TAKING ROOT: Fairtrade in malawi A synthesis report by Barry Pound and Alexander Phiri Natural Resources Institute, University of Greenwich April 2011 contents Acronyms ...................................................................................................................... 3 Preface ......................................................................................................................... 4 Executive Summary ...................................................................................................... 6 1. Introduction ............................................................................................................. 7 2. The Fair Trade situation in Malawi ......................................................................... 9 2.1 Malawi’s Development Situation and Agricultural Sector ................................... 9 2.2 The trade policy environment .......................................................................... 10 2.3 Fairtrade labelling and the Malawi Fairtrade Network .................................... 11 3. The three commodities under review ...................................................................... 9 3.1 Tea ................................................................................................................... 14 3.2 Groundnut ....................................................................................................... 18 3.3 Sugar ............................................................................................................... 19 4. Comparison between the three Fairtrade commodities .......................................... 20 4.1 Organisation and governance ......................................................................... 20 4.2 Involvement along the value chain ................................................................. 24 5. Benefits for smallholders and workers ................................................................... 27 5.1 Support to producer and worker organisations ................................................ 27 5.2 Participation, democracy and empowerment .................................................. 28 5.3 Fairtrade Premium ........................................................................................... 29 5.4 Minimum price................................................................................................. 31 5.5 Pre-financing ................................................................................................... 31 5.6 Long-term contracts ......................................................................................... 31 5.7 Benefits to workers ........................................................................................... 32 5.8 Natural Resource Management ....................................................................... 32 6. Challenges and Opportunities ................................................................................ 34 7. Recommended changes to the way Fairtrade operates in Malawi ......................... 36 8. References ............................................................................................................... 39 This document has been written by Barry Pound and Alexander Phiri of the Natural Resources Institute, University of Greenwich, and was commissioned by the Fairtrade Foundation. The views expressed in this document do not necessarily represent the views of the Fairtrade Foundation, nor does the Fairtrade Foundation take responsibility for the accuracy of information contained in the document. Any recommendations presented refer to suggestions made by the authors to the 2 TakingFairtrade Root: Foundation, Fairtrade In andMalawi have not necessarily been endorsed by the Fairtrade Foundation. ACRONYMS AFO: Association Farm Officer CIC: Community Interest Company COFTA: Co-operation for Fair Trade in Africa DFID: Department for International Development EOT: Eastern Outgrowers Trust EPM: Eastern Produce Malawi EU: European Union FOB: For Onward Boarding FT: Fairtrade FLO: Fairtrade Labelling Organisation International (now Fairtrade International) FTO: Fair Trade Original (Netherlands) GoM: Government of Malawi ICRISAT: International Centre for Research in the Semi-Arid Tropics MASFA: Mchinji Area Smallholder Farmers Association MT: Metric Tonne NASCOMEX: NASFAM Commodity Marketing Exchange Ltd NASFAM: National Smallholder Farmer Association of Malawi NGO: Non-Governmental Organisation NRI: Natural Resources Institute NSTDC: National Smallholder Tea Development Committee SAFN: Southern Africa Fair Trade Network SAT: Sukambizi Association Trust STECO: Smallholder Tea Company VSO: Voluntary Service Overseas ACkNowlEDgements This synthesis study draws on the knowledge and experience of a wide range of organisations and individuals that the authors and Fairtrade Foundation would like to acknowledge. Firstly we would like to thank the producer and worker organisations featured here (the Sukambizi Smallholders Trust, the Eastern Outgrowers Trust, the Satemwa Joint Body, the Mchinji Area Smallholder Farmers Association and Kasinthula Cane Growers Ltd). Secondly we are grateful to support organisations in Malawi, particularly Lujeri Tea Estates, Eastern Produce (Malawi), Satemwa Estates, the National Smallholder Farmers Association of Malawi and Illovo Sugar (Malawi) Ltd. Finally, we are indebted to those who have provided comments on the commodity reports and on earlier drafts of this report, especially: Jessica Gordon and Nita Pillai (Fairtrade Foundation), Andrew Emmott and Doreen Chanje (TWIN), Margaret Rooke (Liberation Nuts), Frank Kamanga and George Zimalirana (Ministry of Agriculture and Food Security), Michael Shaw (Voluntary Service Overseas), Ms Towera Jalakasi (Business Consult Africa), and Mkhululi Silandela (Fairtrade Africa). 3 Photography: Barry Pound, Alexander Phiri and Anette Kay PREFACE 4 Taking Root: Fairtrade In Malawi Fairtrade’s vision is of a world where justice and However, the research also presents clear challenges sustainability are at the heart of trading structures that need to be addressed if Fairtrade is to succeed and practices. Over the last decade, we have in deepening its impact in Malawi. More support worked with producers, campaigners, businesses, is needed locally to help organisations scale up governments and consumers to help tip the balance production, deepen participation and move up the of trade in favour of poor and disadvantaged value chain. The efforts of the national Fairtrade farmers and make it more just and sustainable. network in advocating with the government and This report on the impact of Fairtrade in Malawi effectively representing Malawi’s farmers and workers shows that Fairtrade has the potential to drive need to be supported and bolstered. There is also a real, structural change for poor communities that clear message that positive impacts from Fairtrade will depend on agriculture for their survival. It reveals last over time only if benefits are equitably distributed that Fairtrade can offer them an additional route to among participating households and organisations. development. The researchers recommend several steps to achieve Our work in Malawi began in 1998. Today, Fairtrade this, recognising that we have already begun to works with eight organisations across the country move in the right direction. For instance, the study and impacts over 20,000 farmers and workers who recommends more effective networking at the make their living growing tea, coffee, groundnuts, national and regional level on Fairtrade, a key activity honey and cane sugar. Fairtrade has also worked by which Fairtrade Africa, the regional producer hard to ensure that these products have a market network, is supporting the Malawi Fairtrade Network. and today over 1,000 companies in the UK alone Some recommendations directly ask for a revision of source Fairtrade products from Malawi. Fairtrade Standards – especially those relating to the use of the Fairtrade Premium and Minimum Prices. As a movement committed to continual These will be taken to Fairtrade International – our improvement, it is important for us to understand umbrella body – for consideration. The research also the impact that Fairtrade is having for farmers and throws up some challenging findings that relate to the workers and learn. So after a decade of working in disparity in the distribution of benefits from Fairtrade Malawi, we partnered with the Natural Resources among different sections of the local community. Institute, University of Greenwich to evaluate the Working with producer organisations and local impact that Fairtrade is having for the country’s partners to address this disparity and monitoring farmers and workers over a period of time. For us, this issue will be a key objective of our future work this was an opportunity to understand how Fairtrade in Malawi. Other recommendations call for greater can contribute more widely to the economic collaboration between Fairtrade and other local and development of a least-developed country going national partners to pool resources and jointly address beyond individual products and sectors alone. This common challenges that face Malawian farmers. We synthesis report is the first in this series aimed at agree and seeking these collaborations will be a key capturing the change that Fairtrade is bringing about pillar of our future work. in the country and understanding how it evolves over time in a dynamic