living Well – a new paradigm for development

Day 3: Living Well – a new paradigm for development