The race to produce Quinoa: opportunity knocks for grain farmers

Publication | June 2016

Introduction

The “super food” quinoa is big business. Many countries who are already the largest wheat exporters, including the US and Australia, are hoping to add quinoa to the list of grains which they can produce on a mass scale and export at a much higher price than wheat. Quinoa sells around $2,500 a ton1 compared to wheat which is under US$200 a ton.2

Global demand

According to data from the UN Food and Agriculture Organisation, demand for quinoa has grown 300 per cent between 2007 and 2012. There appear to be two reasons for this increase in demand. Both relate to its health benefits; not surprising in an increasingly health conscious consumer society. The first is that it is the only food crop that contains all of the amino acids, trace elements and vitamins. The second is that quinoa is gluten-free. A 2013 Research and Markets report forecasts that the gluten-free market will be worth US$6.2 billion by 2018 and is expected to grow at ten per cent a year.3

Possible global supply

Quinoa is traditionally grown in in the Andean region due to the regional climate. Bolivia is the main exporter of the grain and Peru has seen a significant growth in exports. Peru’s exports to UK grew 76 per cent in 2014, and by 2015 had increased to 47 per cent of all quinoa reaching the UK.4

Due to growing international demand, farmers are discovering new ways to develop the right seeds and farming techniques to mass produce quinoa in areas outside of South America. US farmers have been producing quinoa on a small scale since the 1980s but are now seeking to expand to large scale production. It is estimated that new varieties of quinoa will be developed within five years and these new varieties will be able to be grown in different regions of the US which will allow production to reach commercial levels. Australia is currently testing growing the crop in a hot, dry climate, with trials centred around Narrogin in the wheatbelt and Kununurra in the Ord River irrigation area. In addition to Australia and the US, there are over 50 other countries trying to produce quinoa commercially. Some countries have already prepared for the eventual mass scale production of quinoa. Bolivia for example is looking to establish a genetically unique brand “Quinoa Real” which will sell at a premium – a way to ensure it maintains its position as a dominant supplier.

Cautionary tale

However, quinoa is a cautionary tale about food security. According to the Guardian article Can Vegans Stomachthe Unpalatable Truth About Quinoa,5 countries such as Peru and Bolivia have been so focused on exporting the premium commodity that the price of quinoa has risen so costly that locals can no longer afford the grain that was once their nourishing staple food. Since this article, there have been many conflicting reports as to the true effect of the ramped up production of this commodity due to the high overseas demand.

Concerns have also been raised about the environmental effects of the transformation of quinoa from a subsistence crop to one that requires mass production. These include the possibility of overworking the land, the increased use of pesticides and the impact on livestock and wildlife.6

The future?

Since many countries are racing in the hope to mass produce this valuable commodity, the countries that are already producing quinoa are being squeezed to produce and export as much as possible. As a result, issues of local food security may be a reality for Peru and Bolivia. However, as long as quinoa continues to yield high returns, the race is still on for which country can produce and profit from this commodity.

Footnotes

  1. Depending on how product is processed, as of April 4, 2016 according to http://www.fairtrade.net/standards/price-and-premium-info.html
  2. As of April 22, 2016 according to http://www.indexmundi.com/commodities/?commodity=wheat
  3. http://www.reuters.com/article/australia-quinoaidUSL3N0TW05L20150225
  4. 4 http://www.cityam.com/234187/uk-quinoa-importssurge-in-2015-as-waitrose-reports-sales-jump-
  5. Article published in 2013, http://www.theguardian.com/commentisfree/2013/jan/16/vegans-stomachunpalatable-truth-quinoa
  6. http://vegnews.com/articles/page.do?pageId=6345&catId=5

  • 1 Depending on how product is processed, as of April 4, 2016 according to Fairtrade International
  • 2 As of April 22, 2016 according to Index mundi
  • 3 Quinao Australia article, Reuters
  • 4 UK quinoa imports surge in 2015 as Waitrose reports sales jump, City A.M.
  • 5 Article published in Article published in 2013, The Guardian, 2013
  • 6 Quinoa Quandry: The Truth Behind South America’s Superfood, VegNews
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