Governance of Agricultural Exports

SOAS/Mo Ibrahim Foundation Governance for Development in Africa residential school,

Mauritius 2014Christopher Cramer (SOAS)

What unit of analysis?

• Governance indicators typically use the nation state as the unit of analysis/measurement but governance is relevant beyond this

• Beyond the nation, beyond the state

Do indices of governance look enough at governance of production & trade?

• While ‘economic opportunity’ may be part of governance mash-up indices, there is often little attention to the governance of productive sectors and to trade.

What we’ll cover

• Look at a specific example – a set of standards that are used in the governance of some commodities exported from Africa and elsewhere: Fair Trade

• Present recent SOAS research on this that looked at one specific dimension of Fair Trade

• But first situate this in context of broad global shifts in governance of trade and production

Fundamental shifts in governance globally

• There have been important shifts in how societies are regulated and in forms of governance, internationally.

• These have to do with how production is structured globally in many sectors;

• and they have to do with new types of governance

This change affects developing country economics

• These changes affect something of extreme importance to developing countries, their export earnings from primary commodities, including agricultural commodities

• (Why of extreme importance? Balance of payments constraint on growth)

SOURCE: World Bank Statistics (data.worldbank.org)

19851987

19891991

19931995

19971999

20012003

20052007

20092011

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

ETHIOPIA (1985-2011)Exports of goods and services (% of GDP) Imports of goods and services (% of GDP)

Of rules and dead economists

• There has been a push at a formal level towards a governance of international trade based on rules that should ensure free trade– WTO rules– Pressure for trade liberalisation– Collapse of commodity agreements

• One foundation for this is political (fear of beggar thy neighbour, as in inter-war years)

• Another is intellectual: comparative advantage

But market access not guaranteed

• The rules work only unevenly and then there are compensatory mechanisms at inter-governmental level – AGOA, EBA

• But they also don’t work effectively for many because of the way production is actually organised

Global Business Revolution, Global Value Chains

• While there are dis-integrative tendencies in the current phase of globalisation, there are also powerful integrative or re-integrative tendencies

• Massive concentration, productive chains linked not just by market transactions but by non-market mechanisms…

Private governance

• Where in the past – and still in many contemporary approaches (like indices of governance) - the behaviour of the state is at the core of governance discussions, the reality is that there has been a shift towards private regulation, private or semi-private networks of governance

GVC governance

GVCs are important sites of governance – here people often mean governance as:• “non-market coordination of legally

independent entities”• This means there are rules (and power

relations)

What is enforced, how and by whom?

• Product vs process

• Lead firm vs external agencies

• Legal force vs voluntarism, codes of practice

How people think about GVC governance

• A matter of driving? – governance as the ‘authority and power relationships that determine how financial, material, and human resources are allocated and flow within a chain’

• A question of coordination? – but mass or niche; auction or price agreement, etc.?

• Or an issue of normalization? – social construction of norms, systems of justification

So what – for development?

• Market access

• Learning curve, productive capabilities

• Distribution of gains

• Leverage for policy intervention

• Funnel for technical assistance

Standards

• In the past, units of measurement, etc; now, people and institutions and relationships

• They constrain. They may also enable.• Many are private or semi-private – their

spread reflects re-regulation not deregulation• There are public but the private tend to be

voluntary

Legitimacy

• This voluntary character of many systems of private standards creates a huge need for legitimacy

• This may be one reason why many organizations ‘mimic’ democratic representation through stakeholder councils, groups of experts, transparency etc.

• But this quest for legitimacy is also a clue to the political dimension of standards…

…Fair Trade

• The particular example is Fairtrade• A system of standards, built on the work of

‘norms entrepreneurs’, social construction of and justification of particular forms of trade relationship; private, voluntary, but for those who are certified, parameters and sanctions

• A challenge to expectations of ‘free trade’, a response to exploitative trade relations, or merely an ameliorative appendage of neo-liberalism?

• Consumer anxiety an old feature of globalisation

• In its new guise it takes the form of ‘ethical trade initiatives’

• Fairtrade is one of these• What is it meant to do (SPOs and HPOs)– Price protection– Social premium

Monitoring the scope & benefits of Fairtrade, 3rd edition, Fairtrade International

FAIRTRADE, EMPLOYMENT AND POVERTY REDUCTION IN ETHIOPIA AND UGANDA

Is this just (ph)antasy?

Claim

• “Fair trade seeks to change the lives of the poorest of the poor” (Fair Trade Federation, USA).

• But who are the poorest of the poor?

Claim

• “Fair trade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers. It enables them to improve their position and have more control over their lives” www.fairtrade.org.uk/what_is_fairtrade/faqs.aspx)

• Does it reach the poorest producers?

Knowledge gap

• Quick studies + biased samples from a skewed community of experts

• Very little on wage employment

We set out to understand more about workers

The acknowledged gap: Fairtrade & wage workers

• 3ie (2010): “many Fair Trade organizations…establish a minimum price for producers but do not deal with the condition of workers that the producers may employ”.

• International Trade Centre:“ most of the studies reviewed deal with the producer as a self-employed individual

and with producer cooperatives”

• Nelson and Pound: “there is limited evidence of the impact on workers of participation in Fairtrade, and more research is required ... ”

=> Rationale for FTEPR research

28

FTEPR METHODOLOGY

FTEPR methodology• Contrastive case study approach –targeting high

quality certified/uncertified, large/small sites• Mixed method large-N varied component study

– prior scoping, initial quantitative survey, longitudinal, life’s work histories, stakeholder interviews. More than1,000 person days of fieldwork. Triangulation.

• Large primary evidence base: venue-based sampling; no official lists but GPS-census sampling frame.

PDAs

30

Questions and data processing on the spotSampling and locating respondents

Sample overview (individuals)Uganda Ethiopia Total

GPS census 3,256 5,093 8,349

PDA survey 2,270 2,473 4,743

Main questionnaire

survey772 928 1,700

Longitudinal survey 117 284 401

Work history interviews 31 84 115

32

33

Ferro site - Sidamo

Zeway Flower site

Electronic questionnaire on tablet

37

FTEPR FINDINGS

38

WHAT WE FOUND: PREVALENCE OF WAGE EMPLOYMENT

Agricultural wage employment commonly overlooked

• Many more rural Ethiopians and Ugandans engage in wage labour than commonly believed:

• Ethiopian Rural Socioeconomic Survey estimates only about 1% or less of rural adult females are in recent wage employment)

• Ugandan DHS data suggest that only 11% of rural women work for wages in agriculture

• We found evidence of widespread wage labour in our detailed research in 12 rural research sites (coffee and flowers).

• For example, our area census results for Ethiopia show more than 40 per cent of the adult population in one smallholder research site (Ferro) and 55 per cent in another (Kochere ) had recently worked for wages in coffee production.

Ferro Kochere Jimma0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Adults participating in wage labour: Ethiopia coffee sites

worked in coffee for wages in last 3 yearsworked for coffee farmer in las 12 months

Ishaka Mubende Masaka0%

10%

20%

30%

40%

50%

60%

Adults participating in wage labour: Uganda coffee sites

worked for wages in las 12 months worked in coffee for wages

Mubende site contains Kaweri coffee plantation

Mpanga Ankole Kabale0%

10%

20%

30%

40%

50%

60%

70%

80%

Adults participating in wage labour: Uganda tea sites

worked for wages in las 12 months worked in tea for wages

43

WHAT WE FOUND: POVERTY OF WAGE WORKERS

Agricultural wage workers are typically very poor

• Households containing people who do manual agricultural work for wages are likely to be much poorer than other households

• For example we know that low levels of female education are an excellent indicator of poverty

DHS 2011 Oromiya FTEPR Non-farmworker households

FTEPR Farmworker households

0%

2%

4%

6%

8%

10%

12%

14%

% Women aged 15-49 Years, Secondary Education or Higher, Ethiopia

DHS

Non-farmworker households Farmworker households0%5%

10%15%20%25%30%

Mobile phone

Non-farmworker households Farmworker households0%

5%

10%

15%

20%

25%

Ox plough

Non-farmworker households Farmworker households0%5%

10%15%20%25%30%35%

Radio-cassette-CD Player

Non-farmworker households Farmworker households0%

5%

10%

15%

20%

25%

Kerosene Lamp

ERSS 2011/2 Rural Farmworker households0%

5%

10%

15%

20%

25%

30%

Mobile Phone: ERSS

DHS 2011 Rural Farmworker households0%

5%

10%

15%

20%

25%

30%

35%

40%

Radio: DHS

ERSS

DHS

47

FAIR TRADE, FAIR WORK?

No evidence Fairtrade has a positive impact on wages & non-wage working conditions

• Both flower and coffee workers in Ethiopian Fairtrade certified production sites are generally paid much less than those on non-certified sites.

• In Uganda, data shows that tea and coffee workers on Fairtrade certified cooperative production sites are paid less or at least not more than those on non-certified sites

Certified Uncertified Certified UncertifiedEthiopia coffee Ethiopia flowers

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Differences in average wages by FT certification

Mean Median

Certified Uncertified Certified UncertifiedEthiopia coffee Ethiopia flowers

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Proportion of workers with wages below 60% of median wage (FT Certified v Uncertified)

Certified Not certified Certified Not certifiedEthiopia coffee Ethiopia flowers

0

5

10

15

20

25

30

35

40

45

8

30

0

42

Percentage of manual workers with 'high wages‘ (FT certified v non-certified)

• Workers either do not know about, and believe that they do not benefit from, the ‘social’ benefits supposedly associated with FT price premiums.

• Wages/conditions vary a great deal across employers (independently of certification) and better working conditions do not weaken enterprise competitiveness

• Although most agricultural wage labourers are adults, it is very easy to find very young children who work for wages in coffee

• Women working for wages (in certified and non-certified sites) are often compelled to offer sexual favours to supervisors and/or bribes

• To pay health and schooling costs, many people have incurred debts at usurious interest rates, restricting options in labour & coffee markets

Findings from life histories and focus group interviews

53

DISCUSSION: WHAT DOES MAKE A DIFFERENCE?

What does make a difference to wages & conditions?

• In coffee, size matters• In tea, reputation and deep pockets?• In flowers, more idiosyncratic: there are some very competitive

good employers; others with plenty of resources are not good employers

• State regulation helps (maternity leave…) but capacity for oversight encounters same problems as for international certification schemes

• Extent of tightening of labour market and labour demand matters more

55

So: what is going on? Political Economy I

• It is actually extremely difficult to explain the variations in working conditions. We have some ideas – scale, quality, other certification, etc. But beyond these there seems to be a high level of idiosyncrasy. More scope for discretion where little clear state regulation?

• Examples: – Flower sector variations across employers– Smallholder coffee Ferro vs Kochere – quality?– Smallholder coffee Ishaka – personalised labour relations

56

Political Economy II

• Certification, cooperatives and rural inequality.

• Who sells through premium channels? Who benefits from the social premium? – Mpanga tea (Uganda)

– Ferro coffee (Ethiopia)

57

Chart 3.16: Distribution of the Volume of Coffee Sales to a Ugandan Fairtrade Certified Co-operative in 2011, by Decile

58

Political Economy III

• Certification, large farms/enterprises, and the state: flowers

• A Fairtrade certified flower farm (when we began)– Came out of the data and life’s work histories

poorly– Tales of the joint body: unspent funds, rival

bodies.– Withdrew from Fairtrade

Consumer led governance clashes with governance of production

• Cooperatives – SPOs • Large farms – “Hired labour situations” and

the joint body• Add politics and stir – local politics, national

politics (Ziway flowers; rural coops and fertiliser and shaming)

• And it is the same elsewhere – e.g. Colombian bananas

Concluding

• Fair Trade as one response to and form of shifts in governance of global production and trade

• Not really an alternative but an appendage• What is often obscured is the local politics and

governance• And what is especially obscured is the

management of labour in production• The locus of governance is not just the nation

state