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The Truth About Fair Trade Money Print E-mail
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Thursday, 04 September 2014 00:00

alfredo ortega.jpg - 83.18 KbThe recent announcement, first revealed on social media and then in the local media last week, that Tate and Lyle has written to the Belize Sugar Cane Farmers’ Association (BSCFA) has left many reeling for answers, and has (as per norm) sent the BSCFA into its usual tailspin as it (the association specifically) scrambles to now figure out what it will do to replace this teet that has now been slapped out of its greedy mouths.

What is Fair Trade first of all?  It is a social marketing program which allows those Fair Trade accredited/certified producers and distributors to sell their products at a higher (premium) price by appealing to social conscience.  In other words, companies like Tate & Lyle, can become certified by the relevant fair trade accreditation body (Flo-Cert), which they can then in turn utilize to label their products as being Fair Trade products.  This unique distinction, allows them to sell the sugar product at higher prices.  The Fair Trade program is marketed across major markets like Europe, in which Tate & Lyle trades, so when buyers see the fair trade labeling on the product package, they will immediately know that if they purchase the product, a portion of the proceeds from the sale, will go back to the “poor” farmer/producer who produced the raw material(s) used to make said product.  Critics of this way of trade say it is rooted in European white guilt for its exploitation of developing countries over centuries, and is their means of recompense.

As such, in the case of Belize, our sugar in the north and cocoa in the south benefit from fair trade marketing status.  In the case of sugar, the program allows for sugar traded (sold) to Tate & Lyle to earn an additional $60 USD per metric ton premium, in addition to the contracted revenue per ton it would normally generate, with one catch point… that the millions derived in premiums can only be paid to cane farmers and must be used to finance programs for the benefit of the “poor” cane farmer.  Not a dollar goes to BSI, the processor/exporter of the sugar on which the premium is paid.  It should also be noted herewith, that not a dollar goes directly into the pockets of the individual cane farmer, but rather to the Belize Sugar Cane Farmer Association.

Six or seven years ago, when Fair Trade first came to Belize, it was done so with the initial intention of providing relief to cane farmers who were at the time facing steep price cuts in the EU market, as a result of the changes in the EU marketing regime, which saw a 36% price reduction phased in between 2006-2010.  As such, the hope and intention was, that in a market whereby prices were being eroded, that in order to assist cane farmers to develop programs to make themselves more competitive, the proceeds from payment of the fair trade premium would provide millions of “development aid” without costing the farmers anything, and would have been used to further develop their cane.  Some of these programs should have included, quality improvement, pest control (froghopper), studies into improved cane varieties, irrigation for better field care, and other social and educational programs all aimed at improving the farmers’ position in an ever changing, globally competitive market where preferential pricing was slowly being diminished.

In 2008 when sugar started receiving the benefit of fair trade premiums, it was being paid by Tate & Lyle on 60-70-80,000 tons of sugar exported per year.  About 3-4 years ago, Tate & Lyle took the decision to cap the payment of the premium to 50,000 tons of sugar (totaling $3 million USD or $6 million BZD).  On a per year basis, this effectively amounts to over $20 million BZD over the same 3-4 year period.  The immediate question which must be asked of the BSCFA, and the wider cane farmer community who they purport to represent is, what do they have to show for over $20 million?
Instead of funding meaningful farmer development programs as identified earlier, the funds have instead been used to fund BSCFA administrative and operational expenses, such as the hiring of a CEO (justified at the time as being necessary to develop institutional capacity within the organization; The Truth About Fair Trade Money


funds have been used for paying Directors’ stipends, allowances, and travel all over the world on the claim of “experiencing other industry practices;” and settling the Associations private debts (recall a few years ago the supreme court crow-footing association tractors and other equipment for unpaid debts at Brodie’s and a few other businesses).

This, when coupled with the recent fact that the BSCFA has been temporarily de-certified by Flo-Cert 2 or 3 times over a similar period of time for violation of use of the premium proceeds.  The most recent abuse and mismanagement of the premium funds being theft by Association employees, i.e. there is so much fair trade money flowing through the BSCFA that rampant theft could have occurred.

So what is really the issue with last week’s announcement?  Firstly, Tate & Lyle will still purchase as much sugar as Belize can produce and export to them.  This is guaranteed by the fact that BSI’s new majority owners, also own the Tate & Lyle refining operations, and so the market is in effect guaranteed.  There are still commercial contracts in place whereby the volumes will not change.  What will change however is the amount of that volume which will benefit from the payment of the fair trade premium, which as per last week’s letter should be not less than 10,000 tons.  This is an obvious blow to the BSCFA, as it will directly affect money that the Association itself has grown used to using (misusing) for everything other than what it was originally intended.  Again, ask yourself when have  you ever heard of any program in the last 6/7 years, whereby fair trade funds have been publicized as being used for any sort of farmer improvement initiative…?

The excuse offered by Tate & Lyle, i.e. changes in market realities, is legitimate for obvious reasons.  Firstly, back in 2008 only Belizean sugar was Fair Trade certified (Belize was the first country certified by Flo Cert for sugar).  Six years on however, other producers have similarly been certified, so there is more supply of fair trade sugar on the market.  Add to that, as a result of this year’s delay in the start of crop due to the bagasse impasse between BSI and BSCFA, Tate & Lyle may have had to seek alternate sources of supply because they could not sit around and wait for the Belize sugar industry to get its act together and get it production going.  As a result, it is reasonable to assume that other suppliers have gotten in on the pie and there is now a smaller share available for Belizean sugar.

If anything, the events of last week only serve to expose the BSCFA executive as being completely incapable of effectively managing the affairs of the farmers, and as such the only play they could make was, in desperation, to try to link the reduction in fair trade quota to some “squeeze” by ASR/Tate & Lyle and by extension BSI, for their not accepting the 51 cent offer for bagasse.  It was the only play, in an effort to distract farmers, and the wider Belizean public, that as a result of their own inept handling of this once potentially great opportunity, they will no longer have that proverbial “titty to suck on!”

Last Updated on Monday, 15 September 2014 14:26