Volume III, Issue I, Spring 2010

8/9/2019 Volume III, Issue I, Spring 2010

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Udergraduate Reearch Appled to Iteratoal DevelopmetArticulAteVolume III Issue I Spring 2010


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late / -v., (of an idea or feeling) to express or state clearly.


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Articulate: Undergraduate Research Applied to International Development a udergraduate cholarly joural that publhe academc paperad wrtg ole ad -prt o ue cocerg teratoal

developmet ad health care Arca.Articulate a ub-dvo ad publcato o the o-prot SCOU

BANANA, whch eek to educate, motvate, ad actvate the publcabout developmet ue, epecally the health care cr, Arca. Tjoural wll act a a orum or tudet to cotrbute to, a well a make,

the debate teratoal developmet. We beleve udergraduatetudet are a vtal, utapped orce to brg reh dea, perpectve, adcocept to the developmet dalogue. Our goal to park, hare, ad

pread kowledge or the ake o ovatve chage ow.

SCOU BANANA Mo: o combe eort to ave lve. Weeek to buld a dometc ad teratoal movemet dedcated

to udametal ocal chage whch global health everyoerepoblty ad every dvdual huma rght.

Articulate operate uder a Creatve Commo (CC) Attrbuto Nocommercal No dervatve lcee. Ayoe ree to make ue

o all materal oud th ue, a log a uch ue comple wth theterm o the lcee. More detaled ormato ca be oud at

http://creatvecommo.org/lcee/by-c-d/3.0/.

educAte motivAte ActivAte

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issn 1943-6742


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Volume II Issue II Fall 2009

editor-in-chiefJonars Spielberg

Michigan State [email protected]

designer

Ken HansenMichigan State University

[email protected]

Cory ConnollyMichigan State University

John Metzler, Outreach DirectorMichigan State University

[email protected]

Stacie DodgsonMichigan State University

Mary Anne Walker, DirectorMichigan State University

[email protected]

Alejandro Lara-BrisenoUC-Berkeley

Alexandra GhalyMichigan State University

Bethany YoungUC-Berkeley

Sophia MosherMichigan State University

Emily LawlerMichigan State University

Nada ZhodyMichigan State University

editoriAl BoArd

Peer reviewers

fAculty Advisors

Udergraduate Reearch Appled to Iteratoal DevelopmetArticulAte

Te opo expreed wth th joural are exluvely thoe o the dvdual author ad do ot repreet thevew o the edtoral board, SCOU BANANA, or ay o the orgazato chapter, advor, or alate.

Curret ad pat ue oArticulate ca be acceed at http://coutbaaa.org/artculate.

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Letter From the Editor

Dear Readers,With generous support rom the Michigan State University Arican Studies Center,James Madison College, editors, and peer reviewers, it gives me great pleasure tooer you this rst issue o the third volume oArticulate: Undergraduate ResearchApplied to International Development.

Much o the content in this issue ocuses on the structures, institutions, andmechanisms o development public goods, commerce, credit and savings,economic markets. What our authors make clear is that these large-scale processes,and the rules by which they are governed, have very tangible, lasting eects oncommunities and individuals worldwide.manule Lapierre-Fortin provides an analysis o airness, or the lack thereo, amongBurkinab cotton producers, their union, and trading partners. Megan Sheahanemploys a sustainable livelihoods approach to compare two coee cooperatives, onein Mexico and one in Tanzania. The comparison makes clear that, even given widelyvarying contexts and circumstances, the current Fair Trade system is not benetingindividual armers. Mpumelelo Nxumalo examines ormal and inormal markets inKenya and South Arica. Mpumelelo argues that inormal markets, in the orm orotating savings and credit associations (ROSCAs), are a vital economic outlet or

thousands and should thereore be given more legitimate institutional status.This issue concludes with a personal essay rom Charlie Kraiger. In an unexpectedtrip to Rwanda, Charlie encounters an equally unexpected culture and peoplethat have moved beyond their dark history, a eat the rest o the world has yet toaccomplish.

Perception is a second key theme that runs throughout this issue. What is airness?How is it measured, and who determines what is and is not air? How long doesit take or a nation to shed its ormer identity in the eyes o the global community?Where we are, what we do, how we think, and who surrounds us: the way we view

the world is very much a product o these. One o our goals in bringing this journalto you is to expand the boundaries o perception to include liestyles and conditionsar dierent and removed rom your own. In doing so, we seek to encourage debate,growth, and, as always, change or the better.

Jonars B. SpielbergMichigan State UniversityApril 2010


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Africa Map of Contents

kenyANxumalo

tAnzAniASheahan

BurkinA fAsoLapierre-Fortin

rwAndAKraiger

south AfricANxumalo


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Table of Contents

vii

forewordWilliam Minter

constructing trAdefromthe Bottom uPAn Examination of Notions of Fairness in the Conventional Cotton Trade of Burkina Faso

manule Lapierre-Fortin

A Better futurefor coffee fArmersA Comparative Analysis of the Fair Trade System in Mexico and Tanzania

Megan Sheahan

linkAges Between formAlAnd informAl finAnciAl mArketsA Case Study of Kenya and South Africa

Mpumelelo Nxumalo

BrAndedCharlie Kraiger

cAllfor PAPers

style sheet

young PeoPleinthe field

scholArly Articles

1

7

21

39

57

65

63


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Foreword

End Aid, Invest in Global Public Goods

Aid, like any other human endeavor, sometimes works and sometimes doesntwork. It is easy to nd examples to illustrate either conclusion, whether or ocialdevelopment aid or non-governmental programs. But nuanced accounts such asRoger Riddells 2007 book Does Aid Really Work? make it clear that the only correctanswer is it depends. There are real achievements, but there are also prooundstructural faws as well as ineective or counterproductive projects. And there are noeasy ormulas to calculate the net eect or to distinguish good aid rom bad aid.

The critics on the right, like Dambisa Moyo and William Easterly, and on the let,

like Jonathan Glennie and David Sogge, may concur in citing the deciencies oboth governmental and non-governmental aid establishments. But the alternativesthey oer suggest radically dierent approaches to reorming or replacing aid.

Let us agree that the aid paradigm is undamentally fawed, in that it is basedon a model o the rich helping the poor. But the paradigm advanced by ree-market undamentalism, that poor countries and poor people can and should litthemselves up by their bootstraps, without benet o support rom the wider society,is also allacious. Whether within a nation, or in our ever more interconnectedglobal society, the chances o eliminating poverty or reducing inequality depend on

investment in public goods. The mechanisms that create poverty and inequality arenational and global, not just individual, and the responsibility or xing them (andpaying or the xes) belongs to all o us.

The current world order, in which ones lie chances still depend on accidentso birth such as race, gender, and nationality, is constructed on a oundation ocenturies o inequality. Slavery, apartheid, and colonial conquest are only the mostvisible examples o mechanisms imposed by orce or custom in the past, whichhave let stubborn legacies elt by children being born today. National governmentsand powerul international agencies such as the World Bank and the International

Monetary Fund still impose rules biased toward the rich, as well as providing asteady fow o subsidies. Global and national economies pump resources rom poorto rich, and prot-making enterprises avoid paying or externalities that damageour common environment.

The impact o climate change, or example, is most severe precisely or thosecountries that have contributed least to global warming. Yet there are no globalmechanisms in place to orce those most responsible or the problem to pay or themassive eort to reverse the present and uture damage.

In a world in which climate change and economic trends know no boundaries,national boundaries stand as an indicator o global apartheid (http://www.thenation.com/article/global-apartheid). In the year 2000, according to the rst comprehensivestudy o global wealth, the richest 2 percent o the worlds adults owned more thanhal o the worlds total household wealth (http://www.mindully.org/WTO/2006/Household-Wealth-Gap5dec06.htm).


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There is inequality within every country. But todays inequalities, note RobertoKorzeniewicz and Timothy Moran in their recent study Unveiling Inequality, areoverwhelmingly determined by national divisions. In such a world, it should be no

surprise that people try to move to get a better deal, and that many are not deterredby laws, ences, or danger. The phenomenon is worldwide, wherever wealth andpoverty coexist: Aricans rom around the continent nd their way to South Arica,South Asians nd work in the Middle East, Mexicans and Central Americans crossthe border to the U.S. Southwest, people risk their lives on small boats rom Aricato Europe, or rom the Caribbean to Florida. The pattern is inescapably evocativeo that o South Aricas apartheid, when authorities tried to conne blacks to theirhomelands, except when their labor was needed elsewhere.This systematic inequality in todays world, which condemns millions o people

to grinding poverty and untimely death, should be as unacceptable as slavery,colonialism, and apartheid. In their time, these earlier systems appeared to beunshakable. Yet they eventually ell, overcome by generations o resistance thatcrossed national and continental boundaries. Another world, in which all humanbeings enjoy ull and equal rights, is neither imminent nor predictable. Fundamentalchange will not be easy, and it may be long in coming. But it is a goal that thisgeneration must envision as both possible and necessary.

There are signs, moreover, however ragile, that the necessary shits in thinking maybe beginning to emerge. A decade ago, beore the Durban World AIDS Conerence

in the year 2000, both Arican and global policymakers assumed that AIDS treatmentwas too expensive or Aricans, and that millions would just have to be let todie. The ght against AIDS is still ar rom victory, but mobilization by activists inArica and around the world changed that assumption, leading to the ormation othe Global Fund to Fight AIDS, TB, and Malaria. Signicantly, the governing bodyo that und, and the responsibility or reviewing results, includes both donor andrecipient countries, as well as technical experts and people aected by the disease.


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Such a vision o shared responsibility or global public goods does not guaranteeresults. And it has yet to penetrate the halls o the U.S. Congress or the studios ocable commentators. The unding is still largely at the mercy o the ckle politics oa handul o rich countries. But even in this realm the search or innovative sourceso unding has produced some hopeul results. UNITAID is supplying medicinesin over 90 countries with nancing rom an airline tax collected by Chile, France,

Madagascar, Mauritius, Niger and the Republic o Korea. A currency transaction levyis being debated seriously by international policymakers, although it is still anathemain the U.S. political arena.

The concept o aid is deeply embedded in conventional wisdom, in bureaucracies,in legislation, and in statistical data. But we should reject the alse choice betweencontinuing the status quo and cutting aid to rely on the invisible workings o animaginary trickle-down market eect. The task is both to conceive a new orderounded on the common good and universal human rights and to gure out thenecessarily complex and diverse ways to pursue that vision.

William MinterEditor, AricaFocus Bulletinhttp://www.aricaocus.org


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scholArly Articles


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Constructing Trade from the Bottom UpAn Examination of Notions of Fairness in the

Conventional Cotton Trade of Burkina Faso

maule Laperre-FortUverty o Guelph

ABstrActUsing a case study o cotton producers in Karangasso-Sambla, Burkina Faso, this article will argue that the

most salient points o unairness in the conventional cotton trade are a lack o participation in decision-

making and the breaches o social contracts between the producers, their Union and SOFITEX, the cotton

company. While they are partners on paper, their trade relationship does not ulfll Tallontires (2000)

criteria o partnerships, and is at the roots o the unairness perceived by producers. This article will present

an array o reasons producers use to describe the unairness in the conventional cotton trade in Burkina

Faso, an exercise never accomplished by air trade organizations. It will be argued that oppression o

producers by more powerul actors is seen as the cause o the precarious and worsening terms o trade

or cotton, and the poor labor conditions in the felds, which speaks to the importance o partnerships

in development work in Arica. Furthermore, this unair situation has the potential to be replicated in the

air trade cotton industry in Burkina Faso because the air trade model, having not taken into account the

baseline situation o Burkinab producers trading with SOFITEX, is not adequately adapted to local context

and history.

introductionFar rade (F) etwork ad the Fartrade Labellg Orgazato (FLO) arebaed o deologcally loaded vew o trade jutce. Tey repreet a amalgam o

varou ocal movemet ad parte wth dvergg vew o why covetoal trade uar, ad how t ca be made arer. Tee vew are oe mpled ad trvalzed the lterature o the Alteratve rade Orgazato (AO), becaue o t prmary

purpoe: ellg F-certed product. O the academc de, although prevoueort have bee made at clayg ad crtczg vew o F,1 obody ha yet to

draw parallel betwee ar trade crtera ad trade jutce a perceved by o-certedproducer.Mot F tatve are cocered wth outcome ad reult, ad tegrate

elaborate motorg & evaluato (M&E) ytem that ae whether objectve arereached. However, F ay t ar. But how are meaured? How ar caF tatve be whe perpetuated by large corporato actg a top-dow aho?Mot mportatly, what doe F mea or t ma takeholder? Doe t mea makgmarket work better or the poor? raormg thee market? Workg aroud theemarket? Or doe t mea commuty ecoomc developmet (CED)? Maelad & DeVall2 um up the ue o deg are F the ollowg way:

1 For more detal, pleae reer to the work o Frdell, Lemay, Lyo ad McSwee.2 Robert Maelad & Albert De Vall, How Far Far rade? De Ecoomt 150 (2002): 251 272.


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A the ar trade movemet oppoe to the curret practce o teratoal tradebecaue o t coequece, t doe o o the ba o a rejecto o ececy a thema crtero. Far trader propoe aother crtero to judge the coequeceo teratoal trade, whch called rather vaguely are. What ecet,they argue, may ot be ar or coderato o equalty. Te ar trade movemetdoe ot ret the market mecham or equalty prcple, but object to

equalty outcome a a reult o ujuted uequal tartg poto. It arguethat equalty caued by ytem ad ttuto that reward people deretly othe ba o atural or ocal derece rather tha by derece eort otmorally deedable. Te act that the curret teratoal dvo o labor doereult uch equalty make t a problematc ad ujutable ytem, accordgto ar trade advocate. Te ar trade movemet thu argue that teratoal tradecottute a mprovemet t ha beecal coequece or the pooret group the world. T the moral crtero ar trade ue to judge the coequece otrade.

reseArch oBjectivesAnd QuestionsT artcle am at explorg whether ad why cotto producer thk ther curret

ocoecoomc tuato ar or uar. Ug a cae tudy o o-certed cottoproducer Karagao-Sambla, Burka Fao, t wll argue that the mot alet poto uare the covetoal cotto trade are a lack o partcpato deco-makg ad the breache o ocal cotract betwee the producer, ther Uo adSOFIEX. T oppreo o producer by more powerul actor ee a the caueo the precarou ad woreg term o trade or cotto, aw well a the poor labor

codto the eld. T reearch baed o the ollowg queto:Is the current(traditional) cotton trade fair according to the producers? Why or why not?

methodology

Te tudy wth cotto producer took place Aprl 2007 the vllage oKaragao-Sambla (Provce: Houet, Rego: Haut-Ba), whch located the Southwet o Burka Fao Wet Arca. Te vllage o Karagao-Sambla theheadquarter o the departmet o the ame ame, whch compre 11 other maller

vllage. Data or th artcle came rom em-tructured tervew wth 19 cottoproducer, the local uo ad the local SOFIEX worker, a well a a mall ample orepreetatve o the geeral publc ad authorte (e.g., vllage che, teacher, healthcare worker).

context

O Burka Fao 45 provce, about 30 produce cotto. Cotto the prcpalcome-geeratg actvty (IGA) or more tha two mllo producer Burka Faoad a tegral part o the daly le work, ocalzg ad ood o mot Burkab.Tere are up to 200 mall cotto ol plat Bobo-Doulao aloe, ad mayhouehold recycle every part o the cotto plat, ug the eed hell a cattle ood oruel ad cotto ahe or cookg potah, a tradtoal dh.

Te cotto producg cycle prece, tme coumg ad pa mot o the year.SOFIEX oe ue the atoal rado to commucate dvere phae o the cotto


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caledar, whch alo ext prt orm. Sowg o eedlg occur May, whle tllgad applcato o ertlzer tart durg the ollowg three to our week. Cotto

pckg tart a early a September to October ad lat utl Aprl. Chemcal petcdead ertlzer are alo appled durg the pckg eao. Aer that perod, cottoarmer clea the eld o le-over tem beore tartg the campag aga. SOFIEX

gg plat top mot actvte early May.Te cotto compay Burka Fao a redoubtable, mytc ad powerul etty.Te truck, gg plat ad reearch ceter are plety. Cotto, all t orm, byar the larget employer the coutry.

SOFIEX headquartered dowtow Bobo-Doulao ad ha cotrol over thevery productve ad clmate prvleged South-Weter cotto producto. It tll largelyfueced by DAGRIS, a Frech brokerage ad vetmet compay, whch poee34% o SOFIEX hare ad tll cotrol the cotto ol compay, SN-CIEC.

Aer prvatzato 1999, the tate hare o SOFIEX wet rom 65% to 35%.3

A teretg eature, though, that Uo Natoale de Producteur de Coto duBurka (UNPCB) ow 30% o the SOFIEX hare, wth prvate bak owg 1%.Some prvate atoal vetor are alo volved.

SOFIEX ha a very complex prce xg mecham,4 whch baed o ellgorecat ad rk aemet a well a varou tock exchage dcator uch a theCotlook Idex. Each year, a mmum prce aouced beore the eedg occur(165 FCFA/kg 2007, dow to 150 FCFA/kg 2008).5 I SOFIEX able to make

a prot out o t, t redtrbute a prme, alo kow a ristourne, to the Groupements deproducteurs de cotton (GPC).6 I the pat eve year, producer receved a ristourne thataveraged 15% o the mmum prce.

I the departmet o Karagao-Sambla a mot other, there are threepermaet SOFIEX repreetatve: oe Correpodat Coto (CC) ad two Agetechque du Coto (AC). o prevet cotto rom gag a yellow color that hard to market, SOFIEX ecourage armer to apply x phyto-atary chemcaltreatmet durg the eao at regular terval. Tee put are geerally bought ocredt rom SOFIEX a producer are oe cah-poor whe they eed to tart eedgad treatg ther eld Augut. Iput are expeve: or example, a bag o ertlzerbought or 12,500 FCFA 2007, whch, total, whch amout to a gcat um,oe 100,000 FCFA (about 220 USD) per producer.

Coultato are held to prepare a chedule or cotto pck-up the departmet,whch are everthele ubject to a al deco Bobo-Doulao. Whle aaccommodatg a poble, th chedule deal wth the lmted capacty o SOFIEX

3 Olva Maraud, Le Burka et le premer producteur arca de coto, http://www.ark.com/art-cle8916.html.4 Lou Goreux. Rorme de dutre cotore e Arque ubaharee (Mtre de Aaretragre: Par, 2003).5 Te FCFA the Frac de Commuaut Facre Arcae, the currecy o Burka Fao. I 2009, theexchage rate wa approxmately 450 FCFA to 1 USD.6 Te Cotto Producer Aocato.


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(epecally ther lmted umber o truck workg a very large terrtory wth poorroad codto) ad the eed or SOFIEX to have a mooth upply o cottothroughout the eao. Te CC repoble or edg requet or pck-up ad

paymet to Bobo-Doulao o behal o the GPC. He alo hadle the paymet whethey come back, theory o more tha 21 day aer they had bee et out.

Burka Fao ha a orgazed ocal ecoomy tructure, o whch cotto a goodrepreetatve. Sce 1995, each cotto producer part o a GPC, whch typcallyha 20-50 el-elected member who mut produce a mmum o 40 to per year.Member o the ame GPC are co-guarator or each other credt. Te put credtcome rom a atoal bak but wth SOFIEX actg a a termedary, accoutgor credt wth the GPC a a group rather tha wth each dvdual armer. I other

word, t ubtract the total credt rom the total paymet or the GPC, whch therepoble or dtrbutg t arly depedg o each member producto, qualty ad

pat credt.GPC are ru a mall democratc commttee wth a Board o Drector compredo a Predet, Secretary ad reaurer, a well a ther repectve atat, advor adormato delegate. Startg 1998, GPC tarted electg departmetal uo, theUo Dpartemetale (UD).Te role o the UD motly admtratve. Te UD a member o Uo Provcale (UP), whch part o the well-kow UNPCB, theatoal uo.

reseArch findings

T ecto tur to the emprcal reult wth repect to the o-certed cottoproducer. It argue that producer dety the uare the cotto trade maly atthe local level; there very lttle exteral blame metoed by producer.

Te prcpal ue cotue to be that the curret prce level doe ot allowproducer to make a lvg gve put prce. However, the termology ued aroudSOFIEX ad the UNPCB reveal that the lack o real parterhp the ma caueo th uare, maly becaue t doe ot allow or meagul partcpato by

producer. T trade relatohp doe ot ulll the ve crtera outled by allotre:7

1. Shared udertadg o the problem or ue ad the cotext2. Mutual commtmet to the parterhp3. A dtct or uque cotrbuto4. Shared objectve5. Mutual trut

A rage o deret reao are gve to expla the curret oco-ecoomc tuato,whch producer coder a uar. However, th ha ot alway bee the cae ad thechage motly due to tred prce ad the deterorato o parterhp.

Te prce or cotto, whch wa 165 FCFA/kg 2007 ad ell to 150 FCFA/kg

7 Ae allotre, Parterhp Far rade: Refecto From a Cae Study o Cadrect, Developmet Practce 10 (2000): 166-177.


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2008, perceved a too low. T ca be compared to rg put prce whch areee a too hgh: 12,500 FCFA/bag o ertlzer 2007 rg to 15,000 FCFA/bag 2008. Whle producer were able to realze coderable ecoomc growth the vllageaer cotto growg tarted, t extet hghly depedet o the prce. Te declgcotto prce ha bee the mot gcat ue oted by producer. Cotto ad ot

to be a protable a other crop or vegetable, ad ot to be protable or everybody.Te dowward ad volatle prce tred create ucertaty ad make t dcult orproducer to pla ahead. Producer oe have to tart ewg Aprl or May, beore theprce or cotto aouced, whch reult them lvg a blur whch they dotkow o whch ba to work. Aother reao why the prce ue o mportat that

producer cotetly deted cotto wth potve actor whe lookg back at the2002 eao, whe the prce wa 215 FCFA/kg.

Whe aked about the beet o cotto growg, producer deted the beet

oud able 1.able 1. Benets o Cotton Growing According to Producers

Provides cash income to:buy consumption goods such as mopeds, motorbike, cars

invest in assets, such as a better house with metal roo

invest in work material, such as labor bulls, donkeys, mills, tractors

invest in human capital through educating children

aord getting married or taking up more wives

Brings a better quality o lie (eat better, more meat in the soup, more leisure activities in the village,better amilial climate because people are happier)

Allows more nancial independence rom the amily member who has a better paid job

Stimulates the local economy, like the pharmacy, the Peuls who sell bulls, the moped/motorbikevendors, etc.

Cotton production also:

keeps clothing prices down domestically

provides ertilizers to use or corn and other cerealshas environmental benets (makes the soils richer, allows maize to grow better, allowsrenewal o the elds)

I addto, the act that the prce o cotto kow advace o harvetg (t uually aouced Aprl) wa ad to reduce the vulerablty o producer to arbtrageor local coyote, who are amou the cereal trade or fatg the prce durg thehgh eao. Alo, the act that the cotto moey uually come all at oce reult a

lottery wer pheomeo. Producer d t eaer to ave whe they get pad alump um, rather tha they get a larger overall come but mall daly tallmeta they would whe they ell vegetable, or tace. T motly due to a htorcallack o ormal avg ttuto the vllage. Producer ay th gle large paymet,o top o beg ecouragg ad motvatg, make t eaer to moblze ud or healthexpee; t ad that people de le becaue they have moey to pay or traportato


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to the hoptal Bobo.It mportat to ote that all thee potve apect are very much depedet o the

prevalg prce o cotto. A put orward by a partcpat, cotto growg lke a bd:you put moey ade ad the at a certa pot t accumulate ad the t come! T ot the oly tace whch producer eem to place bet o ther ow lvelhood

wth cotto. Aother partcpat metoed that they have ther cotto weghedmay tme durg the eao, t gve them more chace to have ther cotto rated rtchoce. Tee behavor relatg to rk dcate that armer have grow to lve wth rkad coder t ormal, although ther ue o uch term a delay, late, upredcted,bad urpre, bad coequece ad vulerablty dcate that they tll perceverk a overwhelmgly egatve lght. T epecally true gve the huge tmecommtmet eeded or cotto ad the lack o fexblty o the IGA. A umber o otheractor were deted to be uar by producer. Tey are ummarzed able 2,

order o mportace.However, the majorty o the uare ad to orgate rom the workg relatowth SOFIEX ad the Uo. SOFIEX repreeted ug the ollowgtermology: baed, elh, abuve, ot traparet, powerul, corrupt, fexble adurealtc.

Te SOFIEX practce that mot crtczed ad dreaded by producer t eldqualty cotrol. I act, to determe whether a producer cotto rt choce (ad get

pad 165 FCFA/kg) or ecod choce (ad get pad 135 FCFA/kg), a SOFIEX aget

called a conditionneurgrab a hadul o cotto ad provde a dagotc baed o happraal o the ber color ad legth. Tat deco ha a eormou mpact o thearmer becaue, over hudred o to, a ew CFA per kg make a eormou derece.

Te conditionneurs have cetve to declay the cotto. A oe partcpatremd u, they are hred o a cotract ba ad due to hgh rate o uemploymet,the compay ca allow tel to dctate quota to be met or each qualty ad oly rehrethoe who ulll them ad ave the compay moey. Itace o the conditionneurakg or brbe to cla oe cotto rt choce have alo bee oberved. Tee twothg are deed by SOFIEX8 whch, tead, emphaze how the cotto ber hato allow or a durable, elatc, log ad regular thread order to be compettve ad togeerate reveue o the teratoal market.

Not oly corrupto ad elhe, but alo a lack o traparecy, are recurrgtheme here. Ideed, producer ote the lack o ormal outlet or vocg thercomplat. Oe the oe had, a Comit de Litige ext to ettle dpute, ad producerca tur to t cae o dagreemet wth the compay. I that cae, ther cotto, whch ytematcally tracked ad deted rom the eld to the exportg port, wll beubject to pecto by a team o proeoal whoe reputato beyod queto

Wet-Arca accordg to cotto expert lke Goreux.9 Te qualty cotrol laboratore the Bobo plat are equpped to perorm up to twelve tet, ragg rom color ad

8 Jea Dr Sar, peroal commucato, May 1, 2007.9 Lou Goreux, Rorme de dutre cotore e Arque ubaharee, Mtre de Aaretragre.


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able 2. Unair Aspects o Cotton Growing According to Producers

Credit-related

Indebtedness plays a lot on peoples character (stress, tensions)

Asset liquidation or seizure o assets by other GPC members, hencejeopardizing ulllment o basic needs

Vulnerability and precariousness: people live day by day and i the harvestis not good, you become indebted easily

Process-related

Picking cotton is dicult, it demands more physical eort than other crops

Very labor intensive

Takes up the entire year

Transportation issues; sometimes producers have to carry their cotton or aweek in the donkey cart rom their eld to town when it would have lledthe entire truck by itsel

Hired labour is expensive; on top o paying them 500 FCFA per day youhave to use your wies groundnuts, kill your chickens and prepare t (localstaple ood) and sauce or everybody! Sometimes you have to sell your cowor that!

Filling SOFITEX trucks oten takes entire nights and is very tiring

Nature ocotton

Cotton is not edible so when you dont have money, you starve or you haveto steal. cotton brought amine to Burkina

People have to sell their cereals to have money to hire labourers at 500FCFA/day in cotton elds, then they have to buy cereals or they dont haveanything to eat

Cotton is the only cash crop so without it peasants have trouble getting

moneyWhen cotton money comes the price o everything else goes up

Cotton is a amily crop so each amily member has incentives to be a reerider and not engage in making cash-fow and protability previsions

Market-structure;imperectcompetition

There are barriers to entry and exit because you have to be part o a GPC toparticipate

A lack o alternatives is an articial barrier to exit, as also mentioned by(r29, ree translation): even though income per capita is low in cottonregions, they would be even lower without cotton because its the onlycash crop. In the USA, Australia and Brazil, armers can easily grow cornor soy, but substitution alternatives are oten much more limited in theSahelian region, with nib being the only alternative


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Socialproblems

Causes conficts: disagreements on who should get the cotton moneywhen many people work together arise: it brings confict and divisionwithin amilies, villages and disagreements amongst people, really, cottongrowing brought lots o quarrels! Even within your amily, your household,because work is very dicult, then when money comes and its little, itsours everything around its management, its dicult. When you sell your

cotton, youre tired, there are no machines, its all hand-picked, but wehave no choice but we need to work anyways, so it brings people to speakbadlyAlcoholism: you should see the anarchy here, when money comes, peopletake 2-3-4-5 kegs o beer and its due to cotton because the peasant wouldnever sell his cereals or maize to drink like this

Sexual eects; polygamy shows status. when you have money you do notlimit yoursel to only one wie, precarious marriages and pregnancies orschool girls with whom cotton growers firt because they are drunk

Suicides: each year producers swallow chemicals intentionallyPeople run-away and disappear to escape debt

Ethnic tension: the Peuls cows walk in your eld and destroy yourharvest!

Individualism : cotton growing erodes this sense o solidarity that we knowto be typically Arican

Health-related

No adequate protection when doing chemical treatment, unlike SOFITEXscommando intervention team, which wears astronaut gear when they

come to spray eldsSide eects o products : itchy eyes, headaches, stomach aches, hard tobreathe, fu, ever

Ignorance

Local beer is sold in old bottles o cotton inputs, mainly pesticides

Lack o money management skills

Accounting and management training not applied in practice due to lack odocuments and lack o resources to renew them, or intellectual or literacylimits o GPC leaders

Impact oneducation

Less study time: children busy in elds on the week-end instead o studyingImpact on productivity : children tired on Mondays and do not assimilatematerialSome absenteeism, especially or students rom out o town going home towork in cotton elds on week-ends

Lack o monitoring and parental involvement in education because moreemphasis is put on cotton

School term starts lat; rom October 1st to November 10th, the school isopen but no students come because they are in the cotton elds

Peer pressure: drop-out children infuence students to leave school to takeup their responsibilities in cotton picking associations

Environment-related

Delicate precipitation balance; i too much, cotton rots, i too little, it fieso

Many voracious cotton pests


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humdty to ber legth, mpurte ad reractvty, to aty teratoal qualtyorm. Whle th ca be codered aleatg,10 t ad to be mpartal by t drector11however, that detely ot the mpreo oe get rom teractg wth peaat the eld. Te lack o trut fagrat; doubt at the cetre o the day-to-day workgrelatohp betwee thee parter.

I addto, the qualty proce motly uexplaed to producer, who thk therehould be a plat or each qualty o cotto (to avod mxg), but who the doubtSOFIEX clam whe they realze the ame gg plat treat all the qualte.Depte SOFIEX cotat empha o ameloratg yeld ad qualty, peaat doot verbally apprecate the reao ad mportace o t. Tey do ot eem to grap ullyhow compettve ad egmeted the world competto the cotto trade , ad how

Wet-Arca ha to ght agat etreched prejudce due to the pat preece o platcchemcal leakg rom the pck-up bag to the cotto.12

For producer, SOFIEX reputato at bet dputable. Te compay ha beeaccued by a UNPCB member o mapulatg accoutg data.13 Farmer are aware othe compay overfatg t cot deret way. For example, the SOFIEX truckdrver are well-kow or ellg ther extra ga the vllage or ther ow beet,becaue there o cotrol o the quatte ued. Aother thg the embezzlemetcotued at the eor maagemet level; maagemet accued by producer omakg paymet o ther ve vlla mortgage ad three car by havg ther owcotto eld ad beetg rom preeretal rate. Te producer kow thee practce

aect the prce they are gettg pad ad t certaly our ther relatohp wth thecompay a a whole.I addto, SOFIEX put preure o producer, orcg them to work at ght

to ll t truck. I geeral, the compay ot courteou ad take advatage o tmoopoy power to threate producer by remdg them o ther lack o alteratve.A put by oe producer: a a poor pero, omeoe help you, you have to accepteverythg that he doe or ay to you. Peaat are trctly ubject to SOFIEXtmetable. Ideed, the compay come up wth a caledar at the begg o the year,

whch urepove to atural codto uch a precptato rate that ca hghlyaect the crop.

Aother caue o uare relate to how lttle the producer perceve themelveto be volved deco makg actvte. Whle the ee o local owerhp othe IGA ot preet, there a trog ee o SOFIEX actg ulaterally ad otcoultg producer ad ther repreetatve ucetly. I Karagao, SOFIEX

10 Producer acqured ad prece practcal kowledge o the qualty o ther crop devalued becauet ot take to accout by SOFIEX. T ha a egatve pychologcal mpact that ought ot to beeglected.11 Jea Dr Sar, peroal commucato, May 1, 2007.12 Ibd.13 Toma J. Baett, Slm Pckg: Far-rade Cotto Wet Arca, Coerece o Democracy adraparecy Certed ad Ethcal Commodty Network (preeted at the Uverty o Ketucky,October 12-13, 2007).


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typcally vte oe to two GPC repreetatve to t o commttee to pla admotor marketg, but, ultmately, t the CC who wrte the cotto evacuato order.Te reultg chedule ad by the CC to be baed o data rom the GPC,14 but t alo ad by the producer to vary cotatly. Te cheduled pck-up day are oemed, ad GPC leader do ot have ay recoure.

A dowward tred SOFIEX-producer relato deted by partcpat.Beore the producer were orgaed GPC, all credt were egaged drectly wth thecompay tead o uder oldarty cauto wth the GPC. At that tme, SOFIEX

wa ad to be more orgvg ad could wat a extra eao beore recoverg thercredt. It wa alo ave ad gave put ad eed out or ree, a practce whch theytopped, apparetly, becaue ome producer were grdg the eed to get four ad ellt. T deed by producer.

Fally, the mot recurrg et o uar apect o cotto growg are drectly

SOFIEX-related. Tey all tell the ame tory: SOFIEX urelable, a demotrated able 3.

able 3. SOFIEX-related Unair Aspects o Cotton Growing According to Producers

Input problems

Errors in order deliveries

Delays in delivering inputs

Favoring certain producers as not everybody gets their inputs on

the same day

Consequence opayment delays (upto six months)

Other eld work, e.g. cleaning the eld or the ollowing harvest,is delayed

Some eld work rendered impossible due to timing issue, e.g.no time to train new bulls because when the money comes itsalready time to pick cotton again

Necessary to sell cereals to cover certain expenses

Necessary to take commercial loans with loan sharks

No money or health care or other emergencies when its needed

Money comes too late to pay or tuition, and since student loansare unavailable, parents have to liquidate assets (like bulls) or notsend their children to school

Money comes when cotton cropping has started again so there isno idle period in which people could do other IGAs even i theywanted to

14 S. o, peroal commucato, Aprl 26, 2007.


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Te Uo, or t part, talked about by the producer the ollowg term: oproducer-redly, ecet, badly maaged, corrupt, SOFIEX ell-out, otrepreetatve ad dcoected rom producer teret.

Producer are ot cotet wth the UNPCB, whch ad to ot be workghard eough toward cocretzg ga or thoe t repreet. Trough otcg how

UNPCB doe ot ght to get a better prce or the producer cotto ad how t progrevely chargg hgher prce or the cereal eed t uppoed to ell to producerat heavly dcouted rate, producer creagly eel that the UNPCB a SOFIEXell-out. It charmatc leader, Frao raor, however popular he may be the Wetor h promet role loudly deoucg US ubde at the 2003 WO meetg Cacu, codered corrupt by the producer Karagao- Sambla. He oedegated a a govermet ocal, whch allude to the bureaucratzato o theUNPCB ad t ew dtace ad dcoecto rom the teret o t teded

beecare. UNPCB largely vewed a a puppet o SOFIEX.Te UNPCB ot the real ydcate t hould be the eye o the producer.Some people are o the opo that whle the orgazatoal tructure good a pror,t badly maaged; the leader lve o the moey o the producer ad do ot gveeough back retur. A omeoe put t a ocu group dcuo, UNPCB lke amachete we pad to gve to SOFIEX o that t cut our throat wth t. Beore, UNPCBmember were cotto grower lke u, but ow I dot ee the mportace o t becaue tdoet do aythg or u. Tey have to come remd u aga why they created uch a

tructure.Te UNPCB role a a repreetatve o the armer to d oluto to problemarg betwee parter ad betwee thoe the dutry geeral. It would theact accordg to t role t made a geue eort to addre the egatve apect ocotto growg brought orward by the armer. Te armer are uhappy wth the UDo Karagao-Sambla, a demotrated by may o them walkg out o the aualaembly meetg. Some o the ue raed that meetg were corrupto the by the ormer predet o the UD. Te etre eo carred a geeral etmet oreetmet, becaue mot armer had ot bee pad by SOFIEX yet at the tme o themeetg.

conclusion

I th artcle, t ha bee argued that the mot mportat caue o uareaccordg to the producer the tate o the curret relatohp wth ther trade

parter ad uo, whch are domated by ulateralm. Tey do ot ulll allotreve crtera or a healthy parterhp, becaue SOFIEX, UNPCB ad the producertervewed do ot hare a commo udertadg o the problem ad ue, are otmutually commtted the ame repect, have cofctg teret ad lack mutualtrut. A a reult, SOFIEX doe ot oer producer a ar prce. T patter ha the

potetal to be replcated wth F etwork.Producer argue thg are uar becaue they are determed outde o ther

cotrol. Eve though they pot out ther poverty to appeal or exteral upport, th


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warrated by the eelg o a breach o a ocal cotract betwee them ad SOFIEX.Te uare are locally through teracto wth uch actor a SOFIEX ad theUNPCB, ad t motly ee a reultg rom parterhp ue ad lack o potverecprocty. Te CC Karagao-Sambla t that ce they have good tetothere o uare, oly huma mtake ad mudertadg. Tere o

recogto o the part o SOFIEX a to how the proce o the cotto trade tel cabe uar.F cotto Burka Fao ha to be coceptualzed wth a edogeou CED

ramework, reemphazg partcpato ad equal parterhp ulllg allotrecrtera. Oberver ought ot get caught the trade veru developmet debate; or

producer tervewed th reearch, t clear that the ormer relate to the latter adthat reorm to make trade ar ought to have gcat mpact o CED. A Qugley& Opal ote, Worker do ot eed ad or ocal premum, but they do eed ar

wage.15

Although thee are ot all juted by are, they are a eceary compoetor F etwork to get approved udg rom blateral door. Moreover, or o-certed producer Burka Fao, F motly juted by the hgher prce ad tocorrect the coequece reultg rom kewed parterhp wth SOFIEX ad theUo.

Fally, more reearch hould alo be doe o F ad huma rght. T exploratoryartcle ought to dety what producer thought ther rght were ad how ad whethey elt ther rght were jeopardzed by other actor. A mall part o the eld work wa

devoted to that queto, ad t wa meat motly to ae the health ad recproctyo parterhp the covetoal trade. It would be teretg to compare thetermology ad oudg text o the F ad the huma rght movemet to ee howthey overlap ad how the ormer ue the latter a a ramework to rame tel a jutce.

references

Baett, Toma J. Slm Pckg: Far-rade Cotto Wet Arca, Paper preetedat the Coerece o Democracy ad raparecy Certed ad EthcalCommodty Network, Uverty o Ketucky, October 12-13, 2007.

Frdell, Gav. Far rade Coee: Te propect ad ptall o market-drve ocaljutce. oroto: Uverty o oroto Pre, 2007.

Goreux, Lou. Rorme de dutre cotore e Arque ubaharee. Mtrede Aare tragre: Par, 2003.

15 Mauree Qugley & Charlotte Opal. Far rade Garmet Stadard: Feablty Study. (raFar USA,2006).


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Lemay, Jea-Frdrc. Commerce qutable: ver de chater de recherche acr dala pratque. Ue revue traverale de la lttrature. Chare de recherche du Caadae dveloppemet de collectvt - Sre Recherche 38 (2003).

Lyo, Sarah. Fatae o Socal Jutce ad Equalty: Market relato ad the uture

o Far rade, Paper preeted at the meetg o the Lat Amerca StudeAocato, Emory Uverty, Dalla, exa, March 27-29, 2003.

Maraud, Olva. Le Burka et le premer producteur arca de cotto. http://www.ark.com/artcle8916.html (Acceed February 15, 2008).

Maelad, Robert & Albert De Vall. How Far Far rade? De Ecoomt 150(2002): 251

272.

McSwee Nathale. La cotrbuto du commerce qutable au Dveloppemet Localau Burka Fao: Le ca de lUo rutre et marachre du Burka Fao etdu Cercle de Scheur, Chare de recherche du Caada e dveloppemet decollectvt - Sre Mmore 11 (2007).

Qugley Mauree & Charlotte Opal. Far rade Garmet Stadard: Feablty Study.

raFar USA, 2006.allotre, Ae. Parterhp Far rade: Refecto From a Cae Study o

Cadrect. Developmet Practce 10 (2000): 166-177.


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A Better Future for Coffee FarmersA Comparative Analysis of the Fair Trade System in Mexico and Tanzania

Mega Sheaha

Boto Uverty

ABstrActWhen coee prices plummeted ater the sudden collapse o the International Coee Agreement in the late

1980s, many o the worlds 25 million coee armers were let without a viable source o income and the

ability to meet even the most basic needs o their amilies. A certifcation and labeling system called Fair

Trade arose as a response mechanism to the crisis, allowing conscious consumers the ability to purchase

coee that provides a guaranteed higher price to its producers. This paper seeks to view the Fair Trade

system rom the perspectives o two very dierent cooperatives: La Union de Huatusco in Mexico and the

Kilimanjaro Native Cooperative Union in Tanzania. The data presented was obtained through interviews

with armers and the cooperative administration, export and fnancial data rom the cooperatives,and interviews with nongovernmental organizations (NGOs) connected to the cooperatives. Using a

sustainable livelihoods approach, I fnd that Fair Trade is having a large impact at the cooperative level but

that ew armers have seen an improvement in their livelihoods. Changes should be made to the current

structure o the Fair Trade system in order or its benefts to reach individual armers more eectively.

introduction

Cr ht the coee commuty 1999.1 Te prce pad to coee producerworldwde ell by almot 50 percet the three year that ollowed, httg a 30-year low

October 2001.2 Wth coee armer come ar below the cot o producto, thelog-term utaablty o the market ad o coee a a vable lvelhood wa put toerou queto. Mot o the world 25 mllo coee armer are completely depedeto coee or ther come. Whe the prce o coee ell dratcally, the qualty o motmall-cale armer lve uered coderably a a reult.

Volatle world prce le may mall-cale armer developg coutre credbly vulerable tuato. Over tme, the developmet commuty bega torealze that ocug o rural terveto could beet both thee armer a well a

ther atoal ecoome, pobly curtalg acal cr ad depedecy o ad fow.Followg a heghteed cocoue o the mortue o coee armer, ortherorgazato tarted to create ad mplemet varou utaable coee certcato adlabelg program a eort to brg more moey back to the armer level.

Oe o the larget ad mot wdely recogzed o thee program Far rade,orgatg the 1970 a eort to promote ocal ad trade jutce. Uder theumbrella o the Fartrade Labelg Orgazato Iteratoal (FLO), cooperatve developg coutre ca be certed to ell ther product abroad wth a prce guaratee

they are able to uphold certa pre-determed tadard ad codto. Coumer

1 Davd Barto Bray, Joe Lu Plaza Sachez, ad Elle Cotrera Murphy, Socal Dmeo o OrgacCoee Producto Mexco: Leo or Eco-Labelg Itatve, Socety ad Natural Reource 15.3(2000): 429-446.2 Oxam, Mugged: Poverty Your Coee Cup, 2002.


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are coected through a labelg ytem that ha evolved over the lat decade, charggcocered hopper wth the tak o lookg or ad demadg that Far rade productbe avalable or purchae ther local upermarket.

Far rade certed coee cooperatve oer a uque ettg or vetgatgthe true mpact o alteratve trade a a utaable developmet trategy. How have

producer group beeted rom the emergece o thee program? Have the beetmade ther way to the armer level? Do thee program oer a more utaablelvelhood or ther partcpat? T paper wll eek to addre thee queto romthe perpectve ad experece o two coee cooperatve rom very deret place,La Uo de Huatuco Mexco ad the Klmajaro Natve Cooperatve Uo azaa. Both o thee cooperatve have bee actve partcpat the Far rademarket or ome tme ad are well-coected to orther orgazato that upplyaddtoal upport. Whle eemgly radom cooperatve to compare, the tral ad

trbulato o both wll provde a more dyamc pcture o actual experece wth theglobal market.

methodology: the sustAinABle livelihoods APProAch

T paper wll ollow the ormat o a mlar tudy doe by Bradley Parrh o theSutaablty Reearch Ittute at the Uverty o Leed.3 Lke Parrh, I wll relyo the utaable lvelhood approach a a mea o comparg ad cotratg theexperece o La Uo de Huatuco (La Uo) Mexco ad the Klmajaro Natve

Cooperatve Uo (KNCU) azaa. Data or aaly provded rom umerouderet ource. I acqured the commetary ad data or La Uo over a te dayvt early Jauary 2007. For the KNCU, I rely o data provded to me by Parrh.Both Parrh ad my ow data were collected through ormal ad em-tructuredtervew wth coee armer, more ormal tervew wth the admtrato o thecooperatve, export ad acal data provded by the cooperatve, geeral obervato,ad tervew wth NGO workg drectly wth thee cooperatve.

Te utaable lvelhood approach a coceptual ramework ad methodo polcy ad program aaly lookg at log term utaablty rom a holtc

perpectve. Ued prmarly by uch orgazato ad departmet a the Departmetor Iteratoal Developmet (UK), Uted Nato Developmet Programme,Oxam, ad CARE, the utaable lvelhood approach oer a fexble adcommuty-pecc platorm or lookg at the may poble compoet olvelhood4 a pecc area o ocu.

3 Bradley Parrh, V. Luzad, ad W. Betley, What azaa Coee Farmer Ca each the World:A Perormace-Baed Look at the Far rade-Free rade Debate, Sutaable Developmet 13 (2005):

177-189.4 Lvelhood deed a the capablte, aet (tore, reource, clam, ad acce) ad actvterequred or a mea o lvg: a lvelhood utaable whch ca cope wth ad recover rom the tread hock, mata or ehace t capablte ad aet, ad provde utaable lvelhood opportuteor the ext geerato: ad whch cotrbute et beet to other lvelhood at the local ad global levelad the hort ad log ru. See R. Chamber ad G.R. Coway, Sutaable Rural Lvelhood: PractcalCocept or the 21t Cetury, IDS Dcuo Paper No. 296 (Brghto: IDS, 1992).


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Te ramework baed o the preme that the aet tatu o the poor udametal to udertadg the opto avalable to them, the tratege they adopt toatta lvelhood, the outcome they apre to ad the vulerablty cotext uder whchthey operate.5 Frt, a reearcher mut explore the vulerablty cotext, the exteralevromet whch people ext, cludg the hock, tred, ad eaoalty

codto over whch people have lttle or o cotrol.6 From there, avalable aetor captal are examed cludg atural, ocal, huma, phycal ad acal.7 Acrtcal look at thee dmeo the allow a careul examato o deret orm o

programmatc terveto ad polcy alteratve.

the vulnerABility context: coffeeAndthe fAir trAde system

Coee, beg oe o the mot heavly traded ad coumed commodte o earth,bode a credbly complex htory ad market tructure. Coee move prmarly rom

the global outh, where 90 percet o t produced, toward coumpto the globalorth.8 I 1962, mot producg ad coumg coutre came together to g the rtIteratoal Coee Agreemet (ICA), etablhg a regme uder a ewly charteredIteratoal Coee Orgazato where a prce bad wa etablhed alogdemadated export quota. Mot agree that the ICA regme wa largely ucceul attablzg world coee prce, but wa omewhat udermed by a ew ree-rdgcoutre.9,10 T ree-rdg coupled wth (1) a coumer wtch demad romoluble to groud coee ad (2) Cold War teo betwee the US ad Lat Amerca

caued the oreewal o the ICA 1989.Aer the regme collaped, producg coutre lot almot all o the fuece theyhad accrued. Stock cotrol le the had o publc agece ad ell to thoe o prvatetradg compae, leadg to a ubtatal drop world prce ad detablzato

producg coutre. Te 1990 were ot oly a tme o low coee prce, but alo o hghprce volatlty. Volatlty led to creaed level o actvty o the uture market, wherecoee ad other commodte are prmarly old ad bought a hort term vetmet.

Iteratoal trade coee ha udergoe coderable retructurg thelat twety year. Te prce o Arabca coee et by the New York Coee, Sugarad Cocoa Exchage (CSCE) whle the prce o Robuta coee et by the LodoIteratoal Facal Future ad Opto Exchage (LIFFE). oday the coee ytem

5 F. Ell, Rural Lvelhood ad Dverty Developg Coutre (Oxord: Oxord Uverty Pre,2000).6 DFID, Sutaable Lvelhood Gudace Sheet, http://www.lvelhood.org/o/o_gudaceheet.html.7 See able 1 or deto.

8 S. Pote ad B. Davro, Te Coee Paradox: Global Market, Commodty rade, ad the Eluve Prom-e o Developmet (Lodo: Zed Book Ltd., 2005).9 . Akyama ad P. Varag, Te Impact o the Iteratoal Coee Agreemet o Producg Cou-tre, World Bak Ecoomc Revew 4.2 (1990): 157-173.10 B. Davro, Te Re ad Fall o Govermet Power o the Iteratoal Coee Market, I M.Gro ad P. Gullaumout (ed.), Ecoomc o Agrcultural Polce Developg Coutre (Par:Edto de la Revue Fracae dEcoome, 1996).


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characterzed by tee olgopoltc cocetrato o both teratoal trader adroater. I 1996, x trader cotrolled 50 percet o the market hare ad ve roater Kra, Netle, Proctor & Gamble, Sara Lee, ad chbo purchae almot hal o the

world upply o coee bea.11Producg coutre thereore ot oly lot ther ablty to help et prce uder

the Iteratoal Coee Agreemet regme, but alo lot ther ablty to cotrol exportfow ad tock. By the ed o 2001, the low teratoal prce o coee dd ot evecover the producto cot o ether Robuta or Arabca coee.12 Furthermore, wthoutthe ablty to cover eve the cot o producto, coee armer are uable to provdebac ecete or ther amle. I may cae, th orce armer to eek a ubttutecome, oe by growg arcotc, uch a chat ad coca.

Tee codto helped paw the alteratve trade movemet, rom whch theFar rade movemet evolved. Te movemet ought to hghlght ad create a couter-

practce to the uequal exchage o good ad ecoomc reource betwee developedad developg coutre, whch wa ee a a coequece to poltcal ad ecoomcmargalzato.13 Alteratve trade became a outlet to protect the lvelhood odevelopg coutry exporter by crcumvetg the mddle-ma the upply cha addrectly acceg market developed coutre.

I the 1980, the mall movemet became more robut through the ormatoo ttuto that would gover the rule ad procee o the ew ytem o trade,amely the Iteratoal Federato or Alteratve rade. I 1988, a Dutch Alteratve

rade Orgazato became the rt ue a label o t product (called Max Havelaar) a eort to help a Mexca coee cooperatve ga market acce. oday, the Farrade Labelg Orgazato Iteratoal (reerred to a FLO) act a the umbrellaorgazato ad coordator o twety deret labelg tatve aroud the world.Ulke orgac certcato, Far rade requre that all level o the upply cha bepected order or the label to be obtaed.14

Far rade work by ettg a prce foor or mall-cale armer to hedge agatthe volatlty o the coee market.15 Curretly, thee level rema at $1.26/poud orcovetoal wahed Arabca coee ad $1.41/poud or certed orgac coee. It happe that the world prce or coee above thee et prce, the the Far rade

prce chage to $0.05/poud over the market prce, a wa the cae 1994 through1998.16 I addto to a et prce, Far rade alo oer armer a ocal premum, a extraew cet o every poud o coee to be ued by producer orgazato to promotedevelopmet actvte wth ther commute. Curretly, the premum $0.05/

poud ($0.11/klogram) or regular Far rade ad $0.15/poud ($0.44/klogram) or

11 Oxam, Mugged: Poverty Your Coee Cup, 2002.

12 Ibd.13 Laure Wardel, Coee wth Pleaure: Jut Java ad World rade (Lodo: Black Roe Book, 2002).14 Ibd.15 P. Rce ad J. McLea, Sutaable Coee at the Croroad, Whte Paper, Te Coumer ChoceCoucl, 1999.16 Ibd.


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orgac Far rade.Far rade eectvely a demad-drve alteratve or armer; thereore, wthout

the preece o tereted coumer, the market could deterorate. For th reao,varou NGO have take up the promoto o Far rade a oe o ther prcplecaue.17 Tee group act to help brdge the o-called ormato gap that ext

betwee the coumer ad the producer, allowg the traer o ormato to thecoumer about the codto uder whch product are produced o that they camake more kowledgeable deco upo purchae. Tee orgazato have made adputably large mpact o the ytem. Betwee 2004 ad 2005, the ale o Far radelabeled good grew by 32 percet worldwde.18 Te rough etmate o total Far radeale 2001 wa $500 mllo.19

mexico: lA unionde huAtusco

Te ollowg ecto rele o the utaable lvelhood ramework to ythezewhat wa oud durg my tay at La Uo de Huatuco Jauary 2007. I each othee dcuo, my aaly wll attempt to deretate betwee geeral aet adthoe aet accumulated a a reult o Far rade certcato. Overall, I oud lttlempact at the armer level but tremedou aet accumulato at the cooperatve level.

Historicalbackground

La Uo de Huatuco, a abbrevated vero o t much loger ame, La UoRegoal de Pequeo Productore de Cae de Huatuco, evolved rom a group that wacooldated 1982 by Proeor Mauel Seda Rco, a ocalt voary o the tme.

Wth coee prce droppg quckly ad wthout a govermet ttuto to provdehelp, the group bought the recetly abadoed proceg aclte the area adtarted ellg collectvely. Te cooperatve wa ocally recogzed October o 1991ad aw t rt export 1992.

I 1994, La Uo wa approached about jog the rak o other Far radecerted cooperatve Mexco. Wth the help o the ta at Max Havelaar, La Uobega the proce o applyg or Far rade certcato, whch t receved 1995.

oday much o what La Uo produce old to Gree Mouta Coee Roater Vermot. Te cooperatve alo part o the orgac market, recevg t rtcertcato 1998.

oday, La Uo repreet about 2,000 coee armer, about 500 o whch arewome.20 Mot armer have betwee 0.5 ad 12 hectare o lad, although there areome armer wth over 100 hectare. Durg harvet, armer brg ther day coeeto ther elected ut repreetatve each aeroo. Oce the coee collected at the

17 Icludg, but ot lmted to, Oxam Iteratoal, Equterre, Coop Amerca, Global Exchage, UtedStudet or Far rade, ad the Caada Coucl or Iteratoal Cooperato.18 FLO, http://www.artrade.et.19 A. Reder ad P. Sedker, Far trade: qualty, market ad coveto, Joural o Rural Stude 19.1(2002): 87-96.20 FLO, http://www.artrade.et.


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ut, the repreetatve brg t to the cooperatve ma aclte o the outkrt oHuatuco. Te cooperatve the repoble or the mllg ad exportg operato.Oce the eao coee ha bee old, the prot marg are redtrbuted back to thearmer.

Human capital

A great deal o huma captal ext wth the cooperatve, but thoe peccallyrelated to Far rade are more dcult to d. Oe chage ha bee the type adamout o work doe by the admtrato o the cooperatve, cludg eekg outew Far rade buyer, etablhg ad kdlg the relatohp wth thee dvdual,ad eurg the requremet or Far rade certcato cotue to be met. Te roleo techcal upport ha chaged great way a well, but maly a a reult o orgaccertcato, ot Far rade. Tee ta people are drectly repoble or completg

yearly pecto o all o the arm ad helpg armer ready ther arm or the talcertcato pecto. Aother mpact ha bee the trag o two qualty cotrolcupper at the cooperatve, pad or by Gree Mouta. Te cotrol o coee qualty very mportat to keepg ad expadg exportablty ad ha bee oe o the more

vble cotrbuto o beg a part o the Far rade market.Evdece o capacty buldg at the armer level wa le revealg. Some armer

metoed havg bee vted by the cooperatve to workhop about Far rade adother ot. It appeared that thoe armer that partcpated more oe cooperatve

actvte ad were better coected to the admtrato o the cooperatve receved theeducato. Te armer that had very lttle teracto wth cooperatve admtratooe ad they had ever eve heard o the term Far rade. Iequalty wth thecooperatve wa overwhelmgly apparet.

social capital

I term o ocal captal, there are a ew trkg mpact ad hortcomg o Farrade at La Uo. I tervew, mot armer poted to the cervcal cacer protecto

program or wome et up by a NGO called Groud or Health, there a a reult ocoecto wth Gree Mouta. T NGO work coee growg commutethroughout Lat Amerca to brg much eeded health care ratructuralmprovemet.21 Te program wa et up the Huatuco area 2000 ad ha ceee 12,000 wome. Augut Bur at Groud or Health ad, Tere uch a actvememberhp at the cooperatve that eergetcally eekg to mprove ther ow qualtyo le. Bur ote that he ha ee a real ocal chage ce the tart o the program;

wome are takg a actve role ad me are ecouragg. Trough tervew, armermetoed other maller project that were a reult o Far rade a chool bult thercommuty, the collecto te or coee beg rebult, ad a baeball team put together aother commuty although othg tood out qute a much a the Groud orHealth Program. O the 21 armer tervewed, 11 o them metoed the Groud or

21 Groud or Health, http://www.groudorhealth.org/.


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Health program a omethg ether they or ther poue beeted rom.O the other had, mot armer ad ther amle are tll depedet o

govermet welare program, motly Oportudade,22 whch how that Far rade haot led armer out o poverty. Far rade ha had a obvou mpact o certa ocaltuato at the armer level, but much rema to be ee o a much larger level.

natural capital

La Uo commtmet to the evromet oe o the mot mpreve apecto t work. Te larget ad mot otable example clude the creato ad promotoo the orgac program, tarted 1998. O the armer tervewed, 16 o 21were allor partally orgac. Te other ew ad that trato to orgac wa too cotly adtoo labor tee or them to purue at th tme. Coupled wth the beet o beg aFar rade partcpat, producer ear $1.41/poud or Far rade orgac coee whle

$1.26/poud or Far rade covetoal coee. I the 2002-2003 eao, 13 percet othe export rom La Uo wet to the orgac market.23Other mpreve evrometal practce clude utaable mllg at the

cooperatve ad compot o wate rom coee cherre. However, t doe ot appearthat Far rade ha bee the ma cotrbutor to the evrometal mdet at thecooperatve. A oted by may, the cooperatve ha bee a have o progreve dealce t cepto. Mot armer leared the value o takg care o the lad ad theatural evromet rom ther amly ad wll lkely pa thee value alog to ther ow

chldre.Oe le obvou eature o the Far rade ytem, though, t ablty to keeparmer producg coee a oppoed to other more evrometally damagg crop.I the Huatuco rego, may armer chooe betwee coee ad ugar cae, thelatter requrg burg t al tage. Te World Wldle Fud ote that ugarcae producto to blame or a credble lo bodverty. Tu, by provdg arelatvely hgher prce or coee, the Far rade market eectvely keep armer awayrom growg more evrometally damagg crop.24

pHysical capital

Te phycal aet o La Uo have certaly compouded over the year. Tecooperatve ha pla to ope aother mll excluvely or orgac coee, maly a areult o the creaed upply ad demad. T would ubtatally accelerate the mllg

proce ad allow or greater dtcto betwee covetoally grow ad orgaccoee. Te cooperatve alo expreed teret havg more mall mll the deretcommute. T would cut dow o the amout o travelg eceary or ut leader,

22 Te program wa tarted 1997 a a poverty allevato tool, dpeg moey to poor houehold -tead o ubdzg ecete. All cah traer are codtoed o chage behavor patter, cludgvetmet by dvdual ther ow educato, health, ad utrto.23 Ecologc, http://www.ecologc.org/.24 WWF, Agrculture ad Evromet: Sugarcae, http://www.pada.org/about_ww/what_we_do/

polcy/agrculture_evromet/commodte/ugarca/evrometal_mpact/dex.cm.


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create job the mll, ad mprove kowledge o mllg operato. Tee pla areot ecearly the reult o Far rade, but drectly a a reult o the creaed demador ther coee.

Wth Far rade ud, the cooperatve ha bee able to et up a urery or mallcoee plat. Addtoally, Gree Mouta recetly purchaed the cooperatve a

electroc orter or the mll, a mache that ort coee bea by qualty. Troughtervew, I leared that the devce able to ort 25 bag worth o coee every hourwth more accuracy tha 8 to 10 people maually ortg 15 bag per hour. Te orteract a a tremedou value-added phycal aet to both the cooperatve ad to theroater.

Financial capital

Whle the volume o exported coee ha remaed arly table over the lat three

year betwee 1.3 ad 1.5 mllo klogram the percet o Far rade ale hacreaed dratcally over the tme perod repreeted. Fgure 1 demotrate that Farrade ad Far rade orgac ale have goe rom 38.35 percet o ale 2003-2004 to62.26 percet o ale 2005-2006. Trough tervew wth t admtrato, I oudthat the cooperatve oly old about 7 percet Far rade t tart-up year.

T otable creae ha ubtatally creaed reveue at the cooperatve. I the2005-2006 harvet, La Uo exported 1,425,000 klogram o coee. I th all hadbee old at the covetoal market prce, t would have yelded about $2.9 mllo. By

ellg ome at the mmum Far rade ad Far rade orgac prce, the cooperatvewa able to garer over $3.9 mllo, repreetg a 32.58 percet creae. T umberwa eve hgher 2003-2004, reachg 71.78 percet. T repreet a ubtatalcome creae or the cooperatve. Depte thee eemgly large creae, armertll report lttle to o creae overall come. Some eve oted that the prce o Farrade coee o loger cover the cot o producto.

Aother mportat acal eature o Far rade volvemet the extra udrom the ocal premum. I the lat harvet, the cooperatve geerated a total o$190,608 premum, a oppoed to $137,082 2003-2004. Whle may armer

Figure 1. Sales as a Percent o Volume at La Union


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drectly beeted rom the premum through partcpato the etablhedprogram, the moey rom the premum dd ot tralate to hgher come orarmer.

tAnzAniA: kilimAnjAro nAtive cooPerAtive union

Te ollowg ecto rele o the utaable lvelhood ramework to ythezewhat wa oud durg Parrh tay at KNCU 2002. Some addtoal ormatoha bee added baed o evdece acqured rom other ource. Te dg romKNCU are qute mlar to thoe rom La Uo: Far rade eem to provde umeroubeet at the cooperatve level, but armer do ot report ay ubtatal mprovemet ther lvelhood.

Historical background

Te Klmajaro Natve Cooperatve Uo (KNCU) wa ouded uder theBrth Coloal admtrato 1925 ad regtered 1932 wth 11 alate

prmary ocete, becomg the rt cooperatve all o Arca. Durg the 1950 ad1960, KNCU wa able to grow ad thrve a a reult o hgh coee prce, eablgthe commuty to vet chool ad other eceary amete. However, Nyerere,eelg threateed by the power o trog ad table cooperatve, dolved them adezed ther aet 1976. I order to crcumvet the leglato, KNCU geoulychaged t tatu to a prvate compay to avod ru. Recevg poltcal retacerom member, the govermet evetually accepted the re-etablhmet o KNCU

1994. Uder the Cooperatve Act, KNCU wa regtered a a compulory memberhporgazato wth a tate-actoed moopoly the teral coee market Klmajaro.

Curretly, KNCU a volutary memberhp orgazato o approxmately 60,000coee armer, competg wth prvate trader ad alo buyg coee rom the auctoytem. Tee armer, orgazed to 67 prmary ocete, ow arm ragg rom 0.1to 1 hectare. Te cooperatve wa certed Far rade 1993 ad bega exportg tot rt Far rade clet, w radg the UK, 1994. Farmer geerally chooe

betwee a combato o baaa ad coee producto or ther lvelhood (ued a aood ad cah crop repectvely).

Human capital

A mportat huma captal aet ha emerged ce the cepto o Far radeat KNCU. Wth a chage export requremet or azaa coee producer the early 1990, KNCU wa able to create t ow export departmet, becomg evemore mportat wth the addto o Far rade. It alo became eceary to hre a

export maager 1993 who tarted a drect export program ad wa able to etablhrelatohp wth other covetoal mporter, allowg them to crcumvet dometctermedare, capture more o the value o ther coee, ad mprove ther kowledge o


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the world coee market ad Far rade ytem.25Parrh, lke myel, oud that th body o kowledge had ot made t way to

the armer level. Durg t tal year the Far rade market, the ocal premumwa ued to ud armer educato program to mprove coee armg kll. Troughtervew, Parrh oud lttle evdece o educato beg put to practce. May

armer reported eglectg ther tree ad lad tead o urturg them. Whe akedabout ther kowledge o the Far rade program, armer were eve le ormed. Noeo the armer tervewed were amlar wth the program; oly ocer o local prmaryocete recogzed the ame ad t ucto.26

social capital

Te admtrato at KNCU report that beg part o the Far rade ytem haallowed them to eel more cloely coected to the market, coumer, ad ormato.

Tee relatohp oer a degree o predctablty ad teade or KNCU ad aloallow or a greater dalogue betwee producer ad tradg compay.27 I a paper byallotre, he ote that Caedrect, a Brth Far rade compay whch ource mucho KNCU coee, ha developed a trog ad mportat parterhp wth KNCU(2000). allotre cte KNCU ad Caedrect a a tellar example o the mutuallybeecal trade deology acto. I partcular, KNCU ha tarted a tourm program the commuty wth the help o Caedrect.

KNCU alo report eelg more coected to the broader market. T mproved

acce to ormato oe o the greatet value-added actvte rom beg part o theFar rade ytem. Varou parter orgazato are kow to provde cooperatve wthbreg o the dutry, market tred, orecat, ad aaly. Te admtrato atKNCU ay that ue th ormato to pla trategcally or the uture. T degreeo coectvty a very utaable aet or the cooperatve but, aga, the armerdvdually have ot ee the beet.28

natural capital

Parrh oud that the low prce o coee (tralatg to low come or coeearmer) ha doe more or the atural captal o Klmajaro tha the Far radeytem tel. Whe the prce o coee low, coee armer wll allocate le moey tochemcal put. Wth the hgher prce, armer could, theory, ped more moey ochemcal, erodg the evromet the mdt. I tervew, all but oe armer adthat chemcal put to ther crop are mply too expeve, meag Far rade ot

provdg a prce hgh eough or armer to ue evrometally harmul ertlzer.Ulke La Uo Mexco, KNCU ha ot bee a major player the orgac

market. I recet year, the cooperatve allocated part o t ocal premum to upport

25 Bradley Parrh, Evaluatg Smallholder Developmet Stratege Natural Reource DepedetEcoome: Te Cae o Coee azaa (Mater Te at the State College o New York, 2003).26 Ibd.27 Ibd.28 Ibd.


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tral orgac plot wth elect armer whch ha bee upported by the ExportPromoto o Orgac Product rom Arca (EPOPA) ad the Swedh IteratoalDevelopmet Agecy (SIDA). KNCU curretly workg to expad the program tomore armer.29 A vetmet ocer at Ecologc Face, a o-prot acal ervce

provder or commute operatg evrometally utaable way, cormed the

mall ze o the program. I a tervew, Nate Schara oted that t lat harvet,KNCU wa oly able to export oe cotaer (42,328 poud) o orgac coee. Trepreet a mall but promg atural aet or the commuty.

Smlar to the cae o ugar cae Mexco, may azaa coee armer chooebetwee baaa ad coee producto. Securg a adequate prce or coee allowarmer to rely more heavly o coee tead o partally o baaa. Baaa producto mlar to coee producto t evrometal eect; producto malyorgac, the eect o the evromet are eglgble, but armer ue chemcal put,

the eect are much greater.30

Trough Far rade, armer ca more ealy determewhat ther coee come mght look lke or a gve year ad allocate ther tme adreource betwee coee ad baaa more eectvely.

pHysical capital

Evdece o mproved phycal captal doe ext but omewhat more dcultto corm. KNCU gve the ocal premum ud drectly to the prmary ocete

wth the codto that the ud be ued a way that beet all member o that

ocety. For example, oe ocety Rombo the premum acted a a comeupplemet to armer wherea Moh, the ocety decded to ue the moey toput electrcty a govermet-ru medce dpeer o that medce could beproperly rergerated. Aother ocety Moh ued t ud to repar the cooperatvecoee cale ad purchae prayer or applyg chemcal to crop. T ame ocety,though, alo reported ot havg receved a Far rade premum ce 2001. Aecdotalevdece corm that ome prmary ocete decded to ue ther ud or pecc

phycal project, although ome armer were uable to decrbe thoe project thercommute.31

Financial capital

Te volume o coee exported by KNCU ell betwee 2000 ad 2003, whch cabe blamed almot etrely o the low teratoal prce durg that tme. Depte th,data how a teady re Far rade export over the ame year, export creag by33.09 percet whle covetoal export declg by 49.63 percet. Te Far rademarket acted a a tremedou crutch the ace o uavorable teratoal market

29 Ibd.30 R.P. Caldero ad A.C. Rola, Aeg Beet ad Cot o Commercal Producto the Phlp-

pe, Workg Paper No. 03-03 (Ittute o Strategc Plag ad Polcy Stude at the Uverty o thePhlppe Lo Bao, 2002).31 Parrh, Evaluatg Smallholder Developmet Stratege Natural Reource Depedet Ecoome:Te Cae o Coee azaa.


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codto. Te data alo how a creag proporto o ale that were claed aFar rade. I the 2000-2001 harvet, Far rade ale made up oly about 6 percet oale whle, two harvet later, they compred about 23 percet o ale. Te creae ale a a percetage o export volume ha had great value-added mpact. I all theexported coee the 2002-2003 harvet had bee old covetoally at a meagerly

prce o $0.54/poud ($1.19/klogram) the cooperatve would have oly ee about$1.1 mllo reveue. By ellg a lttle more tha 20 percet o t coee to the Farrade market, t tead receved $1.7 mllo, repreetg a 51.46 percet creae.

Far rade ha alo gve KNCU a ubtatal ocal premum wth whch t ca ueor el-determed developmet project. I 2002-2003, KNCU brought $36,715.80 ocal premum, up rom $27,588 2000-2001. Te admtrato at KNCUreported to Parrh that becaue the premum had bee o mall beore 2001, mot o tha goe drectly toward trag coee producer better qualty armg techque.

Begg 2001-2002, KNCU bega ug the premum to reward coee armerproducg pecalty grade coee, eectvely a cetve to produce hgher qualtycoee. T wa doe by traerrg 100 azaa Shllg per klogram o parchmetcoee (approxmately $0.10/klogram) to armer that produced a hgh eough qualty

product. From th program, approxmately $25,255 wa gve drect come traerto armer. Te remag premum wa ued to help tart the orgac program ad waalo gve to ome prmary ocete or them to ue or ther ow project.

Te extet to whch dvdual armer beeted rom the creae Far rade

reveue le covcg. Mot oted that ther come were ot ubtatallyaected, ome ever recevg ay addtoal ud. Tere alo cocer, a wa thecae at La Uo, over the extet to whch the Far rade prce eough. A tudy bythe Exteo Feld Ocer at KNCU, Wlbert Nyela, d that the Far rade prce ologer cover the cot o producto or h armer.32 He tervewed 100 armer romthe cooperatve to d the average cot o producto to be $1.72/klogram whle theaverage prce they receve or ther coee $1.20/klogram, meag armer are log$0.52/klogram o coee they produce. Tee reult provde a tartlg pcture o theadequacy o Far rade.

Figure 2. Sales as a Percent o Volume at KNCU

32 Wlbert Nyela, Te Uar radg Relatohp the Far rade Movemet ad t Impact, Ide-pedet Survey at KNCU (Not publhed, 2007).


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able 1. Summary o Sustainable Livelihood Dimensions

La Union KNCU Comparison

Human capital: the skills,knowledge, ability tolabor and good health that

together enable people topursue dierent livelihoodstrategies and achieve theirlivelihood outcomes

Signicant impacton role and

responsibility oadministration butlittle impact atarmer level

Signicant impact atorganization level

with export acilitiesbut little impact atarmer level

Increased capacity

at cooperative level,but little evidence atarmer level

Social capital: the socialresources upon whichpeople draw in pursuit otheir livelihood objectives

developed through networksand connectedness,membership o moreormalized groups, andrelationships o trust,reciprocity, and exchanges

Signicant impactat public health

level but littlechange in thequality o lie oarmers

Signicant increase

in connectedness toglobal industry

More connected to

outside organizationsmaking an impact atthe cooperative level

Natural capital: thenatural resources uponwhich people draw in

pursuit o their livelihoodobjectives developedthrough networks andconnectedness, membershipo more ormalized groups,and relationships o trust,reciprocity, and exchanges

Addition o organicprogram and keepsarmers rom moreenvironmentallydegrading activities

Some potential ortransition to lowinputs (organic)

Keeping armers inless environmentallydamaging crops;addition o organicprograms

Physical capital: the basicinrastructure and producergoods needed to supportlivelihoods

Some increase in

cooperative levelinrastructure butlittle to no increaseat armer level

Some increase in

community levelinrastructure but littleto no impact at armerlevel

More available atcooperative level; nochange at armer level

Financial capital: the

nancial resources thatpeople use to achieve theirlivelihood objectives

Value added atcooperative levelis between 32-70 percent but

negligible impactat armer level withset price reportedas below the cost oproduction

Value added atcooperative levelis between 29-51percent but lessobvious impact at

armer level withvaried incometransers and reportsthat the set price isbelow the cost oproduction

More revenue atcooperative level; but

evidence that pricedoes not cover cost oproduction at armerlevel


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conclusionsAnd recommendAtions

Te global coee market operate a hghly mperect evromet, gcatlyaectg coee armer a egatve way. Te Far rade repoe aroe out o threcogto a a way or coee armer to garer more reveue by eterg to a chemarket. La Uo ad KNCU demotrate both the uccee ad hortcomg o

Far rade a a mea o mprovg the lvelhood o coee armer wth the currettructure o the market. T paper ought to hed lght o the experece o twocooperatve very deret place, although aced wth mlar vulerablte heret the coee market. Depte the dtace betwee them, realte o both cooperatveare very ear. I geeral, the mpact o Far rade at the cooperatve level appear to bemuch greater tha that at the dvdual level. Acro almot all type o captal explored,there trog evdece to how mprovemet at the cooperatve level but that armer

were ether ot beetg or were uaware o the beet (ee able 1 or a comparo).

Mot alarmgly, armer report that the guarateed prce or Far rade coee ologer eough to cover ther cot o producto, let aloe make a prot o o whch toupport ther amle.

Trough th look at thee two cooperatve, I am apt to ay that whle the Farrade ytem doe have beet ad the potetal or true mpact, the ytem hould bechaged uch a way a to eure that thoe mpact are elt by all. Frt ad oremot,a detaled aaly o the prce foor eed to be explored. At what ar prce ca weeure armer are able to lead a utaable lvelhood? Secod, accoutablty ad

traparecy at the admtrato level eed to be motored more eectvely. Whlethe admtrato o the cooperatve ted to have a good grap o world market,hadlg ace, ad the Far rade ytem, armer are le wthout coderable acceto th ormato. Fally, producer eed to have a greater voce wth FLO orderto et tadard that wll better t ther eed. Farmer at both cooperatve exploredhere, a well a may aroud the world, cotue to puh or greater autoomy wththe orgazato, although coderable chage ha yet to be made. I order to create admata a ytem or the armer, ther experece ad whe mut be heard.

Trough dcuo wth deret dvdual at thee cooperatve, t wa apparetthat Far rade, whle helpul, ot eough. Te queto the become: What otherdevelopmet opto ext or coee armer? How do other certcato programcompare or how do they complemet what ca curretly be obtaed through Farrade? I havg a meu o certcato opto the bet or coee cooperatve? Farrade ca lkely act a a powerul mecham or mproved lvelhood, but oly wthcerta modcato to t extg tructure ad tadard. I order or thee chageto be made, armer eed better repreetato the ttuto that create the rule othe Far rade ytem. Wth pecc ad dyamc chage made to both the Far rademodel, a well a the program comg out o a varety o teratoal orgazato, abetter le obtaable or the 25 mllo mall-cale armer o the world.


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references

Akyama, . ad P. Varag. Te Impact o the Iteratoal Coee Agreemet oProducg Coutre. World Bak Ecoomc Revew 4.2 (1990): 157-173.

Bray, Davd Barto, Joe Lu Plaza Sachez, ad Elle Cotrera Murphy. SocalDmeo o Orgac Coee Producto Mexco: Leo or Eco-LabelgItatve. Socety ad Natural Reource 15.3 (2000): 429-446.

Caldero, R.P. ad A.C. Rola. Aeg Beet ad Cot o Commercal Producto the Phlppe. Workg Paper No. 03-03. Ittute o Strategc Plag adPolcy Stude at the Uverty o the Phlppe Lo Bao, 2002.

Chamber, R. ad Coway, G.R. Sutaable Rural Lvelhood: Practcal Cocept orthe 21t Cetury. IDS Dcuo Paper No. 296. Brghto: IDS, 1992.

Davro, B. Te Re ad Fall o Govermet Power o the Iteratoal CoeeMarket. I M. Gro ad P. Gullaumout (ed.). Ecoomc o AgrculturalPolce Developg Coutre. Par: Edto de la Revue Fracae dEcoome,1996.

DFID. Sutaable Lvelhood Gudace Sheet. http://www.lvelhood.org/o/o_gudaceheet.html.

Ecologc. http://www.ecologc.org/. 2006.

Ell, F. Rural Lvelhood ad Dverty Developg Coutre. Oxord: OxordUverty Pre, 2000.

FLO. http://www.artrade.et. 2006.

Gro, M. ad P. Gullaumout, ed. Ecoomc o Agrcultural Polce DevelopgCoutre. Par: Edto de la Revue Fracae dEcoome, 1996.

Groud or Health. http://www.groudorhealth.org/. 2007.

Nyela, Wlbert. Te Uar radg Relatohp the Far rade Movemet ad tImpact. Idepedet Survey at KNCU. Not publhed, 2007.

Oxam. Mugged: Poverty Your Coee Cup. 2002.


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Parrh, Bradley. Evaluatg Smallholder Developmet Stratege Natural ReourceDepedet Ecoome: Te Cae o Coee azaa. Mater Te at the StateCollege o New York, 2003.

Parrh, B., V. Luzad, ad W. Betley. What azaa Coee Farmer Ca each

the World: A Perormace-Baed Look at the Far rade-Free rade Debate.Sutaable Developmet 13 (2005): 177-189.

Pote, S. ad B. Davro. Te Coee Paradox: Global Market, Commodty rade, adthe Eluve Prome o Developmet. Lodo: Zed Book Ltd., 2005.

Reder, A. ad P. Sedker. Far trade: qualty, market ad coveto. Joural oRural Stude 19.1 (2002): 87-96.

Rce, P. ad J. McLea. Sutaable Coee at the Croroad. Whte Paper. TeCoumer Choce Coucl, 1999.

allotre, Ae. Parterhp Far rade: Refecto rom a cae tudy oCaedrect. Developmet Practce 10.2. Great Brta: Oxam, 2000.

Wardel, Laure. Coee wth Pleaure: Jut Java ad World rade. Lodo: Black Roe

Book, 2002.WWF. Agrculture ad Evromet: Sugarcae. http://www.pada.org/about_

ww/what_we_do/polcy/agrculture_evromet/commodte/ugarca/evrometal_mpact/dex.cm. 2005.


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Linkages Between Formal and InformalFinancial Markets

A Case Study of Kenya and South Africa

Mpumelelo NxumaloHamphre College

ABstrActThe extent to which fnancial markets contribute to growth is aected by such actors as size, liquidity,

and efciency o the fnancial system, as well as the quality o the environment. A distinguishing eature

o fnancial markets in Arica is their ragmentation and dualism the existence side-by-side o ormal

and inormal sectors. This paper discusses ormal fnancial sector development in Arica, as well as

one mechanism o inormal fnancial intermediation rotating savings and credit associations in Kenya

and South Arica. The goal is to determine alternative fnancial markets that would enhance fnancialdevelopment without destroying the inormal sector, on which millions rely. The paper recommends an

innovative way o organizing inormal fnance or sustainable development.

introduction

Facal market have drect ad drect eect o peroal wealth, bueactvty, ad overall ecoomc perormace. A well-uctog ad prudetly regulatedacal ector at the moblzato o lmted reource rom the urplu utto the dect ut thereby promotg ecet allocato o reource ad thu leadgother ecoomc ector ther growth proce.1 Te extet to whch acal marketcotrbute to growth aected by uch actor a ze, lqudty, ad ececy othe acal ytem, a well a the qualty o the evromet. Fragmeted ad/oruderdeveloped acal market are oe reao why may coutre the worldrema deperately poor ad crppled by exceve depedece o ocal developmetatace (ODA). Accordg to Jae Frpo, 70% to 80% o the world populato halttle or o acce to bac bakg ad acal ervce.2

What accout or th excluo o the poor rom partcpatg ormal acal

market? How do the poor protect themelve agat uch doycratc rk a poorcrop yeld, lvetock loe, volet crme, or eve alure to receve paymet? I other

word, how do they maage ther portolo? I developg coutre, may acaltraacto occur ormally that , va ace-to-ace cotact amog aver adborrower whch le outde the cope o govermet cotrol.3 We mut look to theormal ector or awer to thee ad other queto. Athropologcal reearcher

1 Frederc S. Mhk, Te ecoomc o moey, bakg, ad acal market, Nth edto (PretceHall, 2009).2 Jae Frpo, Bakg the ubaked: Iue degg techology to delver acal ervce to the

poor, I New Parterhp or Iovato Mcroace, edted by Igrd Matthu-Maer ad J.D. voPchke (Berl ad Hedelberg: Sprger, 2008), 195-206.3 Paul Burkett, Iormal ace developg coutre: Leo or the developmet o ormal acaltermedare, Joural o Ecoomc Developmet 13.2 (1988): 81-109.


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have oud deret kd o locally orgazed vetmet club cludg rotatgavg ad credt aocato (ROSCA), accumulatg avg aocato (ASCRA),moey leder, ad other whch the poor have created to crcumavgate ormalmarket. Tee avg club, whch are dcued more detal below, provde a ourceo credt a well a avg aclte. I other word, they erve a alteratve acal

termedare.A udertadg o thee el-help group may orm eectve polcy deg,whch tur wll hate acal developmet. Te mg data ocal tattc adteratoal acal tattc o ormal ace cotrbute to a uderetmato othee orgazato both a avg ttuto ad a a mecham o poverty allevatoad ocal.4 I ome cae, govermet ocal eve war agat partcpatg theeorgazato, callg them gamblg cheme.5 I mata that ormal avg groupoe have a comparatve advatage oerg ervce to the margalzed. I th

paper, I dcu varou orm o el help group that ext Keya ad South Arca.Te purpoe o th project to ytheze cae tude dealg wth commuty-baedledg ad avg group, wth a goal o determg potetal area o lkage betweeormal ad ormal bakg the Sub-Sahara Arca cotext. I beg wth a bredcuo o acal developmet (or the lack thereo ) the ormal ector Sub-Sahara Arca.

finAnciAl develoPmentin suB-sAhArAn AfricA

Formal acal ytem developg coutre are oe ether a legacy o coloaltme or cope o the acal et-up developed coutre.6 At the ttutoal level,the ormal ector edowed wth a cetral bak, a Mtry o ace or reaury,commercal bak, avg bak, pecalzed acal ttuto, ad pot oceavg bak. Wth regard to the market level (.e., captal ad moey market), Sub-Sahara Arca characterzed by relatve atrophy compared to other developg regouch a Aa ad Lat Amerca Emergg Captal Market.7 Te majorty o Arcaacal ector are characterzed by mall bak, hallow tock market, rudmetaryurace market, low uage o loa, depot, ad urace product, ad poorlydeveloped bak etwork ad other dtrbuto chael.8,9,10 For example, azaa haoly 0.23 brache per 100,000 people compared to 42.45 the UK. I Ugada, there

4 Gretje Verhoe, Iormal acal ervce ttuto or urvval: Arca wome

Documents

Volume III, Issue I, Spring 2010