[asia-apec 131] Alternative trade: symbol and reality

[daga]

Alternative trade: symbol and reality (excerpts)
John Madeley
in One World, issue no. 177

Conventional international trade between the countries of North and South
has brought few benefits for most people in the South.

During the last decade prices of raw commodities, on which millions depend,
have dropped steeply while Northern markers remained closed to many
manufactured goods the South would like to export.

This has helped a few countries, especially in Southeast Asia, but it
diverts resources that might be used more profitably in other sectors of
developing-country economies.

As conventional North-South trade has yielded few benefits, interest has
grown in "alternative trade".

In its most common form, this involves alternative trading organizations
(ATOs), some of them church-based, in the North who buy goods from producer
groups in the South and sell them through shops, mail order, churches, and
so on.

The prices are sometimes, though not always, slightly higher than would
normally apply; and some alternative trade products are also now finding
their way onto supermarket shelves.

Since the Northern ATO deals directly with producer groups or cooperatives,
the "middle-man" is eliminated, giving producers a better chance for a
decent return. Alternative trade thus offers a different and potentially
more profitable route for both manufactured and primary products.

Interest in alternative trade began in the mid-1960s and there are now
several hundred ATOs in the countries of the North - 130 in the US alone -
most working along broadly similar lines. The combined annual turnover of
these organizations is around Pounds sterling 250 million.

While this represents only a small fraction of current Third World
merchandise exports of around US$ 740,000 million, it is bringing benefits
to low-income producers and is also a powerful symbol of a fairer, less
exploitative way of trading.

Although some Northern ATOs have developed from churches and aid agencies,
all normally operate as independent businesses. The products, they buy and
sell typically include crafts, both decorative and utlilitarian,
furnishings, textiles, clothing, household goods and foodstuffs,
particularly coffee and tea.

Some ATOs extend their ranges by selling non-Third World goods such as
recycled paper.  

The Dutch-based International Federation for Alternative Trade (IFAT) helps
ATOs to coordinate their activities. Comprising some forty organizations, it
helps to establish aims and their trading practices.

Most IFAT members are Northern-based, but the federation includes a few ATOs
from the developing world - among them from the prophetically named "Last
Hope International" of Nigeria. Third World ATOs are usually exporters of
products that are seeking alternative trade routes.

IFAT identified several differences between ATOs and commercial trade channels:

* They give priority to small producers who find it difficult to undertake
export trade without a sympathetic marketing partner.

* They are especially interested in how producer groups are organized,
preferring groups in which members have a say in running the organization
and which provide such benefits as education and welfare schemes.

* They pay prices which allow the producer a reasonable return and often pay
for orders in advance.

* They build their range around the products made by the producers they want
to support.

* They promote their suppliers among their customers, giving information
about the project, the locality and the difficulties faced by small producers.

* They aim to provide assistance with information on overseas marketing
requirements and help with matters such as design, technology, packaging,
labelling and sales promotion.

Changing fashions

A major problem for Third World people who produce for alternative trade is
the instability caused by changes in customer tastes in the North. Products
much in demand this year may be completely out of fashion next year.

The tastes of people in Northern countries are fickle, and a sudden change
in consumer tastes can mean considerable problems for producers.

During the 1980s, for example, there was a buoyant demand in British shops
for ducks of all shapes, sizes and materials.  By the early 1990s, however,
ducks were little in demand.

"The market for handicrafts is perpertually changing," says a development
worker  closely involved with alternative trade, "but handicraft producers
cannot change quickly enough."

Sahara Khatoon fared well from making sikas in the 1980s, but by this year
the declining demand for hanging baskets has caused uncertainty for her group.

The future of alternative trade may lie more in getting products into larger
stores, rather than selling only through mail-order and specialist shops.

In 1991 Traidcraft joined with three other British ATOs to market an arabica
coffee, "Cafedirect". The ATOs will use their normal channels for this, but
they are also hoping to get it onto supermarker shelves.

"Ethical issues are very much on the agenda for all the larget supermarket
chains," says the ATOs. They believe the momentum of the ecological movement
is growing, along with an awareness among consumers that Third world
producers deserve a better deal.

Cafedirect is grown by over twenty thousand coffee producers in Mexico and
Costa Rica. Working on small family farms, they have combined in
associations and cooperatives to improve their own conditions and to make
direct export possible.

Like other coffee growers, they have been affected by the recent steep
decline in world coffee prices. Selling at a higher price to the Cafedirect
project provides them with direct income, with no agents or other
intermediaries to pay.

The higher incomes from coffee enable producers to improve transport,
provide scholarship funds, purchase agricultural equipment and make other
community and social improvements.

Pressure for an extension of alternative trading is also coming from other
coffee producers. In March of 1992 - 250,000 small-scale coffee-growers from
fifteen countries in Africa, Latin America and the Caribbean launched a
Small  Farmers' Cooperative Society to held widen the market for their crops.

In October [1992] British ATOs hope to launch a Fairtrade Mark, to be
attached to shop products that have been traded on fair terms. Already in
the Netherlands, the Max Havelaar Quality Mark, attached to coffee that has
been traded fairly, has been a considerable success, with more than 300,000
coffee farmers thought to be selling through this scheme.

Alternative trade has led to better returns for producers and has shown that
international trade can be conducted on a fair basis and help people out of
poverty.

Inevitably there are problems. For some producer groups, notably women's
groups, the prevailing norms of society still hinder the progress they ought
to be making. And some ATOs could be criticized for placing too much
emphasis on handicrafts.

It is not necessarily a good thing for people in developing countries to be
too  dependent on handicrafts; there are other products that can be made.

But Richards Evans says that although Traidcraft is now putting more
emphasis on functional products, such as clothing, handicrafts often provide
the first opportunity for people in developing countries to earn a cash income.

Graham Young of Traidcraft stresses the importance of ATOs "sticking with
producers during hard times, social unrest, adverse weather conditions and
even dishonesty... trying to operate fair business practice in your home
operation and doing justice, but more than that - going further than might
be justly expected."

ATOs have become an important if as yet small part of international trade,
But especially if the mainstream system continues to fail the world's poor,
alternative trading channels are likely to be sought.


John Madeley is the author of "Trade and the Poor: The Impact of
International Trade on Developing Countries", published by the Intermediate
Technology Publications. Traidcraft can be contacted at Kingsway, Gateshead,
Tyne and Wear, NE11 ONE,
United Kingdom. 
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