Page last updated at 00:01 GMT, Wednesday, 25 February 2009

Food crisis hits developing world farms

By James Melik
Business Reporter, BBC World Service

Man packing roses
Roses have proved to be a particularly successful export for Kenyan farmers

Farmers in developing countries are struggling despite recent rises in the price of commodities they produce, the Fairtrade Foundation says in a new report.

The report, which interviewed farmers' groups in Uganda, Malawi, Nicaragua, India, Sri Lanka and the Caribbean, reveals that many families are spending up to 80% of their entire household budget on basic food items.

The rocketing cost of food, fuel and fertiliser prices have had a devastating effect on their livelihoods.

In some cases, families have been forced to cut out meals, take children out of school and reduce the amount of land they plant, the report says.

Fair trade aims to address the injustices of conventional trade, which may discriminate against the poorest, weakest producers.
It enables farmers to improve their position by receiving guaranteed prices for their goods
Source: Fairtrade Foundation

Some farmers have even sold their land because they can no longer afford to farm it or buy fertilisers to keep up production.

But the report says that fair trade schemes could help ease their plight, with demand for Fairtrade products remaining strong despite the economic downturn.

'Hard times'

Some 450 million small farms around the world are home to one third of all humanity.

They are vital for producing food for local and national consumption, as well as earning crucial export income to boost wider economic growth and development.

These are hard times for consumers, but even harder times for producers
Tomy Mathew, Indian farmer

But for many farmers, rises in the price of export commodities such as vanilla, coffee, tea or sugar have been outstripped by the dramatic increase in the cost of staple food.

Tomy Mathew, a farmer and founder of the Fair Trade Alliance of Kerala in India who represents more than 3,000 small farmers growing coffee, peppers, and spices, says the last few months have been very difficult.

"The price of rice has gone up 40% while the amount we receive for crops has remained the same or in some cases come down," he says.

Mounting debt means that farmers have to cut back on the type schooling or healthcare they can afford for their families.

"These are hard times for consumers, but even harder times for producers and Fairtrade is needed more than ever," he says.

Equador farmer holding a stem of bananas
Sainsbury's saves money by selling Fairtrade bananas and no other kind

Some critics however, maintain that offering a guaranteed premium for goods will deter farmers from implementing better production facilities and cost-effective measures.

Ian Bretman of the Fairtrade Foundation disputes that assumption.

"Unlike the European Union's agricultural subsidies, we only pay an agreed price for a product as long as there is a demand from the consumer," he says.

"Providing the demand is upheld, farmers are guaranteed an income regardless of volatile prices and that enables them to conduct their business better by planning ahead."

Growth market

In the UK, demand for Fairtrade product has bucked the global economic downturn by increasing 43% in the last 12 months.

Products selling under similar banners have been equally successful in Europe, Japan and the United States, but Mr Bretman is more excited about what has been happening in the southern hemisphere.

"South Africa has an established consumer market and the launch of Fairtrade goods sets a precedent for the rest of the continent," he says.

red, yellow and green peppers in a bowl
Peppers are among 4.500 items licensed to use the Fairtrade logo

Dismissing the idea that people who support Fairtrade objectives tend to be largely middle-class, middle-income shoppers, Mr Bretman says that the Co-op is not one of the most upmarket retailers, yet they stock 230 Fairtrade products.

There is also less difference in the premium price a customer pays for Fairtrade products than there once was.

"That is largely due to greater sales, which means savings can be made because of the cost efficiencies of higher volumes.

"Supermarkets also save money by only having one line of a particular product," Mr Bretman explains.

"Sainsbury's only sells Fairtrade bananas and some supermarkets only sell Fairtrade coffee," he says.

He agrees, however, that in the current economic climate, people might start looking to save money by switching to cheaper products.

"Public awareness has grown and more businesses have become involved, but we cannot be complacent," he insists.

Pointing out that Fairtrtade empowers both the producer and the consumer, he adds: "We have to state our case more strongly."

New product

One thing which has resonated with consumers is the choice of produce now available.

Apart from the more established and familiar products such as Fairtrade coffee, tea and chocolate, cotton has seen the greatest increase in sales recently along with nuts, honey and spices.

-Mahmoud Issa and his family in olive grove near Jenin in Palestine
A farmer's cooperative in Palestine is the first to produce Fair Trade olive oil

More than 4,500 items are licensed to carry the Fairtrade logo and at the start of the Fairtrade Fortnight another was added - in the form of Palestinian olive oil.

It is the first olive oil to bear the logo and the first produce which originates in Palestine.

Almost 75% of Palestinians live below the poverty line as described by the United Nations.

Initially, 265 olive growers will benefit from the Fairtrade status, but the intention is to bring as many people as possible into the scheme.

Mahmoud Issa is typical of the olive grove owners who believe their lives will improve.

His family has been growing olives for five or six generations.

He hopes to earn enough money to ensure his children have a good education.

"But I hope they retain an attachment to the farm," he says, "so the tradition of growing olives continues in our family."

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