Intermediaries double profits at the expense of producers and consumers | Intermediarios doblan ganancias a costa de productores y consumidores

By Leny Chuquimia, Vision 360:

In the midst of the crisis

Producers explain that the crisis has increased production costs, but not to the extent seen in the markets. They are calling for channels to reach the population directly.

Productores y consumidores, los más afectados ante la especulación.  Foto: Leny Chuquimia / Visión 360

Producers and consumers, the most affected by speculation. Photo: Leny Chuquimia / Visión 360

Between one and six in the morning, Calle 5 in Villa Dolores in El Alto, the streets adjacent to the Rodríguez Market in La Paz, or El Tejar near the General Cemetery, fill with trucks loaded with vegetables, tubers, and other produce. Hundreds of farmers arrive in the cities with products freshly harvested from their fields.

In the middle of the night, depending on the scarcity or abundance of certain products, a battle of offers and counteroffers takes place. There, every day, the prices are set at which intermediaries—wholesalers and retailers—will purchase the products, which they will later distribute in different markets at nearly double their investment.

“There’s speculation. We’re selling a quarter of onions for five bolivianos. To the wholesaler, it’s much cheaper, sold at 3.50. But in the market and stores, they already sell it for eight and even 10 bolivianos. They’re making almost double… that doesn’t go to the producer and it also affects the population,” says Sonia Quispe, a producer who comes to El Alto from Oruro.

The coordinator of the Semilla Ecosocial project, Fabrizio Uscamayta, asserts that while the increase in production costs is real, what is being seen in the markets is a process of speculation due to the lack of a direct channel between producer and consumer. He identifies the monopoly that intermediaries have over the main supply centers as one of the biggest problems.

“They have very strong organizations with highly vertical power structures. These are corporate networks that do not allow producers to participate directly in the market, in any space. There is no real farmers’ market either in La Paz or in Bolivia,” he states.

For the government, these links in the chain, in addition to speculation, are also engaging in reverse smuggling. That is, they are taking products to the borders, thereby depleting the domestic market. As measures, price controls, border controls, and the implementation of a food security monitoring system have been initiated.

The population attends producer fairs to get better prices. Photo: Leny Chuquimia / Visión 360

Duplication of Profits with Price Hikes

During the week, in an operation, the municipal inspector of Potosí, Jhimy Bedoya, found several vendors who had raised the prices of products without justification. The most notable case was that of chicken.

“They were selling it for 17 to 18 bolivianos, when the chicken cost 14.50 bolivianos per kilo. It should be sold for 15.50 and at most 16 bolivianos per kilo. They were doubling their profits,” says Bedoya.

In La Paz, a similar measure led to a confrontation between several vendors at a central market and the Municipal Inspection staff. The reason was their refusal to display the price list for public inspection.

In a municipal operation in La Paz, officials request that the price list be displayed. Photo: AMUN

“Everything has gone up, but it’s easier to control groceries, cleaning products, or imported goods,” explains a vendor from the Ciudad Satélite market in El Alto. She hurriedly arrived at the “From the Field to the Pot” fair, a government measure to curb price increases.

“We have invoices, which can justify how much the product and its transportation have increased and how much more can be added to the customer’s price. It’s easy to determine if there is abuse. But vegetables don’t come with invoices; there is no purchase order to know how much the producer charged or how many intermediaries they passed through. Within the market, it’s more expensive than at this fair, almost double,” she asserts.

Uscamayta notes that it’s also important to consider that transporters are among the intermediaries. “They increased their costs not because diesel prices went up, but because the scarcity led to additional expenses, such as having to wait in lines for several days or weeks. Most drivers are not owners and must pay daily rent. This increases the cost of transporting goods to the market,” he explains.

The increase for the producer

“Yes, our costs have increased. Without fuel, we can’t operate our machinery. Inputs are purchased at the dollar exchange rate. There is less production due to the drought, and also because we are in winter. All of this means there are fewer products and therefore they are more expensive, but we have to absorb those costs,” says Andrés Aguilar, Vice President of the Mercado Integración Sur, from Cochabamba.

While speculation is a factor, it is not the only one contributing to the rise in food prices. The fuel crisis, shortage of dollars, lack of transportation, climatic events, and social conflicts have caused increases and serious losses in crops. However, this increase is borne by the producer, as the amount paid by the final consumer does not reach them.

Producers from different parts of the country take advantage of state fairs to offer their products at fair prices. Photo: Leny Chuquimia / Visión 360.

“What should be clear is that the small producer has always subsidized the population’s food supply,” says Uscamayta.

He explains that this is a very complex situation with many facets. He divides small farmers into three groups. One is the small family agriculture linked to agribusiness, such as oilseed producers.

The second group consists of traditional producers from the inter-Andean valleys of Cochabamba, Santa Cruz, La Paz, and the Altiplano. The third, the smallest group, is made up of family farmers with an agroecological approach.

“Each of these three groups is impacted differently. The first group has a structural dependence on agrochemicals, which are 100% imported, both legally and illegally, hence their input costs rise. The same applies to valley producers who use agrochemicals to sustain their production and fuel for their machinery. It is a reality that their input costs are rising, and thus the price of their products,” he says.

In the case of agroecological farming, since they produce their own inputs for weed and pest control, their production costs do not increase. However, they represent only 1% of the market, so the increase is felt by the remaining 99%.

“While the increase in production costs is real, what we are seeing in the markets now is a process of speculation due to the lack of a direct channel between producers and consumers. The increase is real, but not at the level we see, with increases of 200%, 300%, or even 400%, amounts that do not reach the producing families.”

From Producer to Consumer

On Wednesday morning, dozens of producers arrived at Tinku Square in Ciudad Satélite as part of the “From the Field to the Pot” fair. The initiative aims to put producers in direct contact with consumers.

By Friday, the Vice Ministry of Agricultural Development had conducted 18 of these events across the nine departments of the country. A total of 320.9 tons of food were sold, including fruits, tubers, vegetables, meats, and other items.

Producers indicate that they need spaces to offer their harvests directly. Photo: Leny Chuquimia / Visión 360.

“These fairs are very important for us; we understand that intermediaries and market vendors need to earn their income, but there are unjustified increases. We cannot enter the markets, and now they even came to bother us about our prices,” says Dora, a producer from Achocalla who participated in the state fair.

Like Dora, Uscamayta and Aguilar point out that this is the solution: markets from producer to consumer. However, they state that these should not be temporary but permanent.

The request is not new. In 2019, several regions in Bolivia experienced a potato overproduction. What seemed to be a year of good profits for small producers turned into a season of losses.

The arroba of potatoes at the “Del Campo a La Olla” fairs was sold for between 35 and 40 bolivianos. Photo: Leny Chuquimia / Visión 360. 

Victims of large intermediaries had to lower the price of their potato harvest to 15 bolivianos per arroba. “There’s so much,” “I’ll buy from someone else,” they were told to get the price reduced.

But in urban markets, the price was 30 to 40 bolivianos, an unjustified increase. The producers’ request was to have their own markets.

“It’s possible,” says Aguilar. The Cochabamba producer is vice president of the Mercado Integración Sur in Cochabamba, a private space managed by producers to bypass the monopoly of intermediaries. 

In the early hours of each Tuesday and Thursday, hundreds of trucks arrive at this market, which now has a TikTok account run by the new generations. It was their parents, tired of wandering and falling victim to wholesale prices, who decided to purchase land to set up their own market.

“To have the market, we spent years on the streets. As true peasant producers, we saw the need to have our own space and not depend on anyone. We wanted to sell our products at a fair price and have a dignified life. Here in Tamborada, we have the market; we manage and run our own space and improve our income,” he explains.

Producers arrive at Mercado Integración Sur for Saturday’s market. Photo: MIS

Yes, it is possible to create fairer trade

Mercado Integración Sur is not the only example of a short supply chain. With a similar objective but an agroecological focus, Ecotambo was also created.

“Ecotambo has a fair in a short supply chain. Producers can offer their products permanently, with an agroecological focus,” explains Uscamayta.

Ecotambo is a self-managed association of urban, peri-urban, and rural producers, social enterprises from the La Paz department, and agroecological consumers. They work every day with the goal of promoting a healthy, fair, and pesticide-free food system, encouraging local trade, proximity, and responsible consumption.

They started in April 2020, during the pandemic, as a way to find alternative sales channels during food shortages. Due to movement restrictions, they began with a home delivery service, and today orders can be placed online.

This experience allowed the democratization and diversification of food marketing methods.

“Our work is based on the short supply chain model, where the prices we handle aim for local and stable trade for producer families and consumers, making us a real mechanism for fair trade,” says Uscamayta.

From his perspective, an alternative model of agroecological production and consumption is possible.

Who is responsible for controlling prices?

“The cost of the basic food basket has risen, and the issue with fuels is a mess. Government measures are short, medium, or long-term, but we need immediate actions (…). We demand that the municipality, the Municipal Guard, and Consumer Protection control speculation and hoarding. They are hiding goods,” denounced Marcelo Mayta, executive secretary of the Regional Workers’ Central of El Alto.

In the municipality of La Paz, the faction of the Federation of Neighborhood Boards led by Justino Apaza stated that if there are no controls, neighbors will take to the streets to conduct “raids.”

“We are organizing to identify, market by market, those who are hiding basic food products or raising prices,” he said.

Controls are intensifying in markets across the country. Photo: VDDUC

But who is responsible for carrying out these controls? By standard, markets or supply centers are under municipal control. However, the production chain is so extensive that multiple state institutions at different levels need to intervene, especially in light of the crisis the country is facing.

With this understanding, the Inter-Institutional Food Security Committee was created. It includes the Vice Ministries of Rural and Agricultural Development, Internal Commerce, Consumer Protection, Anti-Smuggling, Industrialization Policies, and Planning, as well as the National Institute of Statistics (INE). One of its actions is to conduct coordinated controls with municipalities, departments, the police, and other institutions.

“The controls being carried out in La Paz’s markets are mutual; it’s a shared responsibility in a comprehensive plan to combat profiteering and speculation. We need to coordinate actions and require greater operational capacity,” said La Paz Mayor Iván Arias.

The General Manager of EMAPA, Franklin Flores, at the price and food monitoring center. Photo: EMAPA

In the operations, the Bolivian Institute of Metrology and the National Service of Agropecuary Health and Food Safety also participate. Municipal staff is responsible for ensuring that prices are clearly displayed to prevent price manipulation and protect consumer rights.

Products flee to 3 countries; regulation will instruct seizure and sale at EMAPA

“There is a lot of speculation, mainly by intermediaries. They collect products to divert them from the domestic market and export them to increase their profits. A few profit at the expense of food security and consumers’ wallets,” said the Deputy Minister of Agropecuary Development, Álvaro Mollinedo.

As it is an illegal activity, exact figures are not available for how many tons leave the country illegally. However, according to production and consumption projections, it is estimated that around 100,000 tons of rice have already been diverted.

“It is not the mills or the producers who are exporting the product; it is the intermediaries,” said the authority.

Sugar, eggs, onions, potatoes, and even meat are among the products identified at borders with Argentina, Brazil, and Peru. The main reason is that these products have a much higher cost in these countries, creating an opportunity for smugglers.

Mollinedo said that the government is working on a supreme decree to regulate Law 100 on Border Development and Security. One of the gaps in smuggling control is that the law applies to those who enter, but not those who exit.

The new regulation aims to also control local foods that are illegally taken out of the country. With this tool, competent institutions will be able to confiscate and subsequently return the products to the domestic market.

All seized goods will be handed over to Emapa. According to what was explained, Emapa will be responsible for selling these products to the public at a “fair price and weight,” as stated by Mollinedo.

Shortening the supply chain: A solution with multiple tasks

When discussing solutions to speculation and potential future crises, Uscamayta is clear: “The supply chain needs to be shortened.” This requires not only markets but a series of urgent and structural changes.

“The first step is to have these markets for the producer, but spaces are required, and that is a structural problem,” he said.

Much of Bolivia’s food comes from small family farming. Photo: Leny Chuquimia / Visión 360.

Another important aspect is access and connectivity. In this regard, the condition of roads and routes that facilitate transportation is crucial, as well as the ability to move large quantities of food, since most producers are in dispersed areas and lack vehicles or access to storage spaces.

“Another problem is human capacity, the aging of family agriculture, and migration. A large part of the producers are women over 50 to 60 years old, so human capacity is low. It’s a structural problem,” he said.

But also, from his experience, he sees the need to eliminate subsidies to agribusiness and increase them for small family agriculture and agroecological food.

“Only in this way will we have a structural solution to the problem that lies ahead. It’s not just the crisis we’re experiencing or the issue of inputs. There’s a risk of increased climatic events; so far, there is no agricultural insurance to support small producers,” he stated.

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