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. As a consequence of that rapid rise in the popularity of quinoa, the price of quinoa tripled between 2006 and 2013. We study the impacts of rising quinoa prices on the welfare of Peruvian households. Using 10 years of a large-scale, nationally representative household survey, we combine pseudo- panel and difference-in- differences methods to look at the relationship between (i) the purchase price of quinoa and the value of household consumption, which we use here as a proxy for household welfare, and (ii) household quinoa production and household welfare. We find that increases in the purchase price of quinoa are associated with a significant increase in the welfare of the average household in areas where quinoa is consumed, which suggests that the quinoa price increase has had general equilibrium effects extending to non-producers. We also find that quinoa production is associated with a faster rate of growth of household welfare, but only at the height of the quinoa price boom. Our findings are robust to a number of different specifications.