Bumper Crops - Good News or Bad?

Bumper Crops - Good News or Bad?

A report on BDNews24 Warehouse packed with rice, import zero! says that Bangladesh does not need to import rice in 2012, the staple food of the 148 million population, for the next year, unless there is a natural disaster. But this is not necessarily good news for the farmers who grow rice.

"The ample stock is a result of bumper productions in the past few seasons, NGO BRAC's Executive Director Mahbub Hossain told bdnews24.com. Aman crops in the current season have seen a bumper production, which led in price of paddy to fall, the BRAC ED Hossain said. The type of paddy, which had been sold at BDT 850-900 a maund by the end of last year, is being sold at BDT 600-650 a maund now, he added. (USD 1 = BDT 75, 1 muand = 40 Kg.)

"The price of rice has been going up for a long time. Being allured by the trend, traders and farmers reserved large amount of paddy and rice. But they let go of the reserves as abundant aman crop led the price of rice to fall," he added. Hossain warned the government that farmers will lose interest if the prices of paddy and rice continue to go down. "In that case, the country's food security will be endangered in future, though the current reserve is adequate."

So, when we are talking about the free trade – can we rest assured that it is also fair trade? If the farmers of rice or any other crops cannot recover the cost of their production from their sales – then they will not produce that particular crop. Then we end up with a vicious cycle of higher prices attracting more farmers to produce – which results in increase of supply over demand – which leads to decrease in price, which leads to farmers shying away from that crop – which results in more demand than supply and imports – which increase price …………. and this goes on and on and on!

In order for the small farmers to get out of this vicious cycle which leaves them in debt or bankruptcy, we should lobby with the Government to try and introduce FAIR prices. A great example has been established by Fairtrade which is a trading partnership that focuses on sustainable development for poorer producers, by providing better trading conditions, raising awareness of their situation, and campaigning. The following text is taken from this web source: What is Fairtrade?

The prices paid for commodities such as coffee have not risen in the last forty years but the costs of fertilizers, pesticides and machinery from developed countries has dramatically increased forcing small farmers in developing countries into debt and even bankruptcy. A number of charities realized the effect consumers and commercial manufacturers could have on changing and improving the situation for producers in developing countries. The charities, who include CAFORD, Christian Aid, New Consumer, Oxfam, Traidcraft and World Development set up the Fairtrade Foundation in the UK to help these small farmers and workers by implementing fair trade standards and regulating the sale of Fairtrade products. The Fairtrade Foundation awards the FAIRTRADE Mark to commercial products that meet 'internationally recognised standards of fair trade'.

Currently commodities being fairly traded include coffee, tea, cocoa, honey, bananas, mangoes, orange juice and sugar. Only those products awarded with the FAIRTRADE Mark qualify. There are plans to fairly trade other commodities in the future. At the moment all Fairtrade products are GMO free and some are organic.

It is important that consumers know about Fairtrade and the FAIRTRADE Mark if they are to make a conscious decision to choose these products and support small farmers and workers in developing countries. Buying Fairtrade helps small farmers and workers make enough money. This allows them to improve their working conditions, improve product quality and invest in the stability of their working environment and organizations.

The FAIRTRADE Mark is an independent consumer label which is displayed on Fairtrade products, and guarantees that those who have been involved in production have been treated fairly. There are now over 1,000 different products which carry the FAIRTRADE Mark.

But how can the same principles of Fairtrade be introduced to the BoP consumers in the Least Developing Countries – where they are most price sensitive, not because they are insensitive people but because they are also poor? The Government – like developed countries – cannot even offer the Agricultural sector subsidies anymore because they have run out of money, or need it for other critical needs like health, education, disaster relief etc.

I am writing this blog not because I have a brilliant idea for a solution – I write it because this issue is mind boggling considering the socio-economic conditions of any LDC. I seek to find solutions through my work with BIF and also through various interactions we have with NGO and business communities. Currently we are working on a project with Agora, a high end retail chain store owned by Rahimafrooz Group, a large business conglomerate in Bangladesh. I am hoping that the concept of fair price for the producers can be addressed through an ethical supply chain development for them.

The critical component remains untested – will the consumers accept higher prices for ethically sourced quality products? If and when this can be established in one company and they show positive impacts on business, suppliers and farmers down the value chain – it should have a multiplier effect on other businesses. Hopefully this BIF project will show us some signs, or at least give us some lessons to learn from and help bring better value to the small farmers. Fingers crossed!