Case Study: Quinoa

The chart below shows the price of quinoa – notice the big increase from 2013-2014.

Economic analysis suggests two possible causes for a price increase. Either an increase in demand or a decrease in supply.

As the quote below shows, this was demand driven.

“The current quinoa craze started as far back as 2008 when Oprah Winfrey included the grain in her “21 day cleanse diet.” Its popularity increased sharply when the Food and Agriculture Organization (FAO) deemed 2013 “International Year of Quinoa,” educating more of the world to its benefits.”

Now consider what happened from 2014-15.

Economic analysis suggests two possible causes for a price decrease. Either an decrease in demand or an increase in supply.

It seems clear that this was supply driven. As the chart below shows the quinoa harvest increased substantially from 2007-2015 in Peru and Bolivia, who collectively account for around 95% of global production.

This is a nice example of how we can combine our economic intuition with comparative statics to interpret and understand price movements.