If anyone understands the maca trade, Medicine Hunter Chris Kilham does. Here is a dispatch from the field regarding the current turbulence in the Maca market November 4, 2014:
“MACA IS LIFE”
I am up in the Andes right now, having just completed two days of gathering Intel, and traveling with a Wall Street Journal reporter. Sergio Cam, who runs and owns Chakarunas Trading Company (which provides maca to Naturex), his brother Walter Guia, the reporter Robert Kozak and I scoured the highlands, meeting with growers, agricultural experts, maca sellers, maca buyers, the police, and a couple of professors. We learned many things, and have absolutely the most up-to-date intel on this situation. I am here on behalf of Naturex, who is still the world’s largest extractor of maca.
Maca is well known and consumed throughout Peru, and is especially important in the Andes, where maca is a staple food of the Andean people, and a well-established source of economic revenue. Since Sergio and I began this maca journey in 1998, the maca market has bloomed steadily, and has grown well and without major mishap, up until this year. For the Andean people, maca is life. It is an absolutely essential food, as nothing else grows up at high altitude, except for potatoes, which grow at slightly lower altitude than maca. The plant, which has been cultivated here for over 2000 years, is a source of great cultural pride. And maca agriculture gives growers an alternative to working in the nearby mines, a profession fraught with hazards and often leading to early death.
CHINESE BUYERS ARRIVE
This year, after 16 years of relative stability, groups of Chinese buyers arrived in the highlands, and started snatching up maca anywhere they could get it. The Chinese buyers include Red Dragon Triad crime syndicate members out of Hong Kong. They are armed, and carry large sacks of cash. They are willing to out-pay anybody. We have seen and met some of the buyers carrying sacks, and we have seen the guns. There have been thefts of maca, and violence, according to local police. Just this week, Red Dragon Triad members murdered a restaurant owner in Peru who refused to pay shakedown money. It’s right out of a bad kung fu movie.
PRICE JUMP
The price of dried maca root from the highlands has jumped from last year’s high of 14 soles per kilo paid to the growers, to as high as 140 soles, and still climbing. Black maca is selling for 500 soles per kilo. This is due to a myth among the Chinese that black maca will impart greater longevity. Right now the exchange rate is 2.89 soles per US dollar. Last year the exchange was about 2.5 soles per dollar. Maca prices will continue to climb. This is eerily reminiscent of Tulip Mania, which swept Holland, and which both won and lost fortunes 1634 -1637. There are no bargains for decent maca. There will be no bargains upcoming. The Chinese are still scouring the highlands post-harvest, snatching up any and all maca. A number of Chinese buyers hid from us when we sought them out, and some sped off when we approached their vehicles. It is a mess. People in the highlands are scared and angry.
The price of maca seed has shot up from last year’s high of 300 soles per kilo to a whopping 4000 – 5000 soles per kilo. The cost of seed will go higher, no question. We are getting into the rarified ethers of pricing.
Land to lease is becoming scarce, and some Chinese are initiating a large-scale cultivation scheme for the coming year. They have bought a tremendous amount of seed. Some seed sellers have fried the sends in pans to kill them before selling to the Chinese. There is great resentment toward these newcomers, even among growers who have been paid big dollars for maca.
DEMAND IN CHINA SOARING
Just a few weeks ago I was in China (Shanghai, Guangzhou, Nanjing) doing intel there, and meeting with executives of Chinese companies who purchase maca. Demand there for Peruvian maca is soaring. China has been cultivating maca in Yunnan province for about ten years now, but the altitude there is lower than in the Peruvian highlands. Thus the maca must be grown with pesticides, herbicides, etc., and with commercial fertilizers, in contrast to the high altitude Peruvian maca, which is produced with no agritoxins at all. There is some lowland maca out of the Hunacayo area in Peru that is poor quality, though big and plump, and also grown with agritoxins. The Chinese with whom I spoke while in China very much want high altitude Peruvian Andean maca. And apparently they are willing to pay for it.
Some illegal shipments of maca bound for China have been seized, and some Chinese people have been deported. But here in the Andes we saw several Chinese buyers over the past couple of days.
NEGATIVE FALL-OUT FOR GROWERS
The implications of this are unfortunate. For while growers are currently making absolutely wild money, maca is now un-affordable to non-growers, and thus an essential staple food is becoming out of reach for people who depend on it. Additionally, US and European and Japanese companies who currently purchase maca will have to raise retail prices to a commensurate extent, and this could collapse the maca market. Is anybody really going to pay $60 – $80 US for a 12 ounce bag of maca powder? Or $100 dollars for a bottle of maca extract capsules?
Maca appears to be going the way of cordyceps, which has undergone insane price inflation over the past few years. The Chinese middle class is gigantic, and maca tablets and capsules containing powdered maca are affordable there. The demand is growing.
PRICES WILL CONTINUE TO CLIMB
I have been monitoring this situation since the Chinese buyers first arrived in spring, and actually first met a couple of them at that time while up in the Andes in May. My conclusion is that maca prices will continue to climb, we will see adulteration of maca and poor quality maca in the market, the pressure from the Chinese buyers will escalate, more illegal activity is inevitable, the effect of this on the current maca market could well cause it to crash, and the Andean people are going to have an increasingly difficult time securing maca for food. As far as I can figure, there is currently no silver lining to this cloud. Naturex, Gaia, Navitas, and the many other companies who have relied on maca for years are now facing an absurd escalation of prices, which surely will sit poorly with customers.
There is a lot of speculation that part of what is happening here involves money-laundering on the part of Red Dragon Triad, who is well known for their activities in money-laundering, prostitution and the sex-slave trade, illegal immigration activities, gambling, extortion, and narcotics. Whether that is true or not, the arrival of the Chinese buyers in the Peruvian Andes has caused extraordinary chaos.
ADDITION
This is an addition to the story Chris Kilham sent earlier.
Today we received word from a member of the police in Junin, under promise of anonymity, that two Chinese men were shot in a maca field on Monday November 3rd. One died. The other was taken to Lima by ambulance.
The victims were Chinese maca buyers. The shooter(s?) was likely part of Red Dragon Triad crime syndicate. Both Red Dragon and non-criminal commercial buyers from China are operating in the highlands of the Peruvian Andes.
Red Dragon has an established history of terrorizing other Chinese. The recent Red Dragon murder of a Chinese restaurant owner in Lima is one of many examples.
We visited both the Carhuamayo police and the Junin police yesterday, tracking down info on the Chinese buyers. Neither told us about the shootings. Yet according to our source in the police department, they all knew very well about the incident.
Today we purchased two regional newspapers. Neither carried the story. We wonder why both the police and the media appear to be playing duck-and-cover. The regional police are basically poorly paid traffic cops. Perhaps they do not want to go up against an organized crime mob that has already employed lethal force?
Yesterday we met and spoke with a Chinese man in a pickup truck. He was visibly nervous, and shaking, and shared little. We also went to a house where four Chinese men peered through the front window, and then hid behind curtains and refused to answer the door.
The war philosopher Clausewitz advised that when facing an enemy, one should prepare for what they can do, not what they might do. Certain of the Chinese maca buyers operating in the highlands, presumably members of Red Dragon, have proven themselves enemies of the public and the peace.
This murder and additional shooting crosses a terrible line, and further de-stabilizes an already bad situation. According to the advice of Clausewitz, we should be prepared for more violence and strong-arm tactics, especially considering that law enforcement officials are doing nothing.
This is a terrible event on the history of an otherwise relatively peaceful maca trade, and will surely breed further fear and distrust among the maca growers of the Peruvian Andes.
Chris Kilham
Medicine Hunter
MedicineHunter.com
