Inka Moss: Doughnut Design Case Study

01 | Brief Summary and Key Facts

Inka Moss S.A.C. is based in the inland Andean region of Junín, Peru. It harvests, processes, packages and exports sphagnum moss, also known as white moss. 

Location: HQ in the town of Junín, Peru, with harvesting communities scattered throughout the mountainous surrounding area

Founded: 2010

Size: $1,370,000 turnover in 2023

Sector: Agricultural and gardening supplies

Legal form: Private company

Website: www.inkamoss.com

Main products/services: Harvesting, processing and export of dried and packaged sphagnum moss, also known as white moss

Highlight of their unique approach

Paying much higher prices and providing robust support to local communities harvesting the product

Highlight of their unique design

Co-ownership that includes an NGO, and long-term trade finance from Fair Trade focused investor.

02 | Founding Story

Established in 2010, Inka Moss received initial financing and advisory support from impact investment fund NESst from 2013 to 2019, which allowed it to scale up its operations and develop machinery for its central processing plant. NESsT also held a seat on the board, with input on decisions but no vote. Further financial support was subsequently provided by other investors, including Shared Interest, in order to pay community suppliers up front. Another round of funding from various investors was opened in 2019 to further expand the business. Today, Inka Moss is partly-owned and operated by the company’s founder and director Marco Piñatelli, with equity shares also held by Swiss NGO Elea and the Peruvian Incaptial impact investment group. The investors hold mandates of 5-8 years, with the expectation they will recover their investment by selling the shares at the end of this period. Each partner holds around 30% apiece with voting rights distributed accordingly. As the director, Marco holds a casting vote and voting processes also include input from staff outside management where possible. Annual turnover has increased in recent years, from $900,000 in 2022 to $1,370,000 in 2023, and a projected figure of around $1,500,000 in 2024.

In April 2017 Inka Moss was awarded B Corporation status, with an exceptionally high score in the “environment” category. It has also attracted media attention – notably a 2018 profile in the Economist – and has received various other awards and recognitions, including from the Dutch Bid Network in 2009, and from Marca Perú. 

03 | Industry Context

Inka Moss’ product, sphagnum moss, is highly valued for its ability to absorb 20 times its weight in water, its antibacterial properties, and for being an efficient absorber of heavy metals. It is mainly used in plant substrates for orchids, but is also widely used for hydroponic crops, topiaries, vertical gardens, and as a water purifier. Because the moss grows wild, it is fully organic and free from chemicals, which is a key selling point for international buyers, who are mostly in the US and Asia. Inka Moss holds around 6% of the global market share of the sphagnum moss industry, with a goal of reaching 10% by 2025. 

Inka Moss’ business provides a source of employment, income and support for isolated communities in mountainous regions of Peru. It also boasts strong environmental credentials, and the business design includes firm measures that actively benefit its workers. 

04 | Regenerative & Distributive Strategies and Actions

Inka Moss’ involvement in remote Andean communities brings massive benefits, both direct and indirect, to impoverished areas. Inka Moss signs agreements with communities – usually through a 2-5 year automatically renewing contract – to pay a fixed, fair price per sack of moss. The terms of these agreements are negotiated with each community on a win-win basis. The price paid to harvesters is a percentage of the (relatively stable) final sale price, and includes payment for harvesters, transport costs, and the community fund (see below for details). As part of the contracts, Inka Moss also provides support in the form of tools and training.

In order to sign a contract, each community or household must be registered as an official supplier, demonstrating they meet the requirements of government environmental management plans. However, many Andean communities and villages are not officially registered by the government, and therefore, they cannot register as providers for Inka Moss. The company’s solution is, where necessary, to help these isolated communities to “formalise” themselves. Being formalised means that villages are protected by forest rangers, and grants them the legal right to harvest moss on their land. Without this right, “natural resources” such as wild moss would technically belong to the state, but formalised communities are able to carry out official sustainability studies alongside the government forestry agency.

Agreements with Inka Moss also stipulate that each community establish a local committee to oversee moss harvesting. Their most important role is managing a community fund, money set aside from each sack of moss for the collective benefit of the community, including those who directly harvest moss, those who indirectly assist (such as transporting) and others including children, elderly or disabled people. Communities are free to decide, via assembly, the amount dedicated to the community fund and can change it as they see fit, with the option to set it at zero. Communities are also completely free to decide how to spend the money, be it on farming or fishing supplies, school supplies, and even organising local festivities.

The aim of the fund is to build trust – both in Inka Moss itself and within communities – and to offset inequalities by distributing income more evenly. This is important as some harvesters may have easier access to land with more moss or be able to work faster, while others may have more difficulty. Each community’s circumstances are unique, hence the flexibility of the community fund.

Moss harvesting has, by no means, made these communities wealthy. Most still depend on potato farming, with moss harvesting contributing an estimated average of 25% of their income. However, Inka Moss provides a stable, regular income with absolutely minimal financial investment and zero industrial footprint in otherwise untouched areas. All processing and packaging is handled at a central facility in Junín. In addition, the harvesting process is not environmentally harmful. In the words of the company’s founder, the moss is “pruned” rather than “extracted”, leaving topsoil and root structures unharmed. This protects the landscape and ensures a sustainable harvest for future years. The company also works closely with government forestry and environmental agencies to ensure high standards of environmental protection.

The company’s staff at the central export office and processing plant is made up of around 60% women. Since harvesters are paid as a household, much of their work is carried out by families who divide up the labour, making it difficult to pinpoint gender demographics. However, much of the harvesting is carried out by women while men engage in other work, meaning women can achieve greater financial autonomy as a result. In Peru it is common for men to go away to work in cities or on coffee and cocoa plantations for long periods, but the extra, dependable income from Inka Moss may make this unnecessary for certain communities.

05 | How Deep Design Enables Strategies and Actions

A large part of Inka Moss’ deep business design is driven by mutual benefit and necessity as much as ideals. The company’s closely negotiated relationships with supplier communities are the core of its operation, and while contracts include various obligations such as the community fund, a lot of support is offered on a more informal basis. According to Marco Piñatelli, this can include help in dealing with government officials, water and electricity companies, and so on. The stability of the communities is intertwined with that of Inka Moss, and the business is designed to safeguard this balance.

When asked in an interview what the business design would look like under a more profit-driven model, Marco Piñatelli said that it would have “undoubtedly failed from the outset” as a result of mistrust and conflicts between suppliers and the company.

In Peru, sphagnum moss grows abundantly at high altitudes in remote areas of the Andes where isolated communities face extreme poverty, usually eking out an unpredictable living through livestock and potato farming on very challenging terrain. Moss is seen as a weed among Andean communities and is often burned or cut back to make way for potato fields. By harvesting and selling it through legitimate channels the productive value of certain areas of land has increased as much as 30 times. Inka Moss’ business design ensures that this value is retained by the communities themselves.

Given that these communities are sustained through potato farming, Inka Moss also has a vested interest in ensuring the sustainability of this other industry. Andean potato farmers have difficulty competing with the crop yields of industrial providers at lower altitudes, and often rely on seeds taken from previous harvests which can harbour bacteria, thus requiring harsh chemical treatments. To combat this, Inka Moss is currently developing specialised potato seeds for higher yields at high altitudes. A plant nursery was recently installed in their processing plant to this end. While it serves Inka Moss’ commercial interests to ensure these communities remain viable, this programme demonstrates a thoughtful level of commitment to the people who harvest their product. In an interview, Marco expressed his desire for this wing of the business to expand further and become an “Andean seed bank”. The long-term and impact-oriented approach of its investors has been critical to enabling this business model.

It is also worth emphasising the importance of Inka Moss’ financial backers in enabling their community focused business design. Patient and impact-focused investors – as well as Marco’s continued control of Inka Moss’ direction – have allowed the company to take a long term and committed approach to their supplier communities, prioritising their interests when making decisions on pricing, community funds, providing informal support with government agencies, and other activities like potato farming.

06 | Reflections and Lessons for other Businesses

Inka Moss’ business design sits at the intersection of trust, necessity, and mutual benefit. As Marco points out, the business simply could not function under a more aggressive, profit-driven model, as relationships would soon break down and a steady, reliable supply of moss would be impossible to attain. Other businesses could learn from Inka Moss’ recognition that an investment in their producer communities is the best way to ensure the business’ long term stability. This extends far beyond a simple paycheck; they help communities, distribute resources and wealth, and even help improve the competitiveness of their potato crops. 

This case study was researched and written by Guerrilla Media Collective in collaboration with DEAL.