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Fair trade in India

Can an old concept help India's rural farming crisis?

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.”