Developing Producer Consumer Alliances
07 / 2009
The nature of the commodity markets is such that the producers of the primary products get a very small portion of what the consumer pays. A large part of what the consumer pays goes to marketing, trading and transporting intermediaries. The consumer only sees the price of the commodity going up. He does not see that the farmer is actually getting a smaller and smaller portion of the final price. This is because the farmer generally exits from the scene after selling the produce in the primary market, where the prices are very low. A surplus is generated post-production through value addition activities like sorting, processing and branding, but the farmer does not have a share in any of this.
Just Change is an initiative of a Non Governmental Organisation (NGO), along with a Community Based Organisation, called Adivasi Munnetra Sangam (AMS) which seeks to address this imbalance through direct intervention in the marketplace. Basically, the concept is to create a new marketing chain where the traditional links between investors, labourers and consumers are redefined.
Just Change has its beginnings in a very political, activist organization called ACCORD, in the Nilgiri Hills in South India. They mobilised adivasis (tribal or indigenous people) to reclaim their right to the land: after being landless for nearly two generations, about seventy to eighty percent of the adivasis eventually became land owners.
The next step was to get them cultivate these small plots, profitably, and thereby to protect the land. ACCORD helped the adivasis plant tea. It was a political statement of sorts, as till then only rich people owned the big tea plantations. The poor people were labourers. For an adivasi to say that he or she is a tea planter was an assertion by itself.
The reason ACCORD chose tea was because tea is a permanent and a mainstream crop, which did not require much infrastructure. Tea was also a protected sector, as it was the largest earner of foreign exchange for the government of India who had a vested interest in protecting the sector, and ensuring that the farming of tea was viable.
However the situation changed in 1991 with economic liberalisation. The sudden flow of foreign direct investment in the country saw foreign exchange reserves ballooning, and so the need for government to protect the traditional foreign exchange earning sectors, disappeared. So tea as an industry did not require the kind of protection that it had been enjoying from colonial times. Thus the Adivasis cultivators became very vulnerable. ACCORD started looking at alternatives. It was then that they came across the fair trade movement in Europe and sent their tea to Germany for sale through the fair trade shops.
The perspective was mainly that of a producer: when Adivasis felt that the price of their products was under threat due to liberalisation, they were proactively looking at ways to secure the price and their market. But this view changed.
Beginnings of a New Paradigm for the Market
While on a visit to Germany, the Secretary of one of the association, suddenly declared “It is not correct that we charge these people more! They are our friends!” This is hardly the kind of statement that you will hear from a delegation of exporters who went to visit their customers, at the fair price shops. Normally you are looking at ways and means of how you can increase your margins. But this group of Adivasis saw the Germans go to great lengths to buy their tea. There were remote shops to which customers had to walk. They were also paying a higher price - all as an act of solidarity with the producers.
The adivasis felt that they should send the Germans their best tea, and charge them less. Thus a new concept of a relationship between the producer and the consumer was born, a relationship in which they do not see each other as opposing forces. This set ACCORD and AMS thinking.
A further dimension was added during a trip to the United Kingdom in 1994, where members visited the poor there. They interact with unemployed people, single mothers and elderly people all struggling to live on very small help that they got from the government. They realised that they were all surviving mainly on tea. They could not afford bread and butter. For them it was bread and tea, literally. Thus tea was a staple. The people said that they would very much like to buy fair trade tea but it was too costly for them. Thus the idea of solidarity between communities was born.
Just Change abandoned what would have been a traditional NGO approach to market development – where the producers are seen as poor and the consumers are rich and can pay the highest possible price. Such a system works, but the market segment is different from the communities that the NGO are supposed to be working with.
Just Change thus started looking for an innovative ways at inter-marketing between poor and marginalised people who are in fact both producers and consumers. And rather than look at each segment as sets of individual consumers or producers, they viewed them as a community, and the exchange as a trading from one community to another, as a means to enhance livelihood.
Working Together – Producer & Consumer
According to Stan Thekeakara (1), one of the main architects of Just Change, the organisation is basically a cooperative between producers and consumers. The idea is to have joint ownership of the entire market chain, so that the benefits of that trading and marketing activity are spread across all the participants. Speaking at a meeting on market access for small farm produces he said :
“I am not so romantic to believe that we can control ownership of the entire chain. But I am romantic and idealistic enough to believe that we can keep control of the product until it reaches the consumer by buying the services along the chain. What happens now is – when the producer enters the market chain, he loses ownership over that product and has no understanding of what happens to the product afterwards. The producers of fine quality foods, the farmers, do not know the final consumer or where the product goes, nor do they have any knowledge about the processes that take place after they sell it. At the consumer’s end, the consumer does not know where the product comes from.”
At the consumer level, their only way of knowing the actual value of the product is to look at the Maximum Retail Price (a statutory label on any packaged product in India). To know whether the MRP is a fair price or not, the customer can only compare it with another package selling the same product. However this is not necessarily the actual value of the product because the customer does not know what part of the product, or service in between adds what price.
In her recent book, Bazaars, Conversations and Freedom, Rajni BAKSHI uses the metaphor of the bazaar as a process which defines value, even commercial value, in a deeper and wider sense than price or financial assets. She writes:
“The market culture that is now in the throes of crisis, has depended on keeping the profit motive pure and ‘unsullied’ by social, moral or ecological concerns—relegating them to family, government and charities.”
But she says the term bazaar can be deployed to allude to a more socially-embedded market culture—based on a broader, better-rounded, view of human nature.
“This view challenges the notion of ‘economic man’ as a utility maximizing, or selfish, individual unit. What is now coming apart at the seams is the idea that combining social and moral values with commercial objectives would somehow reduce the reach of ‘the market’. Above all, bazaar is more akin to market economy—that circle of open exchange where producers decipher consumers’ will and purchasing power to create goods and services. What the ‘free market’ has fostered is a market society where virtually all functions of life are seen to be best served by the pecuniary motive.
But now, across the world and at multiple levels, society is fighting back.”
Just Change, in essence explores how small farmers can stage this fight back, in a constructive way. Their attempt is to work out a linkage where the consumer knows what exactly the actual value of a product is and not just the cost.
Over the last year (2008-2009), Just Change has been able to successfully spread the idea of alternative markets for justice and equitable trade. In light of the current scenario of global markets melting down, leaving people vulnerable to ‘invisible’ market forces, Just Change has been able to catch the imagination of a wide and varied individuals and groups all around the globe.
An example of this is the Marsh Farm effort. Peter Vidal writes in The Guardian (12 September, 2007) that people on the Marsh Farm estate in north Luton, Befordshire which was the scene of several riots in the 1990s and still has entrenched unemployment and drug problems, hope to regenerate their multicultural community of 9,600 people. They purchased a tonne of top quality single estate tea from Just Change. It was sold door to door, on market stalls, and in the few local shops. A pack of 40 bags sold for 75p, compared with £1.20p or more for Typhoo, Tetley’s, PG Tips and Quick Brew and nearly £1.60 for the « fair trade » tea sold in the nearest Sainsbury’s and Tesco’s.”
Thus the Just Change model represents enabling of organised communities of producers and consumers to work together for mutual benefit. Within India, Just Change is working with four different CBOs (Community Based Organisations) – the Adivasi Munnetra Sangam (Gudalur, Niligiri District, Tamilnadu), the Bhoodan Vikas Mandal (Nettikulam, Mallapuram District, Kerala), the Paschim Orissa Krishijeevi Sangho (Bilenjore, Nuapada District, Orissa) and the Social Agency for Women and Rural Development (Poovatuparamba, Kozhikode District, Kerala). These groups represent poor and disadvantaged communities in Kerala, Orissa and Tamilnadu.
They formed themselves into a producer company, the Just Change India Producer Company (JCIPC) which deals with trading through branches at the member level and Village Consumer Societies in the various villages where the member group are working. JCIPC sources buy groceries in bulk and then distribute it through the Village Consumer Societies to individual member households. The aim is to source all products directly from producers.
In 2008, the organisation benchmarked their sale and procurement figures in order to arrive at an optimal level of operations, at least in the consumer part of the operations. Optimisation is not only in terms of profitability, but other social parameters. They have thus arrived at a Just Change Retail model which is based on 50 -100 families coming together and forming Village Consumer Societies.
They began in 2007, by sourcing 18% from producers. Within two years, this has gone up to about 60%. This means that around 60% of local people’s needs are being met from direct exchange using the medium of a jointly owned company between the producers, within themselves as the consumers. Thus 60% of the local economy stays in among the producer groups rather than go to intermediaries.
This takes control of the flow of money out of their local economy contrary to the dominant market model which does not address the issues of local communities and economies finding themselves powerless to stop and alter the juggernaut of globalisation, better read as “corporatisation”.
The latest annual report of Just Change clearly states:
“The price that we will have to pay for this choice is much slower growth. But we remain committed to building block by block, laying solid foundations rather than go for the superstructure and then trying to fill in the gaps. The foundation that we seek to build is one where communities recognise their power in the marketplace and assert this through creating their own marketing channels - where they are aware of the cause and effect of markets on people’s livelihoods. And where such an awareness will enable them to behave in the market not as economic animals single mindedly chasing profit above all else but as human beings, as communities, as a society – where values and principles will determine the choices we make.”
This sheet is available in French: Just Change India - Développer l’alliance producteurs-consommateurs
See Just Change India‘s website.
Stan THEKAEKARA, Presentation at Workshop on « Market Access - Towards Bio-Regionalism », Hyderabad, CED, 2007.
Read Rajni BAKSHI, Bazaars, Conversations and Freedom, Penguin Books India, 2009, 464 p.
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