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.”