How Fair Trade can make people first policies competitive

Some FTAK farmers that I met in Waynaud enjoying life

Kerala is a unique state in India. It has lots of things to boast about including a minimum wage, politically active and trade unionized citizens, high literacy etc etc (click here for lots more info). These achievements manifest themselves very visually to the visitor, I have been here for a month and a half and I have seen one beggar and no slums (I went to Mumbai and within the first 3 minutes I had seen 4 beggars, 2 of them beneath the age of 2, and I’d already seen the huge slum from the train window). It has been the subject of discussion for many social scientist and the unique ingredients have come to be known as the “Kerala Model’.

But the problem is, implementing all these standards come at a price and in the big world market race to the bottom, that price is too high to compete. So I sense that Kerala is at a bit of a crossroads; there is pressure from outside and within to do away with some of the rules around labour and wages. To put it into context a farm labourer would get paid around 200 rupees for a day’s work in Kerala, whereas the neighbouring state of Tamil Nadu pays about 40 rupees and so can afford to offer lower priced goods to the world market. So there’s no other option it seems but for Kerala to join the rest of India and do away with these people first policies.

Well hold on a minute… Fair Trade Alliance Kerala, in particular the promoter Tomy Matthew, would like to propose an alternative. There is a market where decent wages, labour rights and unions make you more, not less competitive. This is the Fair Trade market. This small but growing market offers a framework in which commodities that are produced to certain social and environmental standards can succeed.

Beyond Kerala there are other governments who are looking at how to encourage fair trading practices. The Brazilian government passed a law that will promote Fair Trade practices in government and society and other governments, like that in Malawi, resist neoliberal pressures to maintain minimum prices.

With this in mind, there is a conversation to be had about the role Fair Trade can play in preserving sustainable and fair farming practices which are implemented not just on a farm by farm basis, but on a state or even country scale. And the conversation needs to start now before the Kerala model is something just on paper, rather than in the land and with the people.

To read a more full discussion around the issues please email me on kate.fairtrade@gmail.com to receive a copy of 'Fair Trade and the Kerala Model’ by Tomy Matthew

Combating poverty in a market driven world

This was the topic discussed at a conference in Mumbai that I attended last week, along with about 200 international delegates. Amongst the varied arguments that were put forward, all pulling in different directions, the free market argument was brought up again and again. Will economic growth bring prosperity to the greatest number of people:‘a rising tide will raise all boats’?

I thought I’d stick to the analogy of the rising tide and look at the case of very small producers.

‘A rising tide will raise all boats’ assumes that everyone has a boat.

Small producers don’t have a boat; in this case a boat means access to markets and information on them. As Claribel David from the World Fair Trade Organisation explained, small producers have little or no land, huge price competition, exploitative middlemen, little or no access to credit and poor technology. In short they are in the water, without a boat… or a lifejacket… and they can’t swim. Economic theories proposed by academics don’t have a grasp of the reality on the ground; they take the bird’s eye view, when sometimes it is the worm’s eye view that we need.

As Josantony Joseph, an Advisor to the Indian Commissioner on Food Security, explained in what we’ve seen to date, market liberalization doesn’t seem to help the poor. It only helps people if they have already reached a ‘take off point’, for example you can see that the Indian middle class have an increased standard of life now since India’s economic boom, but yet still 77% of people in India live on less than 16 rupees a day (about 13p… not a lot… the equivalent of 3 cups of chai).

So how does Fair Trade fit in with this analogy? Fair Trade is a lifeboat? No, Fair Trade is trying to do something more than a rescue mission. Perhaps instead Fair Trade is a build your own boat kit, complete with instructions and information (that are much better than your usual flat pack info), and with an onboard navigation system.

If Fair Trade can help overcome some of the disadvantages that small producers face then it gives people the chance to benefit from the market driven world, that is unless Nick Hildyard from The Corner House (UK) is right and in the end turbo capitalism will cause a giant tsunami...?!

Trade not aid or aid through trade?

Animma Aroy with her cell meeting minute book

“Trade not aid or aid through trade?”

This was the challenge from Tomy Matthew, the promoter of Fair Trade Alliance Kerala (FTAK), to a group of visiting Traidcraft campaigners. He put forward that the narrative around Fair Trade, despite an initial acceptance that aid is disempowering, has crept back into the charity 'help the poor farmer' version.

Tomy is not alone in his concerns. In answer to the question posed by an interviewer for a Candian radio station 'if Fair Trade is NOT a poverty alleviation strategy, what is its purpose?' Frans Van der Hoff, the co-founder of the Fairtrade label,said:

“Getting a more democratic system into the market can build upon a world where everyone can live [well]. To alleviate poverty, I never said it, because I hate it, because it’s a world upside down. First you produce poverty and then the north all of a sudden says we will alleviate what we have produced. No, that doesn’t work. No, you have to go to the system which is producing poverty and create a quite different system… It’s an endeavor to correct the charity approach of Fair Trade which we hate. I buy so that the poor bugger can have a better deal. It’s ridiculous and that we don’t want…”

I'm coming back to this topic, that I briefly discussed in the Small Farmers. Big change blog post, as I have just got back from a visit to one of FTAK's 'social premium' projects in the hilly and beautiful Waynaud area. I have come back several pounds heavier from the generosity of my hosts and also with some food for thought.

The farmers' cooperative decided to spend some of their social premium on a project to see if was possible to increase the earnings of the very small isolated hill farmers of Waynaud; all whom fell beneath the poverty line and who weren't at that time part of the cooperative. They worked with local partners and selected a strip of land which included 34 farmer families to take part in the pilot. All the families were given the option to buy on credit cattle,pigs, chickens, cash and food crop seeds and were given three years to pay back the loan. 

 

Instantly the families got milk and eggs from the animals which they could then sell and over time they harvested the crops. Depending on their circumstances they selected a mixture of cash and food crops; coffee for example takes 3 years to yield so it's a longer term investment. Interestingly, and despite the complicated logistics of getting small quantities from these hard to reach farms, FTAK agreed to buy their crops so they were brought into the Fair Trade system, rather than just passive recipients.

The evaluation of the pilot showed some very impressive results, all farmers had increased their incomes and most had managed to more than double it e.g. a farmer named Susamma had increased her income from 19000 Rs in 2008 – 2009, to 34,100 Rs in 2009-2010. The group of farmers also formed a cell and collected a fee from each member every week in order that they can continue to provide micro-finance for future ventures. FTAK will now roll out the programme to other areas.

I was impressed and eek, dare I say it, yes the poor buggers are getting a better deal! I was impressed because it had concrete results, I was impressed because the leader of the cell was a strong smiling woman called Animma Aroy who kept impeccable records and accounts from the repayment and micro credit scheme. I was impressed because the cows and chickens that they got last year now had babies meaning their income would grow again and I was impressed because they've set something up that will continue by itself and that brings the most marginalised producers into the Fair Trade system.

The temptation now is fall back into that comfortable 'save a farmer' campaign line and write up this case study and shout about it to campaigners, but this would skew the reality of the FTAK farmers as this is just a tiny story from a few members of the 3,500 strong membership so I will resist! But it also shows to me that the social premium can be used to further the core aims of Fair Trade, rather than simply a pleasing distraction.