Global Trade Mailing List Archive

[Andrew Parnell <<address removed>>]

In Answer to Duncan Green's Question: "How can we ensure that this form 
of procurement benefits the poor (rather than just the suppliers)"?

1. Firstly, Fair Trade Marked (certified products) are already audited 
by the Fairtrade Foundation so those goods have already proven to 
benefit poor producers in developing countries.

2. Fairly Traded goods produced or supplied by those organisations with 
the FTO mark (see www.ftomark.org) can also be seen to be genuinely 
benefitting poor producers as these organisations are centrally 
focussed on trading fairly under the criteria of IFAT.

3. For everything else, we have a problem. There is no guarantee that 
proceeds from a product coming from a supplier benefit the poor. In 
order to ensure that this is the case, we should stipulate a percentage 
of the final retail price goes to the farmer in any government 
procurement contract. This figure should typically be for example 15% 
to 20% of the final retail price and not less than 10% at the very 
lowest level. We should set floor prices for commodities much like Fair 
Trade has done. This baseline should protect farmers livelihoods and 
guarantee that a price at the 'farmgate' cannot fall below the cost of 
production + the cost of living. A percentage of all government 
contracts involving commodities should be audited by DfID staff or 
willing development NGO partner.

4. The justification of this regulated procurement market can be a 
similar justification to energy markets in Britain. In order to meet 
its Kyoto Protocol targets for example, government has favoured 
renewable energy and guaranteed a percentage of the market (10% by 
2010) to that type of product. Similarly, we could argue that in order 
to meet our Millenium Development Goals, we are going to favour one 
form of trading over others (i.e., Fair Trade contracts).

5. Value added products can be hard to trace back to the producer. An 
example would be a catering contract to buy chocolate (or 'health 
bars') amongst other goods in schools. Normally, a Local Authority 
procurement officer will look for the lowest price (they think that's 
'best value') and will contract a supplier to supply that to the 
schools in the county for example. They're not going to know that the 
cocoa comes from say Ghana and the sugar say from Cuba (for argument's 
sake).

Therefore, it makes sense to set up a government procurement target of 
x% by 2007 (or other relevant figure), followed by a medium and long 
term aim to come from Fair Trade products where country of origin can 
easily be determined. A contract to buy sugar off a supplier who gets 
it from Malawi wouldn't be too hard to set up, the supply chain and raw 
material is very straightforward. A straightforward percentage of the 
money can be sent from the government DIRECTLY to the producer group 
based on the final retail price. The technicalities of ensuring that 
the end producer groups actually receive their money shouldn't be too 
hard to work out.

For more complex value added products, a similar overall percentage of 
government procurement contracts could also be set, but the definition 
of Fair Trade limited to FTO Marked or Fairtrade Marked products only 
(guaranteeing producer benefit) will ensure that the system is 
self-regulating whilst staying credible.

I could imagine that if government catering contracts in Britain were 
successfully switched to Fair Trade, the benefits to producer groups 
would include:

1. a stable 'base price' to help them plan for a % of their crops 
production
2. Allowing them to plan for the future knowing they can sell to the 
Fair Trade market with long term relationships with suppliers
3. Add significant support for Fair Trade (it could mainstream it given 
the MNCs will want a 'slice' of government contracts).
4. In many cases a 'Social Premium' is added for the producer groups to 
spend on Health care, Primary Education, Water pumps, etc...
5. If only 5 to 10% of their produce was Fair Trade in nature, it would 
be enough to raise them above the world poverty line (e.g., 5% of Cocoa 
in Kuapoo Kookoo Co-op in Ghana is Fairly Traded but makes a BIG 
difference).
6. As the government Fair Trade Procurement target was grown, the Fair 
Trade market would also grow with it, increasing market access for more 
producer groups
7. Government demand for catering products generally remains constant, 
giving a 'guarantee' of demand for the Fair Trade market

It could be done unilaterally, shining Britain into a 'world first' 
light. It would be very hard for neo-liberal economists and other 
monetarists to argue against, since it stands to benefit the poor (you 
can use the need for a Supply Management system as a counter argument 
as well).

The thing I like most about this solution is that it has an immediate 
effect upon the poor in developing countries and as government 
contracts for tropical commodities become more and more along Fair 
Trade principles (hitting the procurement targets set), there is a real 
sense of achievement in sending the right signals to this emerging 
market. If even 10% of all government procurement catering contracts 
were Fairly Traded ones, the benefits would be £xxx??? per year going 
to producer groups...(research needed here).

Hope that helps layout a 'rough conceptual plan' for taking immediate, 
relatively short timeframe action that DfID could do that is mostly 
achievable and has a direct impact upon producer's livelihoods?

I must stress that its only one part of the overall solution, but an 
easily achievable one that would require a little bit of political will 
(easy enough?), research, technical know how and a bit of guts and 
panache to carry it off effectively.

Kind regards




Andy Parnell
Business Links Coordinator
 
PEDEC/ CAADP
(Powys Environment & Development Education Centre)
(Canolfan Addysg Amgylchedd a Datblygu Powys)
12 Great Oak Street
LLANIDLOES
Powys
SY18 6BU
 
Tel/Fax(Ffon/Ffacs): 01686 412 731
 
Addysg ar gyfer byd teg a chynaliadwy
Educating for a just and sustainable world

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