Foods and fads: The welfare impacts of rising quinoa prices in Peru

Riding on a wave of interest in “superfoods” in rich countries, quinoa went in less than a decade from being largely unknown outside of South America to being an upper-class staple in the United States, the United Kingdom, and elsewhere. As a result, concerned commentators suggested that the rising international demand for quinoa, which tripled prices, might have substantially harmed Peruvian quinoa consumers. We study the impacts of rising quinoa prices on the welfare of Peruvian households. Our analysis suggests these fears are unwarranted. A descriptive analysis shows that quinoa is a small part (<1%) of the average household's budget share for the roughly 30% of households that consume quinoa. Our econometric analysis generally finds that as quinoa prices rose, welfare increased in regions with higher concentrations of quinoa consumers. Specifically, we use 11 years of a large-scale, nationally representative household survey to construct pseudo-panels at three geographic (district, province, and department) levels to look at the relationship between the international price of quinoa and the value of real household consumption, our proxy for household welfare. We find for the two smaller geographic regions (i.e., districts and provinces) higher concentrations of quinoa consumption or production are associated with a small and statistically significant increase in household welfare in response to quinoa price increases; in the largest regions (i.e., departments), higher concentrations of quinoa consumption or production are associated with small declines in welfare of less than 1% of total household consumption. Our findings that the international trade of quinoa has not been harmful to household welfare in Peru thus run counter to some of the myths surrounding quinoa.