Quinoa’s dilemma due to rising prices

Macroeconomics is often ironic. Many experts have historically shown that as the global need for any agricultural product typical of a certain geographic area increases, its supply and affordability for the local population decreases. This is because local farmers prefer to sell the product to international food companies that pay higher prices than to sell it in local markets that offer comparatively lower prices.

I saw this happen first hand in India. I lived in the country for a while a few years ago when my husband was posted there for a project. India is prized for some varieties of mangoes and some varieties of apples grown in the lower Himalayan regions. Surprisingly, most of these prized varieties are inaccessible to the locals. Most of the produce from these varieties is shipped directly to supermarkets abroad, with very little reaching local markets.

In fact, in many cases, the only product that stays in the country is the one that the farmer keeps for his family and friends. The trickle of produce that actually makes it to local markets ends up lining supermarket shelves and is priced comparable to what they would be in a US market, not to mention the fact that India has a quarter of the purchasing power. .

The upshot of export demand is that apples and mangoes, at least some varieties, have the highest food inflation across all food classes in India.

Fortunately, apples and mangoes come in several varieties. Also, they are not staple foods and therefore Indians do not starve.

The subject becomes much more delicate when we start talking about Quinoa and Bolivianos. Farmers in the country have grown the grain for a long time and almost the entire country is a consumer of it. Much of the population uses it as a staple food and depends on it for their livelihood.

However, now that the whole world admires quinoa, a section of the media believes that ordinary Bolivians can no longer afford the food. In fact, they began to move away from quinoa and began to adapt unhealthy fast food that results in malnutrition.

This is alarming and definitely not something the FAO (UN) had in mind when declaring 2013 the International Year of Quinoa. One of the objectives for which the FAO made 2013 the International Year of Quinoa was to popularize the wonderful grain and spread it throughout the world.

Quinoa: the great hope of the UN

The UN has recently declared 2013 as the International Year of Quinoa. The Food and Agriculture Organization (FAO) has the goal of halving global malnutrition by 2015, and quinoa will play an important role in this.

Quinoa’s flexibility to grow in adverse conditions gives the UN its rays of hope. Since the grain can grow at very high altitudes and in harsh climates, it becomes suitable for growing in regions not currently under cultivation.

Another reason is that quinoa is rich in nutrition. The grain alone can maintain the protein, fiber and essential protein needs of the population.

And that has led to a huge increase in the popularity of quinoa. In an increasingly health-conscious world, quinoa has come to be recognized as a supergrain and is gaining acceptance, spreading across the Americas and Europe, and now increasingly into Asia.

Quinoa Prices

This rise in popularity, while good for meeting FAO objectives, has led to a sharp increase in quinoa prices. In the last decade, prices have skyrocketed from less than $70 per ton to $2,000 per ton today. This is an average annual growth of almost 40%, many times higher than the world average food inflation.

In the last five years, quinoa prices have more than tripled.

It doesn’t bode well for global food security if half the people on our planet can’t afford grain.

The sustainability debate

While the rise in prices has cheered farmers in Bolivia who are seeing a massive improvement in their levels of prosperity, this is definitely not sustainable. If prices continue to rise as they have in the past, quinoa will soon become inaccessible to many.

Basic macroeconomics will then dictate a drop in quinoa consumption. Rising prices will transform quinoa from super grain to super exclusive grain.

This is a challenge that the FAO must face, since its first prerogative is to keep quinoa affordable to the masses throughout the world.

But are Bolivians worried?

Going back to our original discussion, is quinoa really causing malnutrition problems in the Andean communities of Bolivia and Peru?

Rising prices of agricultural products mostly brings joy to the farmer who grows the product. Traditionally, the peasants of the Andean highlands of Bolivia and Peru have been the poorest society on the South American continent. The popularity of quinoa has changed some of that, raising the economic levels of farmers.

Speaking to the United Nations, Elias Vargas, a local farmer who grows quinoa, said that “people everywhere are buying quinoa. In La Paz, you can buy it in the markets. It’s everywhere. For that reason, we can also sell small quantities. With that money we support our families”.

Vargas and his neighbors are small farmers and do not have access to global markets. They sell their crops to a local Bolivian coffee chain, which uses quinoa in its salads, sandwiches and desserts.

There are more than 130,000 farmers like Vargas who grow quinoa on 250,000 acres.

The surprising thing is that quinoa was even considered in Bolivia as ‘poor people’s food’ and Bolivians preferred to eat wheat and rice. The increased global fascination with quinoa has even benefited domestic consumption and allows small farmers with little exposure to global markets to fetch healthy prices. Clearly, the economic condition of the community has improved significantly and quinoa cultivation now allows them to spend more on housing and education.

There is a significant difference in the prices of quinoa in local markets in Bolivia/Peru and in supermarkets in North America. The processed, rinsed, and packaged quinoa sold by food companies like Bob’s, Eden, or Truroots retails at a huge premium in North America over quinoa sold locally in Bolivia.

This alleviates the concerns of critics of quinoa’s growing popularity.

The delicate ecology: maintaining prices and sustainability

However, the UN and the FAO remain attentive to the situation. The rapid increase of agriculture in an ecological system often begins to destroy the system, mainly due to human ignorance or greed. Precisely the same thing can happen to the Andean highlands and to the Bolivian/Peruvian population.

The UN notes that if prices continue to rise, local farmers should reduce their use of quinoa and switch to supplying to international food companies. Worse still, quinoa prices may actually increase in local markets and more farmers gain access to big food companies, avoiding local markets that pay less.

The World Health Organization (WHO) is already concerned that about a third of children under five in the Andean countries are already chronically malnourished. Switching from nutritious quinoa to processed foods will only make things worse.

Higher incomes may also eventually lead locals to shift away from comparatively coarser (but healthier) grains like quinoa toward less healthy processed foods of choice, inadvertently and ignorantly worsening nutritional balance. This is something that is already happening in Bolivia as higher-income peasant families switch to other staples like noodles and rice, which are much cheaper.