The Economist explains

Why the price of quinoa has fallen

By S.K.

QUINOA'S tricky pronunciation (keen-wah) has not stopped it from taking over salads in kitchens, cafés and supermarkets. The grain used to be the preserve of Andean peasants, but is now hailed for its high protein content by opinion-formers from Oprah Winfrey to the United Nations. Some even celebrated 2013 as the International Year of Quinoa. But since 2014 the price of quinoa has been plunging. Why?

Before Western consumers developed a taste for quinoa, it was mostly produced by poor farmers in the Andes—in the harsh mountain conditions, not much else would grow. Bolivia was the main exporter; in Peru producers were largely producing it to eat themselves, consuming around three quarters of what they produced in 2004. But as the rich world discovered the grain, demand outstripped supply. At the peak of the boom, quinoa was going for $6 or $7 a kilogram, more than triple the pre-fad rate.

The soaring price transformed global production, prompting a large increase in supply, which ultimately pricked the quinoa price. The existing farmers increasingly used their quinoa crop to sell, and new growers were tempted in, from agribusinesses switching over their crops, to taxi drivers from La Paz growing some as a side business. Even European farmers started getting in on the action. Today more than 50 countries around the world are growing it. Bolivian producers lost their price-setting power. Whereas in 2012 Bolivia exported more than quadruple the amount of quinoa as Peru, by 2015 Peruvians undercut the Bolivians to export more than twice as much. As supply increased the new producers could offer it more cheaply; the Peruvian farmers had been harvesting the quinoa using sickles, but the more modern agribusinesses were using combine harvesters.

Since its peak the price of quinoa has fallen, by 40% between September 2014 and August 2015 alone. It is unlikely to rise any time soon; both European and Peruvian producers are holding on to unsold quinoa stock. This puts the original Andean farmers in a pickle; using their current farming techniques they are not competitive on price alone, and the market rate for quinoa is $2 per kilogram, compared to the $2.60 that the Fairtrade Foundation says is necessary to maintain a decent standard of living. In the long-run, carving out a niche as the original authentic quinoa producers is probably their only hope of propping up the quinoa price.

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