Showing posts with label fair trade. Show all posts
Showing posts with label fair trade. Show all posts

Tuesday, March 12, 2013

Are voluntary standards efficient tools for changing the world?


When you buy a cup of coffee for €2 the farmer gets 3-4 cents for the coffee in that cup. If you buy a cup of organic and fair trade coffee you are likely to have to cough-up €2.50 - and the farmer will get 4-5 cents. This example shed some light on three circumstances.
1. How little share of the economic value in today’s food chains that is constituted of the raw materials.
2. How little share agriculture has in the GDP of the rich countries - often just a few percent
3. That the market mechanism may not be particularly efficient in transforming consumers willingness to pay for direct or indirect services or values in a product to an increase in income for producers.

Hear a presentation I made at the recent Biofach fair in Nürnberg.

Saturday, July 7, 2012

The road to food security: What works and what doesn’t?

Considering that donors spend some US$ 150 billion per year in development aid, and that much of this is oriented to poverty alleviation and food security it is perhaps surprising to know how few thorough international reviews that have been made to assess  what works and what doesn’t work. The Dutch Ministry of Foreign Affairs has now reviewed existing evaluations in the field and make a summary in the study A systematic review of the impact of interventions in agricultural production, value chains, market regulation.  One conclusion is that most evaluations and impact assessments are not solid enough to allow for any far-reaching conclusions. Of 365 evaluations screened only 38 fulfilled the quality criteria the reviewers had developed.















The review assessed four pathways to food security: increasing production; development of value chains; market reform and land security. Interventions based on access to credit; development of non-farm sector; social safety nets; stabilized prices, hygiene and sanitation were thus not part of the review.

Overall conclusions
Interventions improving land tenure security scored mostly positive, especially when combined with other interventions.
Interventions increasing agricultural production scored generally positive, except for sustainability.
Value chain development scored well on increasing trade, but the most vulnerable people did not benefit.
Market regulation reform interventions score lowest, due to the combination with reduced support to the agricultural sector in several African countries.
Success was most likely where different interventions were combined in a favourable national climate.

As I have been working a lot with value chain development I took a particular interest in that: Intervention in value chain comes out as one of the better strategies for improving food security. The report highlights that there is a big potential in the development of domestic value chains. For example, in Kenya approximately 500,000 smallholders produce vegetables and fruits for the domestic markets while only 11,500 smallholders were engaged in the export market. The export market involves many more large plantations with employees. They employ in total also around half a million people, who are food secure through their income. The evaluation also studied value chains built around GlobalGAP, Organic and Fairtrade.

Number of farmers producing certified products for export markets          
Standard
Worldwide
Developing countries
Africa
GlobalGAP (2007)
97,000

2,871
Organic (2009)
1,808,000
1,526,000
511,000
Fairtrade

977,000
589,000
source: IOB study 363, 2012

Clearly donors are disappointed with the very limited impact of all the efforts spent to train smallholders in GlobalGAP systems. There have been many donor financed projects for linking smallholder farmers in developing countries to organic markets in developing countries. For example the Export Promotion of Organic Products from Africa. In that programme, more than 120 thousand smallholders in Uganda and Tanzania were linked to organic markets in Europe, USA and Japan. The estimated earnings reached some US$ 30 million per year.  The review assess the impact of organic value chains as successful, but can’t conclude if the efforts have reached the most vulnerable or not. Successfactors have been linking of farmers to commercial exporters (as opposed tp supporting farmer to export themselves), group certification and efforts to improve quality. Also for Fairtrade it was unclear if the most food insecure people were reached and perhaps surprising the report states that, Fairtrade seems to have reinforced men’s role in household an cooperative decision making around cash crops; in one case women’s income had even declined. For the total household income, in four of six cases in Latin America, there had been no increase of household income with Fair trade: ”The low income for Fairtrade farmers is due to the competition between the Fairtrade crop and other farm and non-farm activities, the additional costs for inputs and (hired) labour, and the limited Fairtrade market - only part of the produce is sold as Fairtrade.”

On the opposing side to organic stands a strong drive to increase use of chemical fertilizers, and sometimes GMOs and pesticides. The reports says that the subsidised fertilizer schemes in Zambia and Malawi have been successful. However, another recent special review of such schemes, Agricultural input subsidies in Sub-Saharan Africa from DANIDA comes to a much less positive conclusion after studying such schemes in Malawi, Zambia, Ghana and Tanzania:
• Significant increases in agricultural productivity and food production is possible, and the potential for improving agricultural productivity by subsidising agricultural inputs exists. However the estimates are somewhat uncertain. Costs are very high, and given uncertainties it is unclear whether the programmes provide value for money.
• There is very little convincing evidence to suggest that outcomes are likely to persist after termination of the programmes. However, the subsidy programmes are designed to address the distortions created by market imperfections rather than the market imperfections themselves. When (if) the programmes are phased out, input use is likely to decline again.
It also concludes that none of the programmes managed to reach the poorest households

On the, rather controversial, effects of market deregulation, the Dutch review shows how market de-regulation in China and Vietnam, in combination with land reform, has contributed tremendously to growth and reduction of poverty. ”The impact of domestic trade reform alone was not evaluated, but together with the other pathways in Vietnam’s agricultural development, it contributed to the production increase, from a deficit of 27% in 1980 to a surplus of 40% in 1999. And for China:
In China, during the so-called household responsibility system reform between 1978 and 1984, national grain production increased from 305 to 407 million tonnes. Increases in efficiency increased labour productivity and reduced production costs and food prices. [... ] As a result, per capita grain consumption increased from 195 to 250 kg per year, and household income increased by 15% per year between 1978 and 1984. The efficiency gains in agriculture made labour available for the rural industry sector that absorbed about one third of the rural labour force by 1996. Poverty declined from 53% in 1981 to 8% in 2001.

On the other hand the report also points to that during the period of big de-regulation
In most African countries, the increase in food import was larger than the increase in agricultural export. The ratio of food import to agricultural export has worsened for all African countries plus Guatemala and Peru, remained the same for Guyana, and had improved for China, India and Chile (1970-2002). In the period 1995-2002, the situation was worst for Senegal which imported food worth more than three times their total  agricultural export. Farmer income from export crops increased in all countries. In contrast, farmer income from liberalised food crops decreased in all countries, except in Chile. Farmer income from food crops that were still protected increased in Cameroon, Nigeria, Morocco, China, India, Chile, Guyana and Peru.

That land reform the report highlights that land titling and solutions based on individual, private ownership may not be the best. As a matter of fact they are likely to benefit more those that are already better off, and exclude women and disadvantaged groups.

As the report points out, there is no silver bullet that by itself can guarantee food security. It stands clear to me that food security – poverty and equality are intrinsically linked, and that the reason for food insecurity is found in an unjust society and unequal access to resources, and therefore,  that the path to food security is to correct those injustices.

Wednesday, November 23, 2011

Don't buy organic instead of changing the world - do it as part of changing the world

Are there really any benefits for the farmers in developing countries that engage in organic or fair trade schemes?

A recent literature review casts doubts on the merit of "sustainability" certification systems. It includes studies of Fairtrade, Organic, Rainforest Alliance and the Forest Stewardship council. The authors Allen Blackman and Jorge Rivera note that rather few studies have a rigorous control against non-certified production, which is needed to form a scientific basis for claims that certification is beneficial for producers.

The 11 rigorous studies provided very weak evidence for the hypothesis that sustainable certification has positive environmental, social, or economic effects at the producer level. Only four of the 11 provided evidence of such benefits (Table 3). Of these four, all tested for economic effects. In two of these four studies, both on coffee, the authors remark that the benefits are either idiosyncratic or inconsistent (Arnould et al. 2009; Bolwig et al. 2009). The results of the remaining seven rigorous studies (two studies of environmental effects and five of social and economic effects) did not show that certification benefits producers.
As the authors note "the hypothesis that certification benefits the environment or producers is limited. More evidence could be generated by incorporating rigorous, independent evaluation into the design and implementation of projects promoting certification."


One of the few studies that show economic benefits is the one of Bolwig and others, The economics of smallholder organic contract farming in tropical Africa. I was personally engaged in those projects studied, in the EPOPA programme. It was successful mainly because it was designed with the explicit purpose to be commercial and increase farmers income (and hopefully because it was well implemented).It spoke less about sustainability and smallholder empowerment than most similar programs, but generated more direct results in terms of increased income, and with low costs compared to many other projects.

It is worrying, however, that there is so little result coming out of so big efforts, even more troubling considering that the vast majority of all situations with certified smallholders are in to form of "projects" where substantial external funds are used to support them. As a matter of fact, I have yet to come across any small farmer project with sustainability certification which has not benefited external support; most of them are even established by external actors.To include even more rigorous evaluations and scientific monitoring of the projects, as suggested by the authors, will make the projects even more donor dependent and consultant dependent, and decrease the efficiency of the deployment of resources substantially.

I think the jury is still out regarding the direct and indirect benefits of the sustainability schemes. But what should be clear, even without more scientific studies, is that the economic benefits, and environmental benefits are limited. And that is not because the schemes are bad. There is simply no way such schemes can shift global economic relations fundamentally. Not even Fair trade, which has this as it's focus is more than a marginal adjustment of fundamental factors such as unjust trading relations and an ongoing exploitation of smallholders; limited access to resources and therewith associated low labor productivity; and inequality. As a matter of fact there is no particular evidence that fair trade farmers have any higher income than organic ones.

Note that this study is about farms in developing countries, there are numerous studies about farms in developed countries that show environmental benefits for organic farming. When it comes to economy it is a more complex picture. But clearly, organic farms in developed countries are exposed to the same commercial pressures as non-organic and respond in more or less the same way: more specialization, larger farms, more input buying etc., because that is the logic of the competitive market economy, whether you like it or not.



My suggestion is not that we should throw the sustainability schemes overboard, but that we should realise that they will not make the Big Difference which is needed to reach a fair(er) world. Go on and buy organic, but don't do it instead of changing the world, but as part of changing the world. 

Read also:

 


Tuesday, October 11, 2011

How fair is fair?

"Fair Trade was established to enable producers to improve their livelihoods and communities through trading with buyers whose behaviour was governed by an agreed set of principles. Over time though there, has been an unfortunate change of emphasis whereby it is now the producers (artisans and farmers) whose actions are under the microscope rather than the buying organizations. In effect, the certification systems have changed Fair Trade to such an extent that sales of products are the main measure of success instead of the welfare of producers. The WFTO believes the interests of producers, especially small farmers and artisans, should be the main focus in all the policies, governance, structures and decision making within the Fair Trade movement."
says the World Fair Trade Organisation 

and it is probably true. And unfortunately I believe that most of the systems for environmental or social labeling end up like that. Not because of that the people managing them are bad, and also not really because they are taken over by "big business". No, it is just the "natural" logic of the market place to work like that.

I have written about these things before
Guilt free

What gives value to an ecolabel
and sometimes the system just become self-serving and inward looking
How quality Management can result in low quality...

My point is not that we should stop buying eco labeled or fair trade products, but that we need to have a lot more critical view on them and constantly watch where they are going. 




Monday, April 18, 2011

Sustainable coffee is increasing, but only 35% is sold as such.

Markets are growing rapidly across all Voluntary standards Initiatives (VSI), in all sectors reviewed, at rates far beyond the growth of markets for conventional products. The production of VSI compliant goods is now reaching significant levels of market penetration, accounting for over 10 per cent of global production across several of the sectors surveyed.

Forestry
- The land area covered by global sustainable forestry initiatives (FSC and PEFC) has grown by a total of 232 per cent over the past five years and, at 341,703,696 hectares, accounted for 18 per cent of global managed forests (nearly 9 per cent of global forested land) by the end of 2009.

Coffee
- Over the past five years, sustainable coffee sales have grown by 433 per cent and, at 457,756 metric tons, accounted for 8 per cent of global exports in 2009.
- Global supply of sustainable coffee, however, is still significantly higher than demand, with supply reaching 1,243,257 metric tons, or 17 per cent of global production.
- Reported premiums for sustainable coffees for 2009 ranged from US$0.025 to US$0.405 per pound, with most premiums falling in the US$.05 to US$.10 per pound range.

Bananas
- From 2007 to 2009, sustainable banana sales have grown by 63 per cent and, at 3,480,565 metric tons,
accounted for approximately 20 per cent of world exports by 2009.


This and much more you can read in a new report from the IISD,
The State of Sustainability Initiatives Review 2010: SUSTAINABILITY AND TRANSPARENCY

Tuesday, December 7, 2010

A model for fair trade.

"It takes a village to raise a child"

That is a Tongan Proverb. I am currently on a job for the FAO for the development of the organic sector in the Pacific. I am now in Fiji after visiting Solomon Islands and Tonga.
Similarly as in Samoa, which I visited earlier this year, and in Bhutan there is an interesting culture. While it is an old culture it might also have seeds for the future. The proverb is stressing the need for community. The Westerns view, or at least the view that has penetrated Western culture lately is based on an extreme individualism. According to Time magazine for this week, it has grown worse. Anyway, traditional cultures pay a lot more attention to family and not only that, at least in some cultures the local communities are also seen as essential, which is exactly what is expressed in that proverb. Ultimately we are a social being and not individuals. It is the social organization of humans that made us to what we were. If we had been "individuals" throughout history, we would hardly been different than any other animal. It is actually only the most primitive animals that are acting as individuals.
Society IS part of humanity.

An interesting feature in Tonga is how Tongans "trade" with the Tongan communities abroad, in particular in New Zealand. While someone in Sweden might send a box of Swedish stuff to some emigrated relatives the first years, Tongan families (extended families) fill a CONTAINER with taro, tapioca, coco nuts and whatever they have and send off to relatives in New Zealand. And some time later perhaps a container goes in the other direction with some building materials and household appliances. Or perhaps money is sent. It is a kind of reciprocal exchange which was how we all traded historically,before money. In old times, trade was about ecological adaptation and about strengthening ties between communities, gifts and bartering ruled. That was before "profit", "self-interest" and the "invisible hand" came into play. Why are we so blinded?

Thursday, November 18, 2010

Nice to show results

By 2008, 80,000 farmers contracted by EPOPA have sold organic products to exporters for approximately US$ 15 million per year. All farmers received higher prices due to the organic premium, which ranges from 10-25% over the conventional price. Taking into account the size of households, 600,000 people have benefited from the programme.

This is how the Export Promotion of Organic Products from Africa is presented as one of a limited number of case studies of "Evidence of Impact" on the joint donor web site

Wednesday, July 29, 2009

Why should organic be regulated but not Fair Trade?

In the "COMMUNICATION FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE, contributing to Sustainable Development: The role of Fair Trade and nongovernmental trade-related sustainability assurance schemes" from EU Commission of 5 May, the commission "Reiterates the importance of maintaining the non-governmental nature of Fair Trade and other similar sustainability schemes throughout the EU. Public regulation could interfere with the workings of dynamic private schemes." I could not agree more. The EU has had a similar approach to environmental labelling, where it does run an own scheme, but it has not regulated or banned other environmental labelling schemes.

BUT it is very hard to see the logic why the EU thinks that organic labelling needs regulation. Fair trade labelling, eco labelling and organic are all sustainability labelling schemes and the arguments for staying out of regulation are the same for all of them. When the commission says:
"Regulating criteria and standards would limit a dynamic element of private initiatives in this field and could stand in the way of the further development of Fair Trade and other private schemes and their standards." this is equally true for the organic sector.

There will be scandals and fraud without a regulation - but they are there also with a regulation...