Huge influx of Chinese capital coupled with threat of violence seriously destabilizes maca trade in Peru, expert says

“This year crews of Chinese buyers moved in including members of organized crime from Hong Kong.  People have been shot dead.  It has become one of those huge gold rush type of things,”​ Kilham told NutraIngredients-USA.

The market for maca has been stable for many years, Kilham said.  The botanical has been used in Andean cultures to enhance energy and mental clarity.  It is also claimed to act as an aphrodisiac.

As prices rise, chaos does, too​

Kilham, who bills himself as The Medicine Hunter, said before this year there has been slowly increasing demand for the ingredient. Kilham said he has been working with maca producers in Peru since the late 1990s, when price for maca was about $3 per kilo of dried root. Then peak price last year was about $5.30 per kilo. Then the Chinese buyers moved in and the price rose to more than $40 per kilo more recently. This destabilized the market not only through the rapid influx of capital but also through the threat of violence.  Kilham said that after he left the country in the last few days he heard through sources that two Chinese traders had been shot, one of whom died quickly and the other of whom was left in serious condition with his ultimate fate unknown.  He said he saw an ambulance speeding off toward Lima at the time and the place of the alleged shootings.

“The other day when I was leaving the Andes people were getting $40 to $48 a kilo,”​ he said.

That represents the low end of the market. The Chinese buyers especially prize black maca, for what Kilham said appears to be “mythical” reasons.

“There is no reason to believe black maca is any better than regular maca. But the Chinese seem to have come to believe in some mythical way that it is this life extending, eternal youth elixir. The prices for black maca when I left Peru were hitting $173 (500 nuevo soles) a kilo,” ​Kilham said.

High altitude Peruvian source​

Maca has been cultivated for years in China but is grown at a lower elevation and is of inferior quality, Kilham said. The most desirable roots come from the Junin Plateau which lies at an elevation of about 14,000 to 15,000 feet in the Andes in central Peru.

Kilham said the situation can be compared to another famous botanical craze which is often cited as the first market bubble of Western capital markets—the tulip craze of the 1660s in Holland.  Prices for the bulbs of new varieties of tulips coming from breeders hit ridiculous levels for the time and then crashed just as utterly when buyers came to their senses and remembered that they were just flowers after all.

A more recent example in the world of botanical supply is the cordyceps trade in Tibet, Kilham said. The price of this rare parasitic fungus that infests the bodies of caterpillars in select locations on the Tibetan plateau rose to the point several years ago where violence erupted over control of the harvesting areas.

Faster cycle of Chinese demand​

The difference with maca sitaution is that is lays bare for the first time in the botanical trade, at least outside of China, how demand from the Chinese middle and upper classes can distort markets and influence supply chains. This has always been a factor of capitalism and international trade. The popularity of beaver fur hats for men in Europe and the United States and the devastating effect on worldwide beaver populations is another example from the past. But that scenario played out over decades, from the early 1800s until the late 1830s, by which time beavers had been all but extirpated in Europe and had become rare in North America. Everything is happening faster with the growth of the Chinese economy than was true of the history of the markets in the United States or Europe. This latest market distortion has played out over the course not of decades or years but has taken place in just a few months, Kilham said.

Why has maca suddenly become so outlandishly popular?  Kilham said he has to shoulder some of the blame.

“Specifically with regard to maca, I think those of us who have been promoting it from the very beginning, perhaps we have done a wee bit too good of a job. We have stimulated significant international interest in the ingredient. And then there is the whole sexual enahancement thing, which makes people go a little bit crazy,” ​he said.

Crushing power of Chinese market​

The current maca situation sounds a sobering note for the future, Kilham said. 

“We are seeing the crushing power of the Chinese market. The message here is that the middle and upper classes in China are now wealthy enough and are so huge that when they decide they want something, they can buy ALL of it. The entire world’s supply. When prices hit $170 a kilo, what can you do?  Relationships that buyers have built with producers over decades are destroyed,”​ Kilham said.

Kilham also said the huge influx of money and muscle appears to have had a corrupting influence on local officials, further destabilizing local society.  Some illegal maca exports have been seized and some Chinese nationals have been deported.  But many other shipments have gone through, Kilham said, and armed Chinese traders in the growing areas appear to operate with impunity.  Kilham said he has also traveled to China recently and has gathered intel on the situation from that end, too.

“When you are talking about police officials who are paid like a low level traffic cop . . . we had a source in the local police department there in Peru who told us of some of the things that were going on. That Chinese buyer who was shot dead, you didn’t read about that in the local papers. At the very least you could say that the local police are very reluctant to get into a confrontation with the Chinese buyers,”​ Kilham said.