New deal for Peru's alpaqueros?
A marketing system dominated by small-scale traders is blamed for the steady decline in the quality and value of Peru's alpaca fibre
Peru's alpaca herders, or alpaqueros, raise their animals in one of the world's most isolated regions, the grasslands of the Andean plateau, at altitudes above 3 500 m. But they know that the fine fleece of their alpacas fetches high prices on world markets: Peru's annual production of some 6 500 tonnes of alpaca fibre earns around $50 million in export income.
Only a fraction of that returns to the estimated 65 000 alpaquero families. Between the producers and large processing plants in the lowland city of Arequipa is a long chain of intermediaries. Small-scale traders collect the raw fibre directly from producers, then sell it to larger traders or processors' agents. Traders do link producers with processors, but – in the words of one report – they are "capturing an excessive proportion of the value in the chain".
That marketing system is blamed for a steady decline in the quality and value of Peru's alpaca fibre. Since intermediaries prefer to purchase by weight, and offer no premium for quality, herders have no incentive to produce higher quality fibre. Result: at a time when international markets favour fine, light fibres such as mohair and cashmere, less than 10 percent of Peru's alpaca output in 2007 was classed as "top quality". Meanwhile, alpaca farms in Australia and New Zealand are emerging as strong competitors, thanks to their breeding programmes, processing technology, quality standards and investment in research.
Toward a national strategy. To help Peru regain lost export market share while improving the livelihoods of its alpaqueros, a recent initiative of the Food and Agriculture Organization of the United Nations (FAO) brought together government representatives, alpaca producers, fibre processors and other stakeholders. After initial tension – producers complained about prices, processors criticized the quality of their fleece – consensus emerged at regional consultations on the need to improve quality throughout the sector.
Next came a series of national workshops that developed Peru's first Camelid Development Strategy. Adopted in May 2006, the strategy recognizes alpaca fibre as a "flagship product" of Peru and calls for strengthening producer organizations, promoting investment, developing product and processing standards, and improving research and extension services.
The strategy's adoption has been followed by action. With assistance from France and Oxfam, UK, the national producers' association established a centre in Puno to train farmers in selecting alpaca for better-quality fleece, and launched a breeding programme that lends out high-quality males.
Policies that benefit the poor
FAO's assistance to Peru's alpaca sector was provided by its Pro-Poor Livestock Policy Initiative (PPLPI), a programme aimed at helping countries formulate policies and make institutional changes needed to benefit low-income livestock producers. Download the PPLPI report The politics of livestock sector policy and the rural poor in Peru (FAO, 2006)
To break the hold of intermediaries, a network of collection centres has been set up to allow producers to bulk-up production, grade their fibre, and sell it on the open market through auctions. The centres are encouraged to use quality standards developed by the Ministry of Agriculture and the processing industry. FAO reports that many producers have taken advantage of the system, although most fibre collection remains in the hands of traders. "The benefits of this new way of doing business need to be made more widely known," FAO says, "so more alpaqueros can enjoy premium prices for higher quality fibre."
Consensus shaky. But consensus on the right approach to reviving Peru's alpaca sector may be shaky. In 2008, the Peruvian Government decided to break up a national camelid development agency that had been a key partner in FAO's initiative, and the new quality standards have not been widely implemented owing to disputes over their application and arbitration.
The global economic downturn is another dark cloud. In 2007, processing companies offered producers very low prices, claiming reduced demand from China. Prices in 2008 were no better. "Inevitably the cycle will turn," FAO says. "When that happens, much will depend on the willingness of government and industry to act on the central understanding reached during the strategy process: that fibre quality is the key to unlocking the sector's potential."
Contact us to get involved:
International Year of Natural Fibres
Trade and Markets Division
Food and Agriculture Organization of the United Nations
Viale delle Terme di Caracalla
00153 Rome, Italy
Fax: +39 06 57054495