(Originally posted on 15 January 2013)
Peru exports over a USD100 million worth of natural products to the US and EU market. ITC is supporting companies to strengthen their access to the United States markets. In December, I visited the companies and learnt more about the challenges they face in both marketing and supply. Here is a snapshot from one field visit to San Martin in the Amazon basin.
Sacha Inchi is a nut cultivated by smallholders in the Amazon basin. Processors turn it into snacks (such as covering it with chocolate) as well as oils used in salads and cooking. Due to its Omega 3 properties, it is heavily in demand and estimates show that its value in the US market is worth USD2 million and growing fast.
Sacha inchi – Amazonian “superfood”
Market access barriers
A handful of companies in Peru are exporting the products to the US. In response to buyer requirements, exporters certify most of their product according to the US and EU organic standard. Fair trade is also in demand.
Consumer safety in the US is governed by Food and Drug Administration through an Act known as Generally Recognized as Safe (GRAS). Exporters have requested support from ITC to help overcome this non-tariff barrier. ITC will do this in partnership with PROMPERU and GIZ.
You will not find the product in the EU due to the Novel Food Regulation – under this Regulation, sacha inchi is considered a “novel food” as it was not used for human consumption to a “significant degree” in the EU before 1997.
A farming community in San Martin, Peru
San Martin lies in the northern region of Peru in the upper reaches of the Amazon basin. Three years ago Wallis Winder, founder of Amazon Health Products, introduced sacha inchi to the region providing free seeds and technical advice to small holder farmers. At present the company works directly with 218 producers organized in 10 committees in Bellavista and Lamas. We visited the Pukashpa community, a small producers association perched on a hillside in the Lamas district where Wallis sources his crop. The community has no electricity and like much of the region; it is mainly reliant on agriculture for its income.
Wallis Winder’s Amazon Health Products show sacha inchi crops to Alex Kasterine and Josef Brinkmann from ITC
Lead farmer Pedro explains cultivation techniques
High returns but risk aversion
Sacha inchi offers good returns for farmers as there are two harvests of the crop per year and it is easy to establish and maintain. During a training farmers were receiving on composting, they informed us of how the crop had generated higher incomes for their families. However, as the nut is still novel to this area (and prices may fall one day), farmers still perceive risks to adopting the crop. They mitigate these risks by planting two other crop types. These include:
- Food crops (maize and papaya): These are crops which farmers are accustomed to and can be consumed immediately. However, they have low economic returns. As they are sprayed with agrochemicals they threaten the organic certification status of the sacha incha that grows alongside.
- Biofuels: Incentivised by input packages offered by the local government last year, farmers have focussed much of their land on these crops. However, there has been no follow up from the government on the purchase of these plants. These plants are a hindrance as they are difficult to remove with thick stems and embedded roots.
The weather in this region is unpredictable as seen by the recent drought that was followed by heavier than normal rains. Experts put this unpredictability down to climate change.
Amazon Health Products extension officer leads a training on making compost
Side selling is a common problem in agricultural and natural product markets. Wallis, like many other private companies who have made investments in training for communities, also faces this challenge. Traders come to the village at harvest time and offer higher price for the sacha inchi. Wallis and his lead extension officer frequently explain to farmers that it is important to think long term. Amazon health products have invested in the community and guarantee a terminal market for their goods.
Even though there is no guarantee that farmers will sell their products to Wallis; a key factor for preventing side selling is building rapport and trust within the community through frequent visits and technical support. Training is particularly important for quality and crop management and meeting organic certification requirements. For example, one farmer spraying pesticide on his field can ruin organic certification for the whole community.
No spraying = more bird life
ITC (2012) North American Market for Natural Products
ITC (2012) NTM Survey of Peru
Images: Renatto Francisco Cánepa Vega and Alex Kasterine