Fair trade in India

AMRAVATI, India — Rajendra Panja Kadu lives with his family in a small, humble home in a farming village in central India. He works three jobs — farming his two acres, milking his water buffalo and working as a laborer on others’ farms — but Kadu, like millions of other Indian farmers, can barely make ends meet.

Kadu earns about 60,000 rupees ($1,300) a year and must rely on government ration cards to help him buy food, he says as he sits on his wooden bed. Mounds of cotton puffs waiting to be sold peek out from under the bed. Large sacks of soybeans lean against one wall. Paintings of Hindu gods adorn another.

When Kadu is low on cash, he must borrow about 10,000 rupees a year from moneylenders, who he says charge him a 5 percent monthly interest rate.

The farmer, who lives in Ghodghwan village in Amravati district, says he continues farming despite the difficulties because he has no better options. “It is my business. It is my job,” he said. “I don’t know anything else.”

Kadu manages, thought not always. Last year he had a motorbike accident and had to borrow 150,000 rupees — more than double his annual earnings — from friends and relatives to pay the medical bills.

A non-profit organization called Shop for Change is trying to improve the lives of Indian farmers like Kadu by supporting and formalizing fair trade practices and giving those farmers better access to a market interested in buying fair-trade products.

Shop for Change, which has created the first fair trade certification label for a domestic Indian market that works with the mainstream supply chain, launched cotton T-shirts with its label in an Indian retailer this January. Other companies adopting the certification standards will offer various types of certified cotton products.

Typically, fair-trade goods like coffee and tea are produced in the developing world and sold to consumers in developed nations. Shop for Change aims to capitalize on a growing market of middle- and upper-class Indians who have the extra disposable income to pay higher prices for goods and who — it hopes — will feel compelled to help farmers struggling just a train ride away, said Shop for Change CEO Seth Petchers.

“This whole concept of fair trade — and also of consumer empowerment to influence the way companies do business and the choices they can make as consumers — is a new concept here,” Petchers said.

Shop for Change identified three farmers’ organizations, which represent about 2,500 farmers, and audited them to ensure they are in compliance with its certification standards. The organizations, Petchers said, must have safe and healthy working conditions, be transparent, have an environmental management plan in place and build the capacity of the farmers to increase their productivity and reduce their production costs.

The companies that buy the raw materials from the farmers pay the farmers’ organizations a 15 percent premium, which is earmarked for building the farmers’ capacity through trainings and social development through group activities and planning, said G. Venkat Raman of Agriculture and Organic Farming Group India, a network of organizations that works with farmer collectives.

Shop for Change has identified cotton textiles as the first product to target because of the particular hardships cotton farmers in India, and in this particular region, have faced.

Saddled with overwhelming debt from the high costs of production and exorbitant loan interest rates, some Indian farmers face such difficulty and shame they resort to suicide. The number of annual suicides varies, with estimates reaching as high as over 17,000 a year. 

For the first time in four years, the number of suicides in Vidarbha region, which includes Amravati, dropped below 1,000 in 2009, according to the Times of India. In general, though, the region sees some of the highest rates of suicides and is considered the epicenter of India’s agricultural problems.

Kadu says he joined Zameen Organic, one of the farmers’ organization working with Shop for Change, because he can earn more money from them than from the conventional market, does not have to pay for expensive chemicals like pesticides and learns about new cost-effective technologies.

Shop for Change aims to create new market opportunities for farmers who want to follow sustainable practices but would otherwise face difficulties complying with a cumbersome international certification process, according to Petchers.

Plus, Indian consumers are attractive because of “the sheer numbers here,” he said. If Shop for Change reaches even 1 percent of India’s 1.1 billion people, “it could blow small European countries doing fair trade out of the water.”

The biggest challenge Shop for Change faces, he says, will be convincing Indian consumers they should pay extra for these products. The trick will be how retailers position the products in the minds of the consumers, said Neelam Chhiber, the managing director of Mother Earth, which is the first chain to carry the Shop for Change label.

Mother Earth is targeting a younger generation of urban Indians who might pay the equivalent of $9 for a stylish, fitted Shop for Change shirt because they perceive buying fair trade products as cool, according to Chhiber.

“We want to make doing good become fashionable,” she said.

Shop for Change has also enlisted Bollywood actor Parvin Dabas, who starred in Monsoon Wedding, to promote the label. Dabas, who was born in a farming village outside New Delhi, says he will use photographs he took of cotton farmers to raise awareness about fair trade products.

Critics of fair trade argue that the system does not help farmers because it encourages them to continue growing low-priced crops and because the inflated prices leads to overproduction, which causes the prices to fall even further.

Another criticism is that some of the premium spent on fair trade products goes to the retailer — or even the certification agency — rather than the farmer.

“Retailers add their own enormous mark-ups to Fairtrade products and mislead consumers into thinking that all of the premium they are paying is passed on,” states a 2006 Economist article on food politics. Citing an interview with Tim Harford, author of "The Undercover Economist," the Economist says: “Fairtrade coffee, like the organic produce sold in supermarkets, is used by retailers as a means of identifying price-insensitive consumers who will pay more.”

Petchers argues that fair trade is not trying to be a silver bullet to solving the plight of farmers, but that it is “one piece in a much larger puzzle of what needs to happen to help these farmers.”