DAY 36 – From industrialization to differentiation

DAY 36 – From industrialization to differentiation

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Quinoa industrialised processing in the remote town of Slainas.

So now what?   It is interesting to talk of markets, cycles, prices, yields – but what about the people behind the markets, the ones whose livelihoods depend on the quinoa harvest?  Following the cycles of development, mature markets can become industrialized with new product but they can also differentiate though the product itself.  This is how Fair Trade operates in other export commodity markets such as coffee and chocolate – putting a social and environmental value on production which consumers support through their purchases.

There are advantages to Bolivia’s quinoa production which can enable it to compete in new areas of Fair Trae, quality and variety – creating a premium quinoa with a higher price.  A small study conducted by my UMass students last semester, showed consumers willing to pay 30% more for organic quinoa that has a high nutritional and cultural value. The challenge now is to organize Bolivia’s diverse quinoa community of associations, cooperatives, private businesses, NGOs and government ministries to educte outside markets and consumers about the benefits of Bolivian quinoa.

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Packaged quinoa for sale in the US – a mix of many varieties listed as just flakes with no mention of location or type of quinoa.

The first step is the development of a Bolivian Seal of Denomination for the Royal Quinoa grown in a 25 mile zone around the salt flats.  This quinoa is distinct in its high nutritional quality and large, creamy seed formation.  It is also mostly organically grown, hand harvested and blessed.  This seal will be presented at the world famous German Natural Foods Trade Show in February – and if accepted, will create the name Royal Quinoa as something solely in reference to the distinct varieties of quinoa from Bolivia’s Salt Flat zone – thus opening a new market solely for Bolivia quinoa.  This is much like the name Champagne only being able to be used for grapes and sparkling wines coming from Champagne, France.  Monitoring and enforcement of the proper Seal use will be tricky here as will the marketing of the Seal to global audiences who are unaware of the distinction.

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The salt flat region where Bolivia’s Royal Quinoa Grows.

Another advantage of the Bolivian quinoa is the distinct varieties of seeds grown and their special properties – for soup, breads, energy, fast cooking…  International micro-markets for specialized gourmet quinoa exist – but they need to be found and developed.  The producers and associations are prepared to separate their quinoa by these distinct varieties (and not just white-red-black) but the market needs to also exist for the to sell this – by the container (20 tons of product at a time).  This is difficult as most market de

Loading 100 pound sacks of cleaned and weighed quinoa for final processing.

Loading 100 pound sacks of cleaned and weighed quinoa for final processing.

velopment is done through expensive and sophisticated foreign trade show participation where language and communications are huge challenges for the small Bolivian farmer or their cash-strapped association.

It would be interesting to explore the possibility of having a Bolivian quinoa presence at the US regional ExpoEast Natural Food trade show in Baltimore this fall.  But like the Seal of Origin, unique cross sector partnerships and commitments need to be formed to support this.

DAY 33 – the difficult evolution of Bolivia’s quinoa market

DAY 33 – the difficult evolution of Bolivia’s quinoa market

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A farmer studies a young quinoa seed head, bent by a worm chewing on the stalk. Healthy seed heads can grow to produce up to a half pound of quinoa seed each.

What’s happening with the quinoa in Bolivia?  Well many things.  First there was the boom, brought on by decades of international development work in the quinoa fields – improved (and some not so improved!) methods of soil management, seed planting, pest control, cultivation and harvesting.

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In the market quinoa is quinoa – red, white or black. But there are actually lots of varieties and differences in quinoa that is important for consumers and farmers.

Through much trial and error –  and there were plenty of errors – the delicate volcanic soils and the unique properties of the quinoa plant became better understood.  Teams, projects and supplies from the US, Holland, Switzerland, Israel, China and more slowly trickled into the area, finally reaching a high level of production and world recognition of the ancient grain around 2004.  By 2013, the world recognition of Bolivia’s “seed of gold” was growing exponentially, and like all fledgling new markets, the demand outstripped the supply, leading to elevated prices and a period know at the “quinoa boom” with total exports totaling more than $200 million, according to Genaro Aroni, a Bolivian quinoa agronomist with over 30 years working with this ancient grain. The boom lasted from 2009 – 2015 when prices suddenly drastically dropped by more than 75% – due to the entrance of new competitors in the market – largely from Peru, but also Canada and France.  Now the Bolivian quinoa farmers are struggling to cover their costs of production.  Many are saving their quinoa until prices go up again, others have left the quinoa region altogether – in search of better work.

Today the quinoa has entered into a “mature market” cycle – with little differentiation of product, relatively low prices worldwide, more production of quinoa from other places, and a steadily growing consumer demand, which meets the slowly growing availability of the product, as new producers enter into the market.

This is not good news for Bolivia’s farmers.  They pride themselves on their hand grown quinoa, deep ancestral knowledge of the plant, commitment to organic farming methods, and their own cultural connection to the ancient grain.  These qualities are not present in the current market of – white-red-black quinoa.  In the world markets, there is no distinction of how its grown, where, by whom or even what the quinoa itself actually is (it’s a seed not a grain).  There are actually over 70 varieties of quinoa – with many only able to be grown in Bolivia’s mineral rich, high desert salt flat regions.  Within the standard white-red-black spectrum, there exists countless specific quinoa varieties with distinct characteristics that are simply lumped together and sold as a single color type.  Some say that these ancient varieties are becoming lost as the market demands the simplified image of quinoa.  But in my research I found that they are actually only lost to the consumer.  The farmers know what they are planting – and the women know how to cook it.  Each variety of quinoa come with its own uses and recipes.

In the range of white quinoa alone, there exists the Tolerado which cooks the quickest; the high protein (18%) Hachachina; the sticky Caslala which is great for making bread and noodles;  the Q’oto which is toasted and ground into the beloved Bolivian pito; and more.

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Quinoa farmer checking her Caslala variety of break making quinoa – commonly known as white quinoa – but having distinct properties as being soft, sticky and perfect for baking.

One way to compete in a mature market is through product differentiation and market specialization.  In my former research, I focused on industrialization – looking at how quinoa communities can improve their market access, diversify their economy, create new jobs and build value through the transformation of their raw product (bulk quinoa for export) into processed foods.  In the 18 months I have been done, some associations and communities have done just that – with good results.

For example the quinoa growers association, APQUISA, in the town of Salinas now has a quinoa bakery and a contract with the local mayor to provide hundreds of regional breakfasts for schoolchildren daily.  This enabled them to expand their operations into a full bakery producing breads, cookies, and cakes for the local community and regional trade shows. They now have a store located on the central plaza of the town and are looking to expand distribution throughout the region, once they get improved packaging for their product which will extend its shelf life better.  The quinoa producers association of SOPROQUI in Uyuni had a similar contract with their regional mayor which also enabled them to expand their processing to breads, noodles, and quinoa puffs.  They work with their parent association ANAPQUI, one of Bolivia’s oldest quinoa associations, to access the quinoa processing equipment which produces quinoa flakes, flour and puffs.  ANAPQUI now has packaged products of different varieties of quinoa seeds and flakes with export to Spain.  In addition, a growing number of producer associations such as ANAPQUI, QUIMBOLSUR, APQUISA and the community of Otuyo, have their own quinoa processing plants – with the latest technology and laboratories – that can produce export quality quinoa, though reducing their reliance on contracted cleaning and creating a new revenue flow as some also clean others’ quinoa at a cost of 40 – 120Bs per quintal.

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APQUISA’s delicious quinoa bread – fresh made daily in Salinas.

The industrialization of quinoa is looking good – but it’s not the best.  The low market prices, minimal technical knowledge, and lack of capital investment, has made the industrialization costly and difficult.  APQUISA’s president Endulfo Gabriel C. invested $100,000 into their quinoa cleaning plant and bakery – with market prices so low, even with the extra national sales and production, they are behind on their payments to members for quinoa and do not have the funds to further develop their product, packing and seek export sales.  This is the situation for many of the local quinoa industrialists I have met.  The market is not giving them the movement of funds they need to move forward – in equipment, training and market development.

Stay tuned for tomorrow’s post – what could be next…

DAY 22 – Research versus Development

DAY 22 – Research versus Development

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ANAPQUI’s Fair Trade, organic quinoa bread being made for local consumption in Salinas.

As I enter into the quinoa lands which I have grown to know so well both in my initial 2015 field research and subsequent projects and research performed in UMass classrooms, I have a better idea of needs, possibilities and opportunities.  In addition, I spent several years studying women producers in the Fair Trade and coffee industries too.  I feel I have a good grasp of the needs and wants of Bolivia’s Fair Trade women producers.  I am also an economist and have a theoretical grounding in development economics.  And am a natural business developer, marketer and partnership builder.  I teach marketing to graduate students and started my own advertising agency out of college until leaving it to come to Bolivia in 1996 as a Peace Corps volunteer – working in Business Development.  While in Bolivia I developed several businesses, mentored students in being marketing consultants, and worked with Bolivian businesses to create export and national marketing opportunities for natural foods and other products.  Though I’m not an expert, I have an idea of things that can get done in Bolivia, how they can happen and what the opportunities are – especially in a US market.

So how does this impact my role as a researcher?

As I talk with women and hear them complain about low quinoa prices and their desire to make processed food products from their quinoa to create new incomes and jobs – it reminds me of the women coffee farmers who wanted the same thing.  Consulting with Bolivia’s Fair Trade CLAC (Latin American small farmers) representative, Tito Mendoza, he confirms that there are women working with Fair Trade chocolate, sesame seed, and brazil nuts who all want to do that same. – process their raw materials to create alternative industries and not just export raw materials in bulk.  The men however, I found in my coffee research and others in the quinoa industry have confirmed, enjoy the big numbers and ease of bulk export and do not want to bother with complicated food processing.  Though Fair Trade is supposed to work together equally amongst gender, men tend to dominate the decisions about where community funds are invested, and usually disregard the women’s projects – leaving them with no funding or support.  Their ideas stay as ideas – more often than not.

In economic development theory, the next step from the mass export of raw material is the industrialization and processing of that material by the producing country – the is where technology, innovation, marketing, product differentiation, and job creation come into play. In my previous research, I have recommended that farmers invest into product industrialization.

Now in the quinoa fields I ma met with women again, who want to transform product, create jobs for their community, feed the people of Bolivia and export their product to new markets.  However they don’t know where to start – need recipes, equipment, training, packaging, and investment.  They do have the raw materials, land, tiem and desire to make osmethign happen.

One items I brought with me to introduce women to the ways quinoa is being consumed in the US is a case of KIND bars which are made in New York and have popped quinoa as a viable ingredient.  The women were inspired by the bars and wanted to make their own.   When I contacted KIND about this they told me that each month they had a $10,000 fund that women could assess one time if they wrote a project proposal that won a monthly crowd funding competition.  Suddenly the idea of a feminine Fair Trade energy bar made from women-grown Fair Trade quinoa, brazil nuts, sesame seed and chocolate seemed feasible.  There is also Fair Trade honey in Bolivia but there are some restrictions with its use as an export food that need to be explored.  When I mentioned the KIND fund and quinoa bar to the women they are very excited and want to work on the project.

But what project?

I’m here as a researcher – not a developer.  Am I overstepping my role to start forming projects here too?  And where will the project take place?  Who will administer it?  Coordinate it?  See that funds are properly invested?  And of course someone needs to write the grant and get the funds in the first place.  Suddenly this seems really huge.  But it is also a great opportunity.  I think of the food processors I already know- making puffed quinoa, flakes, breads, cookies… Some are Fair Trade cooperatives such as ANAPQUI, or associations such as APQUISA, and others large private businesses such as Coronilla and Frencessa.  Can we share resources, or contract them for the project?  Or do we start with a quinoa community such as Otuyo – which is well formed and has resources (and also inaccessible due to mud) and begin on our own from there?  Tito from Fair Trade CLAC likes the idea and is willing to introduce the project to the other women in Fair Trade.  But it needs more support and collaboration than just that.  I also don’t want to get too distracted from my research.  However the final Part III of my research is in 2018 and that is time to get something set up perhaps – though from the US it would be difficult.

Thais is an open question I am still mulling over – what do you think?