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Production and commercialization of quinoa by smallholder producers in the Junin region, Peru

Quinoa is a staple food traditionally cultivated for subsistence and local consumption in Andean regions but the crop has attracted the attention of consumers in high-income countries for its high nutrient content. In Peru, the quinoa sector has rapidly been integrated in international and national markets during the last decade, leading to the development of the sector and a transformation of the quinoa supply chain. Higher demand for quinoa and development of the quinoa sector entails potential opportunities for local smallholder producers to increase income, improve productivity, and improve access to new technologies. However, increasing quinoa prices and increased price volatility create serious concerns on the production and consumption decisions of local smallholder producers, and on the environmental impact of expanding quinoa cultivation and changes in the quinoa production practices of smallholder farmers. While quinoa has recently been recognized to entail the potential to contribute to food and nutrition security in the world, the consequences of the ongoing transformation process in quinoa supply chains for smallholder quinoa farmers in Andean regions are unclear. There is very little empirical evidence about the economic and environmental implications of the transformation of the quinoa sector on smallholder producers in Andean regions. This dissertation aims to contribute to this research gap by analyzing the recent transformation of the quinoa value chain in terms of quinoa consumption, production technology, value chain coordination and environmental impacts. I focus on the Junin region in Peru, one of the oldest quinoa growing regions and one of the five sub-centers of genetic diversity of quinoa.    

In chapter two I analyze the effects of changes in quinoa prices on the production and consumption of quinoa among smallholder farmers. I estimate the own price elasticity of consumption of quinoa for quinoa-producing farm-households. I rely on the Barnum-Squire farm-household model to explain the effects of food price changes that simultaneously affect farm-households’ consumption and production decisions. I apply the theoretical model to original farm-household survey data from the Junin region in Peru. The estimates show that a 1% increase in the quinoa price results in a 0.429% increase in quinoa production and a 0.238% increase in its consumption. The finding of positive own price elasticity of consumption of quinoa suggests that the global quinoa boom did not adversely affect the nutritional intake of smallholder quinoa producers. In chapter three I study farmers’ preferences and willingness to pay for improved quinoa varieties. I use a discrete choice experiment and estimate generalized multinomial logit models to control for preference and scale heterogeneity. I find that farmers generally prefer improved varieties over traditional varieties, with mildew-resistance as the most important crop trait. In general, farmers prefer varieties that are characterized by larger grain sizes, higher yield levels, lower levels of saponin, and a reduced maturation period. Yet, food-insecure farmers are found to be indifferent to early maturation and larger grain size, which can be explained by a lower degree of commercialization among these farmers. Results imply that developing mildew-tolerant and higher-yielding varieties with a medium to low saponin content is a priority for investments in quinoa technologies that are designed to benefit small-scale and food insecure farmers in the Andean highlands of Peru.

In chapter four I investigate the impact of participation in farmer associations and contract farming on quinoa farm performance. I use primary farm-household survey data and I employ a propensity score matching technique to examine the impact of participation in farmer associations (horizontal coordination) and contract farming (vertical coordination) on farm revenues, productivity, and producer prices for quinoa. I find that participation in vertical coordination is associated with better yields, likely stemming from increased specialization, while participation in horizontal coordination is associated with higher producer prices, likely stemming from increased bargaining power and reduced transaction costs. The yield effect of vertical coordination is found to translate into substantial revenue gains while the price effect of horizontal coordination is found to be too small to result in higher gross or net revenues. Participation in both vertical and horizontal coordination is associated with both higher producer prices and improved quinoa yields but has similar effects on gross and net revenue as vertical coordination alone. I conclude that the ongoing process of innovations and modernization in the quinoa supply chain entails benefits for smallholder farmers for whom quinoa is a traditional subsistence crop. The spread of these innovations can result in more broadly shared benefits among smallholder farmers, but this requires public and private investments. In chapter five I assess the sustainability performance of smallholder quinoa production. I use primary data from two rounds of a survey among smallholder farmers in the Junin region of Peru and secondary data from Ecoinvent and LCA Foods databases. I employ a combination of a life cycle assessment and a data envelopment analysis to link the environmental performance of quinoa production with the economic performance and quantify the eco-efficiency of individual farms; and a fractional regression model to examine the heterogeneity in eco-efficiency across farms. I find that conventional quinoa production creates a global warming potential of 7.82 kg CO2-equivalent per kg of protein, which is similar to the environmental impact of organic quinoa, or any other grain crop, but much below the impact of rice and food from animal origin. Also, the eco-efficiency among smallholder quinoa producers is low, on average 18.2%, which is explained by an excessive use of mineral fertilizers and a switch to mechanical threshing. I conclude that quinoa, with its specific nutritional characteristics, can make a contribution to more sustainable global food production, but attention is needed to the soil fertility management practices of smallholder Andean farmers to reduce the environmental impact and increase the efficiency of smallholder quinoa production.

Date:29 Sep 2015 →  16 Jun 2021
Keywords:Agricultural economics
Disciplines:Agriculture, land and farm management, Applied economics, Economic development, innovation, technological change and growth
Project type:PhD project