United States safety certificate could quintuple Peru’s exports of indigenous food products
Industry players in Peru expect sales to the United States of sacha inchi, a nutrient-rich traditional plant, to jump to US$ 2.5 million in 2015, following the lifting of a major barrier to trade in their largest export market.
In September 2014, the United States Food and Drug Administration approved a submission prepared on behalf of Peruvian exporters with ITC support, and classified sacha inchi oil as ‘generally regarded as safe’ (GRAS), a key threshold for exporting large quantities of food products into the United States market. Exports to the United States currently hover around US$ 500,000 annually.
‘At least five American importers were waiting for the GRAS approval to close contracts with us,’ says Juan Manuel Benavides, Director of Amazon Health, an exporter of natural ingredients.
‘The United States market for ingredients is huge, but the use of ingredients requires GRAS status,’ says Miguel Navarro, Operations Manager at Agroindustrias Osho, another exporter in the region.
Sacha inchi, sometimes called Inca peanut, is a plant rich in protein and fatty acids, cultivated and harvested in Peru’s Amazon region, including in the San Martin area, where it provides cash income to over 1,200 families of producers.
Almost a quarter of Peru’s population lives in poverty, and about 90% of them are in areas with high biodiversity. Improving the market position and increasing the sales of biodiversity-based products represents a unique opportunity to improve the living conditions of farmers and harvesters of these products.
In Peru, ITC has provided support to nine exporters of sustainably sourced natural ingredients, including sacha inchi and golden berry, a fruit indigenous to South America. The companies received information about international market conditions and opportunities.‘Comparative and competitive advantages have been established and the market has been quantified. This information is highly valuable,’ says Pedro Martinto
Housman, CEO of Villandina.
ITC assisted the companies and their farmer suppliers in obtaining fair trade certificates. ‘This opens a new market for us: the fair trade market, which we didn’t have access to,’ Martinto says. ‘We can provide higher incomes for the growers,’ which in turn improves sustainability of supply, he says. The nine companies working with ITC buy from over 10,000 suppliers in the country’s Andes and Amazon regions.
‘The money from the golden berry that we sell is used to educate children, to pay for health and clothing, as well as to feed ourselves,’ says Humberto Durand Chuquimango, one of the 187 golden berry farmers who received training on fair trade and sustainable growing practices.
SMEs also received support to participate in international trade fairs, where they could display their products, demonstrate their nutritional benefits and establish contacts with potential buyers. This was particularly important for sacha inchi, which is little known outside Peru, ‘so there is much work to be done and going out to these fairs is a very big opportunity,’ says Carolina Sanchez, sales manager at Shanantina.
While negotiating with potential customers at these fairs, the exporters realized that convincing buyers about the nutritional qualities of their products was not enough to close deals: without GRAS status, food companies would be unwilling to use their product as an ingredient. In response, ITC, in partnership with government agencies Promperu and Perubiodiverso, agreed to facilitate the preparation of the GRAS submission, which involved both scientific and legal work. Following a seven-month approval process, the certificate was granted in September 2014. Sacha inchi oil may now be used in granola bars, breakfast cereals, chocolates, and fats and oils such as gravies and mayonnaise, among other products.
‘This opens the door for widespread use as a mainstream food industry ingredient that can capture the interest of companies like Nestle, Unilever, Procter & Gamble and PepsiCo,’ says Guadalupe Amésquita, Sustainable Trade Officer at Promperu.
This article is a part of ITC's SME Competitiveness Outlook 2015.