Monday, February 14, 2011

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...?!

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  1. We are a small Fair Trade producer on Penang Island Malaysia and can relate to your comment "Small producers don’t have a boat; in this case a boat means access to markets and information on them". As a lone producer, Fair Trade membership etc doesn't really give us international market access as shipping costs are the big killer, and most of the Fair Trade wholesalers/buyers are dealing with really big producers, who are rarely interested in small players like us. As an outsider, it seems like a VERY exclusive club that is difficult to get into, unless one has the support of a well-heeled and connected NGO.

  2. Hi, thanks for your comment. My time out here with Fair Trade Alliance Kerala (FTAK) has shown to me the importance of organising small scale producers into a cooperative which then has more clout and a louder voice (see 'Small farmers big change blog post:

    FTAK started 5 years ago and already seem to have quite a strong international voice, despite the fact that the individual farmers are very small (I think on average each farmer has 2 acres), they punch above their weight in terms of influence. Do you think there is the possibility of something similar in Malaysia?

  3. We worked with about 50 farmers in Viet Nam to grow and produce our loofah products for export, however this same model has been a dismal falure in Malaysia. There are various reasons for this and probably why there is zero Fair Trade activity in Malaysia.

  4. On the other hand, we are having some success working with a group of rural based intellectually disabled in producing a dish wash soap made from recycled cooking oil, and are now exporting this product to Japan.