Opening the door to exports for Peruvian smallholders
On a hillside in the Lamas district, in the upper reaches of Peru’s Amazon basin, you will find José Ramos, a smallholder from the Pukashpa community. Like many of the other farming communities around San Martín, a northern region of Peru, the Pukashpa community lack access to electricity, and mainly live from subsistence agriculture, growing yucca, plantains and fruits.
For centuries, smallholders such as José have been cultivating sacha inchi, a plant native to the Peruvian Amazon. Sacha inchi thrives in the local climate and offers a valuable source of cash to these communities. In recent years, the oil from the sacha inchi plant has gained international recognition for its health properties, including high levels of vitamin E and omega-3 fatty acids. It is used to promote weight loss, fight depression and prevent heart disease.
Interest has risen sharply – particularly in the United States of America – in exploring the world's biodiversity for ingredients that provide high nutritional value and functional health benefits. And in Peru, these natural products are fast becoming a label of the country’s uniqueness. According to the Peruvian Ministry of Environment, the total value of exports related to biodiversity based goods in 2011 was US$ 350 million. And around 40% of these goods are destined for the United States market. In Peru, a country where 30% of the population lives in poverty, mostly in rural areas dependent on agriculture, this increase could have significant impact on economic growth.
Despite increased international demand, Peruvian enterprises still find it difficult to break into foreign markets, especially Canada and the United States. Often because of a lack of access to finance and the limited capacity and skills of small and medium-sized enterprises (SMEs). In the United States, for example, one barrier has been the requirement to obtain the approval of the Food and Drug Administration (FDA) as ‘Generally Recognised as Safe’ (GRAS) for food imports. Any added chemical or substance is considered GRAS only when it can be demonstrated to be safe for consumption by a group of qualified scientific experts.
SMEs in Peru also lacked knowledge on how to make the most out of sacha inchi in the market, including how to position their products alongside other organic and natural products, and how to improve production efficiency.
To tackle such challenges, the International Trade Centre (ITC) through its Trade and Environment Unit has provided technical support for the development of a GRAS assessment dossier for sacha inchi oil. This involved evaluating the safe usage of the oil, the manufacturing methods and the specifications against the criteria set out under the GRAS regulations. An expert panel was established to sign a consensus statement and notify the results to the FDA.
The GRAS assessment was submitted to FDA in March 2014. If approved, it will open the door for every smallholder wishing to export sacha inchi into the North American market. Sacha inchi crops already yield gross returns of US$ 5,000 per hectare, and this could increase substantially with GRAS approval, offering a huge income boost in very poor regions of Peru.
ITC has recently conducted market analysis of three Peruvian natural ingredients, including sacha inchi. This has provided an overview of the potential in the United States and Canada, covering market, regulatory and technical requirements. It also lists contact details of companies that already use Peruvian natural ingredients, making it easier for farmers to target buyers of their produce.
ITC’s Trade and Environment Unit has also assisted exporters of sacha inchi and other natural products to attend trade fairs, including Biofach (Germany) and Supply Side West (United States), giving them the chance to connect with buyers directly. These market linkages matter because producers and exporters are enabled to locate and identify new markets for sacha inchi. In fact, in 2013 alone, enterprises assisted by ITC and Peru’s export-promotion agency, PromPeru, struck US$ 502,500 worth of deals at trade fairs.
For José and the other smallholders growing sacha inchi in San Martín’s Lamas District, and elsewhere in Peru, improved knowledge and skills mean that they are enabled to grow more and sell more. And that is good news not only for them, but for the families and communities that they support.