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Life and death struggle is price of cheap goods

Sun, 12th Mar 2006

THE WEEK before Marks & Spencer proudly announced the first high-street range of T-shirts and socks made with Fairtrade-certified cotton, accidents at three Bangladeshi factories producing garments for western firms left hundreds of workers dead or injured. The incidents went unreported in the British press. Campaigners estimate that since 1990 more than 350 people have been killed and 2,500 injured in similar incidents in Bangladeshi garment factories.

It was a grim reminder of the high price of cheap goods. In the global economy, the acts of consuming and producing are separated by ever-increasing distance and time. Behind the supermarkets, replenished overnight with the cornucopia of fresh food and the other products that construct our daily life, lies an intricate network of supply chains stretching back invisibly to every part of the world. But these links don't just transmit goods. When the supermarkets do promotions or boast of 'everyday low prices', the pressures ripple back through the middlemen down the length of the line. It takes periodic pickets of Parliament by British farmers, or French smallholders strewing cauliflowers or manure over the Champs Elysees, to call attention to the harshness of life at the end of the chain, where there's nowhere else for the pressures to go.

Sometimes, as in the Bangladeshi garment trade, the harshness is a matter of life and death. It is the same with coffee.

By value, this is one of the five most important commodities traded in the international economy. Its price is quoted on exchanges in New York and London. There are just four main buyers of the crop: Kraft, Nestle, Procter & Gamble and Sara Lee. But the beans are grown by 15 million poor farmers working smallholdings around the world 70 per cent of the world's coffee is grown on farms of less than 25 acres.

The world's coffee-producing zones coincide with a map of extreme poverty. So what happens when the price of coffee falls, as it did with the collapse of the International Coffee Agreement in 1989, and again in 2001, when overproduction meant that prices to producers tumbled, in real terms, to a 100-year low?

The answer is that people die. If they don't die, they grub up the coffee bushes, take their children out of school and join the exodus to city shanty towns and slums, says Harriet Lamb, director of the Fairtrade Foundation.

When coffee goes off the boil, whole countries suffer 60 per cent of Ethiopia's foreign earnings come from coffee. Nicaragua is similarly dependent.

The idea of fair trade comes from various sources in the Netherlands and Germany, as well as the UK. One strand derives from the old Greater London Council, where activists wanted to use its buying power to develop a counterweight to the unfair trading system.

Michael Barratt Brown, a pioneer of the movement, says former colonies depended on a single product, which they had to export to survive. Then the World Bank encouraged other countries to plant the same cash crops to pay the interest on their debts. As a result of increasing surpluses, despite growing demand, the price of these staples fell for two decades or more.

On the ground, that meant that while brokers, manufacturers and - most of all - supermarkets profited, the growers were trapped ever more firmly in poverty. The pattern is the same across many crops grown in poorer countries.

A good example is chocolate. In West Africa, where 70 per cent of the world's cocoa-bean crop is grown, grinding poverty is endemic. Some farms were run with child slaves, the US State Department found in 2001. Child labour is still widespread, with hundreds of thousands of children doing hazardous farm jobs instead of attending school.

For several countries in the Caribbean, bananas are another key crop. In 1999, prices plunged to historic lows, while under World Trade Organisation rules, growers faced losing access to their European markets. In Dominica, the number of banana producers fell from 11,000 to 700. With nothing to replace farming, unemployment soared, the social fabric began to fall apart. Gangs formed, guns and drugs proliferated and crime rocketed.

In all these cases, it has taken a reforging of the links between the ends of the supply chain to start to break the vicious circle. The key, says Barratt Brown, whose alternative trading company, Twin, helped to launch Cafedirect in 1988, was discovering that consumer power could be harnessed to producer power. The move of fair trade from charity purchase to the supermarket shelves was critical, enabling significant quantities of the raw material to be bought at fixed, above-market prices. In turn, that allowed more producers to plan ahead, and invest in quality and sustainable methods - with some left over to put back into the community.

As important as anything, agree Lamb and Barratt Brown, is the sense of empowerment that fair trade gives: equipped with a computer to look up prices on world exchanges, a coffee or banana growing co-op is no longer a group of marginalised dirt farmers but small-scale international businessmen with choices and links to the consumer.

Neither Lamb nor Barratt Brown exaggerates the gains. 'We're just on the starting blocks,' says Lamb. But if the problem is huge, there is evidence that, within its limits, fair trade works, bringing more benefits, including intangible ones such as cultural revival, than even its champions expected. People don't have to wait for governments, human beings people don't have to be prisoners of markets. They can move them.

'The need is as great as ever,' adds Barratt Brown. 'But it gives hope. It's worth fighting for.'

The Observer, 12 March 2006


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