Peruvian Quinoa Market Amidst Export Challenges and Climatic Issues

Quinoa

France

Published Dec 8, 2023

Peru, the leading global exporter of quinoa, faces a significant decline in exports, with a 15% YoY decrease in value in 2022, totaling USD 89 million. In the first seven months of 2023, Peruvian quinoa exports also declined to only 29,139 mt, worth USD 61 million, reflecting an 11% YoY decrease in volume and a 4% YoY decrease in value. The challenges, amplified by the pandemic, include rising logistics costs and container shortages, prompting Peruvian exporters to prioritize closer markets. The EU, a major buyer, simultaneously has turned to internal production, further diminishing demand for imported Peruvian quinoa. Although Peru remains a primary EU supplier, shipments have decreased by 6% YoY to 12,851 mt in 2022. In terms of production, climatic challenges, particularly the El Niño phenomenon have led to a 25% YoY decline in Peruvian quinoa production to 85,016 mt in 2023. Late sowing, water scarcity, and low fertilizer use contributed to this production decrease. To navigate these challenges, Peru still needs to watch the climate situation for the development of Peruvian quinoa in the future. In addition, the Peruvian quinoa industry needs to adapt to the changing landscape, considering alternatives like the United States, as it diversifies to regain competitiveness amid evolving global demand dynamics.

Lower Export of Peruvian Quinoa Due to Lower Demand in the EU

Peru, the primary global exporter of quinoa, has been grappling with a downturn in its quinoa exports. Over the last three years, there has been a notable decline in Peruvian quinoa shipments, with 2022 exports totaling USD 89 million, marking a 15% year-on-year (YoY) decrease in value. The challenges have been exacerbated by the pandemic's onset, causing a surge in logistics costs and container shortages. Higher expenses led Peruvian exporters to prioritize shipments to closer destinations, further diminishing competitiveness in distant markets like the European Union (EU) and Asia. In addition, this downward trend is also attributed to major buyers like the EU opting to produce quinoa internally, resulting in diminished demand for imported Peruvian quinoa.

Figure 1. Peruvian Quinoa Exports from 2016 to 2023

Source: Trademap and the Peruvian National Superintendency of Customs and Tax Administration

Peru remains the most important supplier to the EU with 12,851 metric tons (mt), accounting for almost two-thirds of shipments - although this still represents a deficit of 6% YoY in 2022 compared to the previous year. Most of the imports are destined for domestic consumption, but many countries like France and Germany have had enough productive success. In France, for instance, quinoa production has seen steady growth, rising from 3,000 mt in 2020 to 3,500 mt in 2021, with expectations of continued expansion. Meanwhile, Germany showcases positive developments with 350 quinoa varieties cultivated in the experimental field of the Institute of Crop Science and Plant Breeding in Kiel, contributing to the overall advancement of quinoa in the EU market. Despite the increasing competition from the EU, it is noteworthy that the EU production has yet to match the substantial volumes of Latin America and cannot fulfill all of the EU demand. Nevertheless, these efforts contribute to reducing the EU’s' reliance on imported products. Due to this, the demand for imported quinoa from the main consuming regions, such as Europe has been steadily declining.

Figure 2. Top Markets of EU Quinoa Imports

Source: Eurostat

Lower Production of Peruvian Quinoa Increased Prices

The challenges faced by Peru extend beyond market dynamics to severe climatic issues affecting production. The El Niño phenomenon has led to high temperatures causing droughts in key quinoa-producing regions like Puno, exacerbating water scarcity and increasing pest-related losses. Consequently, the Peruvian Ministry of Agriculture expects a 25% YoY decline in quinoa production to 85,016 mt in 2023, compared to 113,355 mt in the previous year. The climate situation shows no signs of improvement, putting the supply for the next year in serious jeopardy.

From Jan-23 to Aug-23, Peruvian quinoa shipments totaled only 29,139 mt, worth USD 61 million, reflecting an 11% YoY decrease in volume and a 4% YoY decrease in value. The limited supply managed to partially compensate for prices. The lower production in quinoa production this year is due to El Niño which resulted in late sowing, water scarcity, and low fertilizer use. Late sowing, pushing the harvest to late May or early June, has contributed to increased prices for Peruvian quinoa. The price of Peruvian quinoa in Aug-23 increased by 5% YoY to 2.15 per kilogram FOB Callao.

Figure 3. FOB Price of Peruvian Quinoa

Source: The Peruvian National Superintendency of Customs and Tax Administration

With lower production, the market situation also depends on the development of global demand. The future hinges on the Peruvian quinoa industry's ability to adapt to changing dynamics. Since the EU reduced reliance on Peruvian quinoa, Peru needs to diversify its market to increase its competitive quinoa landscape The United States (US) is one of the alternatives to redirect Peruvian quinoa. The US imported 10,152 mt of Peruvian quinoa in the first eight months of 2023, an increase of 9% YoY. However, the climate situation still needs to be watched for the development of Peruvian quinoa in the future.