UF/IFAS Student Conducts Potato Economic Research in Peru
Small potato producers in Peru are receiving help in the production and marketing of a native potato known as the yellow Tumbay, thanks to a joint agreement between UF/IFAS and the International Potato Center (Centro 
Internacional de la Papa or CIP).
UF/IFAS and CIP are jointly coordinating a study through CIP’s Program Papa Andina, (“Andean Potato”), to study production and marketing costs of the yellow Tumbay, a variety identified as having the greatest commercial potential of any native potatoes in the region. The yellow Tumbay, an ancient variety grown in this region for centuries, was identifiedby ADERS, the Association for Sustainable Development, a non-profit group that works extensively with small potato producers.
The UF/IFAS researcher on this project is Mike Jones, an undergraduate student in the Food and Resource Economics Department, studying under Dr. James Sterns. Jones traveled to Huánuco and Cayna, Peru from June 24, 2008 to July 15, 2008, collecting data for the study. Jones’ research is a cost analysis of yellow Tumbay potato production in this region. He is looking at both economic feasibility and at the additional information needed from producers to increase the accuracy of the cost analysis, since some of the data—such as production expenses—simply do not currently exist due to cultural factors.
Jones conducted much of his research during the multi-day Festival of Saint Peter, which drew a large number of people from the countryside, concentrating them in Cayna’s main square. The concentration of farmers in Cayna greatly helped Jones locate farmers meeting the parameters of his study.
Once farmers qualifying for the study had been identified, Jones administered a 16-page questionnaire compiled with help from CIP and their consulting associates. Interviewing farmers from dawn to well past darkness, he asked producers about a wide variety of economic factors such as soil preparation methods and cost, seed type and cost, chemical input costs, labor costs, etc.
A surprising number of producers did not know their production costs nor did they see the significance of knowing them. They buy; they sell; but they do not track expenses: that’s just the way it’s always been done. Some of the information could be reconstructed, which helped Jones’ task, but the farmers in this region need to learn how—and why—to track their production expenses, in order to meet the goal of raising their incomes.
Much of the labor is done by hand, partly due to the steep terrain. The terrain and small farm sizes make the purchase of a tractor impractical and far too expensive to justify the cost, particularly with lack of credit and lack of pre-harvest resources needed to gain access to tractors, even rentals. Access to credit is extremely limited outside membership in cooperative organizations such as ECOMUSA. Manual labor is therefore the norm, much of it unpaid family labor.
ECOMUSA, or Empresa Comunal de Servicios Agropecuarios, a local cooperative with 28 members, receives support from INCOPA/ADERS. INCOPA, the “Competitive Promotion of the Peruvian Potato to Respond to New Market Opportunities,” is a collaborative associate of Papa Andina, financed by the Swiss Development Corporation and coordinated by CIP. INCOPA’s mission is to improve competitiveness of the potato market chain, with an emphasis on small producers. INCOPA takes advantage of new market opportunities and promotes the use of the Peruvian potato.
ECOMUSA is a model of a successful communal organization in the region. ECOMUSA conducts technical training for all the producers in the cooperative, often taught by agricultural engineers from ADERS. In one such session Jones attended, the engineer lectured on identification and proper treatment of traditional and newly developing plant diseases and pests. ECOMUSA’s specialized training service teaches producers the most cost efficient and environmentally friendly ways to maintain a healthy crop, which doubtless accounted for the far lower rate of pesticide use by members of ECOMUSA compared with producers outside the cooperative. These producers are able to use eco-friendly techniques to bring in their crops, cutting cost for agrichemicals.
The main source of cash to begin a new crop is money saved from previous crops and cash from the sale of animals raised specifically for that purpose, cash to plant a new crop. Many farmers, particularly those outside the cooperative, were unaware that any credit opportunities existed for them. Yet, credit was sometimes the deciding factor in whether farmers were able to plant yellow Tumbay potatoes.
Yellow Tumbay seed is more expensive and the variety requires the use of fertilizers and pesticides. Without credit, many farmers’ low cash and capital situations at planting time forced them to turn to low-investment, low-return white potato varieties like Canchán.
Jones’ research thus showed that access to credit is critical for farmers to switch to the yellow Tumbay native potato and thus is critical to their ability to raise their net incomes after harvest. His research also revealed that membership in a cooperative is important to gain access to credit, although the success of ECOMUSA in providing credit to farmers has created interest amongst lenders, some of whom are investigating the potential for entering this area to provide credit to farmers.
Jones’ economic research also shows that small potato producers need education to show them the importance of keeping economic records in order to tell whether or not they are actually making or losing money on a crop. Jones’ research, assisted extensively by University of Florida alumna Anna Flaig, determined that a fair number of the farmers in his study actually lost money on their crops, paying more for soil preparation, agricultural inputs, and labor than they earned on their crops.
Flaig helped Jones calculate the cost of chemical inputs, locating prices for each type of fertilizer, insecticide, and fungicide mentioned in the farmer interviews. Since the farmers frequently had no idea how much they had paid for their agrichemicals, Flaig worked with Jones to visit every supply store in Huánuco City and Ambo, going through their records to unearth the correct prices of the chemicals the farmers remembered buying.
When the harvest was due, a harvest-time interview with Ing. Celfia Obregón, President and CEO of ADERS Perú, revealed that the market prices in Lima and Huánuco were too low to justify the cost of transportation. As a result, all 28 producers within ECOMUSA followed the cooperative’s advice to sell from the field. Many sold their crops to buyers the ADERS staff pre-arranged for them.
As a contrast, only 67% of independent producers sold from the field. Worse, still, those producers who paid an average of 69.25 Peruvian soles (SO-LACE) in extra costs to bring their potatoes to the market in Cayna—or for home sale—then received 11% less for their products than independents who sold from the field. The double blow of transportation costs plus an 11% lower price represented an unnecessary double cut in their revenues. ECOMUSA producers avoided that loss entirely due to the cooperative’s ability to communicate market information. The value of joining a cooperative is clear, both in terms of training in production techniques and in terms of critical market information.
Jones’ research shows that it is possible for small potato producers in Peru to bring in a profitable crop of the native Peruvian yellow Tumbay potato, but multiple factors need to be in place for that to happen. Producers need education in production techniques such as proper treatments for diseases in order to reduce their production costs; they need access to credit; they need the market information provided by cooperatives such as ECOMUSA; and they need education in economic record-keeping in order to determine their actual costs so they can see how their purchases and their labor costs affect their profit.
Fortunately, a network is in place that helps producers accomplish these things, namely the local cooperative ECOMUSA, with its close association with CIP, INCOPA and ADERS, funded by the Swiss Development Corporation, and now affiliated with UF/IFAS through Jones’ research. If more producers join or create local cooperatives with the same kind of organizational ties and services as ECOMUSA, then an important joint UF/IFAS and International Potato Center goal is well within reach: helping Peru’s potato farmers earn a higher income through the production of the higher-value yellow Tumbay potato.
Contact: Mike Jones, mikejones2010@gmail.com
Mike Jones, UF/IFAS undergraduate student working under Dr. James Sterns (UF/IFAS Food and Resource Economics Department), conducted native potato economic research in Peru, where farming is largely done on steep slopes, like the ones behind him.
Jones' research measured the economic feasibility of producing the high-value native yellow Tumbay potato, to increase the income of small potato farmers in villages like the one above.
Rough ground on steep mountain slopes must be prepared extensively before planting is possible...
...beginning with terracing. Steep mountainsides must be cut and leveled into small, flat terraces to provide a platform for cropping. Then the rough ground (see above and below) must be prepared through tilling before crops can be planted.
On such steep slopes, terracing and tilling are frequently done through back-breaking hand labor. Tractors are too expensive, especially without access to credit, for most farmers to buy or even rent them. Another reason is that many farm plots are too small for tractors to be practical.
Jones interviewed many farmers in their fields to gather economic data: soil preparation cost, seed cost, agricultural chemicals (fertilizer, pesticides) used and their cost. He also asked about unpaid labor, often done by family members, to calculate that labor's value.
Jones interviewed farmers from dawn until well past sunset to gather enough data for his research.
The ultimate purpose of Jones' research is to improve the livelihoods of small potato farmers, to benefit their families and future generations. Jones (at far right, above) enjoyed spending time with the region's children during the festival of Saint Peter, during which he identified farmers who could meet his research needs.
