Challapata Market Price Service Discontinued

Recent developments have diminished the relevance of the Challapata market for the export prices of quinoa. At Mercadero we have therefore decided to discontinue the Challapata price service, following the suggestion of our informants. There are two main reasons for this: both quality and price of quinoa traded at Challapata are no longer representative for exportable quinoa. Below we will explain the new situation.

In the last one and a half year the price of white quinoa at the Challapata Market decreased drastically (Graph). It went down from US$6.24 per kg in January 2014 to US$1.43 per kg on 12 July 2015. However, on the same date, 12 July 2015, producer organisations paid US$ 3.18 per kg organic Quinoa Real, more than double the Challapata price. Whereas producer organisations and private companies have always paid a premium compared to the Challapata price, this difference has now become very big. Acccording to our informants, exporters have stopped to use the Challapata market price as a benchmark.

Important reasons for the decreasing price at Challapata are an oversupply of quinoa from different sources and lower quality of the quinoa sold on the Challapata market. The quinoa now offered to this market is reported to proceed not only from the southern altiplano but also from La Paz, Cochabamba, Chuquisaca and not in the least Peru. For some time, quinoa from the latter origins could earn a higher price at Challapata, where predominantly royal quinoa was traded. But now this practice has totally distorted the market Challapata. The quinoa on the Challapa Market used to be good quality conventional and organic Royal Quinoa. Today it is hard to guarantee product quality, hence prices go down (P. Claver, personal communication, 5 July 2015).

 

Graph Challapata Market Analysis 20140824

 

 

 

 

The role of the Challapata market

For many years the Challapata Market has been an important venue where the prices for conventional quinoa are set on a weekly basis. According to Raynolds et al. (2007), up until the 1970s the “Challapata Fair” represented the only commercial path where the farmers could sell their quinoa. However, the increased demand for the quinoa grain has led to the engagement of new players in the market. Each one of these players have different incentives and paying structures (Effel 2012).

At the Challapata market:

  • Farmers are paid on the spot;
  • Prices are set on the spot;
  • Prices are usually lower than what the producer organisations and private firms pay.

Farmers can sell their quinoa to Producer Organisations or to Private Firms, but the “Challapata Fair” was still considered quinoa’s “Wall Street” for a long time.  At the Challapata Market the quinoa prices are decided weekly and can raise or drop within the day. The Challapata price is determined by supply and demand, and this price used to be the benchmark for most Bolivian exporting companies and associations.

Sources:

Effel, Cinthya Verastegui (2012), “Implications of the Quinoa Boom on the Farmers’ Income” How do changes in the quinoa market structure mediate quinoa farmers’ income. International Institute of Social Studies, The Hague, The Netherlands.

Raynolds, L., D. Murray, J. Wilkinson (2007) “Fair Trade: The challenges of transforming globalization”. New York: Routledge.

 

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