Fair Trade in Malawi’s Sugar, Tobacco, Cotton, etc

Most western organisations thrive on philanthropy. Firstly, because they genuinely believe in giving something back to society. This has brought arguments as to whether company directors are really interested in giving back to society or that the exercise is merely a marketing gimmick.

Well, both arguments hold true. Society benefits when organisations sponsor projects such as recycling to cut the rate of global warming but at the same time, an ethically minded organisation improves its image and therefore attracts new or continued custom. Corporate Social Responsibility(CSR) as is popularly known has become a fundamental concept for most companies, it is a vehicle through which both society and organisations benefits. Most governments are willing to give companies revenue or capital grants for undertaking specific CSR projects.

In Malawi, the National Insurance Company(NICO), National Bank of Malawi and SOBO are some of the organisations setting the tone for good CSR by sponsoring a variety of projects and sports.

During my undergraduate research here in the United Kingdom, I was intrigued to discover that TESCO which is the largest supermarket in the UK stocks Fair Trade Brown Sugar and Tea Bags from Malawi. Another German owned LIDL supermarket also sells this Fair Trade product(sugar). Both sell these products at above normal or prevailing market prices. Companies are involved in selling Fair Trade products not because they necessarily want to make a profit(costs are high) but simply to enhance image.

One of the attributes of Fair Trade is that companies such as TESCO have become so powerful, they promote good Labour practices in producing countries, discourage child labour as was the case with GAP in Thailand and India. However, I wonder if Malawi is benefitting from these Fair Trade practices? I ask this because my dad who has been a smallholder farmer in Nkhota-kota(Dwangwa) for nearly 30 years still lives in abject poverty. He gets peanuts every year and the reason advanced to him and other farmers for this situation is that of poor world prices for sugar. Whilst I do not believe this, and have my own theory I believe in the spirit of professionalism that my blog is not the right forum to address matters of this nature. Fair Trade has become such a political tool to force companies to reform. NIKE manufacturers of the popular brand of sports shoes was accused of exploiting cheap chinese labour paying just above £1 for the productions of a pair of shoes while they sold the same shoe in the UK, USA and many countries including china for over £100 making lots of million pounds in profits. It was until the company was faced with calls by rights groups for people to abandon NIKE products that the company asked their suppliers to improve working conditions. Today, as I write, NIKE enjoys massive publicity by premiership football stars. Matter of fact, Arsenal football club which I support are sponsored in part by NIKE. I dont wear NIKE products for personal reasons, one of which is that I cant afford them but also that substitute products such as AND1 are equally and fashion-wise impressive but cheaper.

There has never been a better time to promote Malawian products to the rest of the world than this. The government should support cotton, bananas, fishing, sugar associations to get Fair Trade accreditation and encourage western supermarkets to invest in the expansion of their supply chain that undercuts unscrupulous middlemen for fair prices. The wholesale liberalisation of the economy just over 10 years ago resulted in some dubious traders conning farmers into selling their produce at below acceptable prices using phoney bags and tampered with scales. For this to work indegeneous companies must adopt good CSR policies, that encourage enterpreneurship from their suppliers by adopting fair prices when buying raw materials. There is no point in encouraging foreign companies to intervene in our mess when we let our own companies make huge profits at the detriment of farmers. Directors motive should not only be profit maximisation- Profit is just one element of measuring an organisation’s success, all other things are equally important.

The economics in the Tobacco industry leaves alot to be desired. Too much politics and a strong cartel aimed at breaking farmers hearts through price fixing. Suffice to say that sales for 2008 as reported in different media outlets at both Lilongwe and Limbe auction flours seem to be putting a smile on farmers faces. I strongly hope that this trend shall continue and that it simply not a political ploy as 2009 general elections draw nearer.