Whilst Fair Trade certification highlights the need for a better deal for third world growers, what Africa really needs is ownership of the value chain, which is the only sustainable route to empowerment and economic justice. Good African is both African owned and African based, which is critical in the fight against poverty and the creation of wealth for its people. It has also set up a processing plant which will retain most of the value as opposed to transferring value through the use of value addition plants overseas.You can hear the complaint: these rich Westerners who think they know best are unconcerned about the real issues in African development, which are to stimulate mechanisation on farms and industrialisation in processing. Good African, on the other hand, is a working example of the right way forward, in helping its farmers to be more productive and in investing in plant and equipment to industrialise Uganda. Capturing more of the value is the only way that Uganda, or any other developing country, will grow and get richer, so good on them.Would that we in Europe were more open to goods imported from these countries: as you can see from this report, we would improve on the way we currently do things, getting better products more cheaply and keeping more of the value in the developing world.
Sunday, February 28, 2010
A Good African example
This is some excellent news. I've been trying desperately, as I wrote this, for it not to sound like an advert, but it's going to end up like one, because it pretty much exemplifies everything I've been going on about to do with development over the last few years (archive). So frankly, if I'm doing some free advertising for this company, I don't much mind. (I have no connection with the company.)Good African is a Ugandan coffee producer which actually keeps its production in-country, and helps its farmers to develop their farms and mechanise, both of which are stark contrasts with the Fairtrade Foundation's approach. You can see a video with clips from its founder below (link):
The company's website is goodafrican.com, and the products are apparently available in Waitrose, Sainsbury, and all good Ugandan supermarkets! I found them on the Waitrose website, but not the Sainsbury one. Perhaps they're on the shelves; I couldn't say. The company also reports that it will be stocked by Tesco UK come July 2010.If you're a Fairtrade coffee drinker, let me try and convince you that Fairtrade is doing worse than free trade here. Your Fairtrade coffee pays a minimum of the equivalent of 5,624 Ugandan shillings per kilogram to the coffee farmer. That's for 'robusta' beans, which are your common-or-garden beans. Good African paid a little less than that in '06 (src), at sh5,224 the kilogram, for 'arabica' which (so this inveterate tea drinker is told) is a superior bean. In other words, you get a better cup of coffee and the price paid to the farmers is not dissimilar.However, the killer point is that whereas practically all the processing of Fairtrade coffees takes place in the West, Good African processing is all done in Uganda. From the link above, a kilogram of beans will give about eight hundred grams of roasted beans, which retail at about sh27,300. I don't know what the wholesale price is, so can't say what mark-up the retailer makes, but even allowing for that, you can see that paying farmers a little extra for their beans is missing the real game here, which is the addition of value from processing. By capturing as much of that processing in Uganda as possible, vastly more good is being done by purchasing Good African coffee than Fairtrade coffee.Oh, and I forgot to mention: when I looked on the Waitrose website, I found Good African retailing slightly more cheaply than Fairtrade (at most £1.17 the 100g against £1.25 and more). So in conclusion, you're doing more good, getting a better cup of coffee, and paying a lower price. And all that, despite having a seriously adverse tariff barrier to cross, of perhaps as much as 100% for retail-ready coffee (*src*) as opposed to exemption for the full, unprocessed coffee bean which Fairtrade imports.Good African is owned by shareholders (no idea who), having been founded and now run by Andrew Rugasira, an economist who wants to put his Christian faith into business practice. It is committed to sharing 50% of its profits with the communities where it operates, through social enterprises. If you watched the video, it was interesting to see that Good African is helping its farmers to set up co-operative savings as a tool for mutual assistance in mechanisation and agricultural development. This is another benefit of for-profit development work: in contrast to the charitable and government sectors, businesses are able to be far less precious about the routes they take to achieve the goal of profit. The Fairtrade Foundation insists on mutualisation of practically everything among its developing world contacts (notably, they don't flex that muscle so much in the West), but in a free market there is no need to be one-size-fits-all about solutions.The company is understandably reluctant to criticise the Fairtrade Foundation, but they do have the following answer to the question of why they do not pursue Fairtrade status: