“Implications of the Quinoa Boom on the Farmers’ Income" : How do changes in the quinoa market structure mediate quinoa farmers’ income

This thesis analyzes the implications of the current quinoa market structure on some aspects of the farmers’ income such as producer prices and bargaining power through an alternative approach to mainstream economics. The increased demand for quinoa during the last few years, especially since 2006 have led to an increase in the value and volume of the transactions related to this market. As a result new private firms have entered the quinoa market seduced by the potential profits. The entry of these new private firms has changed the structure of the quinoa market, which through new business practices have displaced the monopoly that the peasant producer organizations had in the market for organic quinoa exports. The implications of such changes on the farmers’ income are studied in this paper through the Global Commodity Chain analytical framework which puts at the center of the discussion issues surrounding the power relations within a production process. While under mainstream economics efficient price discovery is thought possible through market clearing at each stage of the production process, the GCC analytical framework is more careful in drawing conclusions from market data and challenges us to inquire into the types of relationships amongst the different participants in a particular production process; which is why, this paper starts the analysis by mapping out the Quinoa Value Chain looking to uncover the power relations at work therefore the bargaining power of each actor and ultimately the distribution of profits. For the case of the quinoa farmer in Bolivia, this paper shows that the new business practices brought by the private firms manifested in vertical integration strategies which include “contract systems” have limited the bargaining power of the farmer to its contract specifications. Hence the possibilities that quinoa farmers have to profit from the booming demand for their crop are seriously circumscribed by those who are able to more successfully enter the models of vertical coordination. Lastly, this thesis bears in mind that a limitation in its analysis is the lack of sufficient knowledge regarding the type of relationship between the peasant producer organizations and the farmers, since this information could bring light on explaining some recurrent themes mentioned by the farmers interviewed during the fieldwork and that is the issues of price volatility. Often farmers would mention their frustration about a lack of knowledge regarding how prices are set in the quinoa market, which often caused them significant losses. Furthermore, despite the increasing difficulty that the producer organizations have in fulfilling their role of “protecting the farmer” under the new quinoa market structure, these remain important for the lives of the farmers, which is why this paper recommends the need for state policy on control mechanisms to help stabilize prices in the quinoa market (currently characterize by high levels of volatility) as well as a greater support for the producer organizations since these represent a point of reference and buffer between the quinoa farmer and the private firms. Concluding, the data presented in this paper is a combination of desk research and fieldwork interviews to a wide spectrum of actors which include: government personnel, university lecturers, private firm and producer organization representatives as well as quinoa farmers. Relevance to Development Studies The recent boom in food type commodity prices between 2006 and 2008 has reopened the opportunity to analyze how do farmers fair under what are presumed to be favorable market conditions – that is high crop prices. This thesis focuses on the quinoa farmers in Bolivia and analyzes the implication of high quinoa prices on the farmers’ income in a more holistic way that the Global Commodity Chain (GCC) analytical framework allows in contrast to mainstream economics. Although producer prices data was taken into consideration as a point of departure for the analysis, this paper does not rely on these figures to draw conclusions from. Instead, through its analysis attempts to uncover the power relations governing the Quinoa Value Chain and in this way contribute to the economic literature on the quinoa case with a more challenging and thought provoking debate. Lastly, not much research and data is available on the current market structure post the changes in its demand. Most academic works on the subject date back to 2005, which is precisely when the craze for quinoa and its prices start to shoot up. Hence this work aims to contribute with more up to date data as well as fieldwork interviews that have captured the current sentiment of the different actors’ participants of the Quinoa Value Chain.