Friday, January 14, 2011

Development of Local Markets

In the wake of the global recession, one lesson became clear for “developing nations” in the South: Don’t depend on exports to the North alone!!! Generally speaking, the heavier the dependence on trade with the North the greater the impact of “The Great Recession,” as the World Bank has conveniently boxed and labeled it. For the multitudes of poor in both developed nations and in poor alike, it was much more personal and the effects continue to be felt in long lines of the unemployed and in the households of the underemployed. 

For so long in the shrouded halls of trade negotiations, it has been the promise that trade with the North will save you. The fallacy of this assumption became painfully clear as Northern nations, in an attempt to protect their own economic well-being, greatly reduced imports from the same Southern nations to whom they sold this lie. Even the helping hands from the North cut back their assistance to the point many NGOs and donor agencies greatly reduced their funding for local development programs and projects. In some cases, they were halted or scrapped altogether. Such is the world of empty promises. Better luck next time and thanks for playing. 

This stark reality was also reflected in the alternative market of Fair Trade. A generalized sliding scale was a predictor for the impact of the global recession. The more dependent on exports to the North, the harder the impact on Fair Trade producer groups in the South. The Philippine Fair Trade movement has definitely learned an important lesson.

In recent years there has been a concerted effort to unite Fair Trade Organizations (FTOs) regionally and nationally. The World Fair Trade Organization (WFTO) based in the Netherlands has increased the room for regionally based networks to expand their influence and unite FTOs with common interests. 

Africa: COFTA
Asia: WFTO-Asia
Latin America: WFTO-LA
Europe: WFTO-Europe
The Pacific Rim: WFTO-Pacific

The WFTO-Asia works with the existing formal and informal networks in Bangladesh, China, Cambodia, India, Indonesia, Korea, Laos, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, Timor Leste and Vietnam. “WFTO ASIA serves as a platform wherein member-organizations share, among each other, culturally sensitive and regionally distinct strategies in the areas of skills and organizational development, technology transfer and access to information. WFTO ASIA fulfills its role as the voice of Fair Trade in Asia by promoting the standards and principles of Fair Trade among various actors at different levels of the value chain. It works to involve producers, workers, service providers, intermediaries, public sector institutions and consumers to the process of bringing about social and environmental justice to the global trading system.” 

In the Philippines, the Fair Trade movement united under the banner of WFTO-Philippines and has been progressively adjusting its national strategy. Amongst the lessons learned in the Great Recession is, Do not depend on exports to the North alone!!!

No matter how well-intentioned the Fair Trade Movement of the North may be, when faced with a recession there is a logical reduction of imports from the South in both mainstream and alternative trade. For this reason it is important that the FTOs of the South learn a valuable lesson and begin to expand their local and regional markets while relying less heavily on the promises and good intentions of North. 

The Fair Trade Movement of the Philippines

My inquiry into the local Fair Trade movement began with meeting Ronald Lagazo, the Director of WFTO-Philippines, which has thirty member organizations. I asked about the recent effort to expand the national market access for local producer groups through the creation of Fair Trade Shops which I had heard so much about. 

The Fair Trade shops are operated by members, like Saffy is operated by SUFRUDI in Santa Ana, Manila, and SPFTC (Southern Partners and Fair Trade Corporation) in Cebu, and Salay Handmade Paper in Cagayan De Oro, Mindanao (the main island in the south). Right now they are catering to the members of WFTO Philippines. We buy them from them and their products are displayed in the store, so it is the market avenue for some of our members. They may be based somewhere in rural Luzon, but they are supplying products in Mindanao or in Cebu, that is an opportunity for them."

Currently there are thirteen stores operated by FTOs, of which, four new stores are part of a recent development to expand Fair Trade into the local markets. Ronald explained, APFTI (Advocate of Philippine Fair Trade, Inc.) is a non-profit receiving funding for this initiative. The grand design included coffee shops in the stores, more like a deli-café. The partners don’t have so much money or funding, so they can’t afford a real big space to put in a coffee shop at the same time. Instead they started with a retail store first, but I think they want to go there. The funders have been quite impressed with the efforts put into the stores. There are a lot of lessons we learned from this.

The Fair Trade store in Cebu is quite successful in this regard. They do have a fairly regular article coming out about them in local newspapers. They get major coverage for their activities. Some of the media people go and buy from the shops, so they are quite successful with the media engagement. They do a lot of promotions. Gigi Labradores is doing all the efforts to go out of her way to meet people and present products. She networks with a lot of local organizations and people.”

In addition to starting a chain of national Fair Trade Shops, the WFTO-Philippines have established a national set of criteria to become a Fair Trade Organization. Last year we went full swing with implementation of the agreed upon requirements for WFTO-Philippines members, we had seven organizations apply… 2009 was more of a self-evaluation year.” 


Additionally, the WFTO-Philippines established their own Fair Trade label. Ronald Lagazo noted, We had very good international feedback over the FT-Philippines labeling certification system. For one, the FLO label is very expensive and not accessible to small producers. The application fee is very expensive. The label is meant for the Philippine market. If it goes international and is accepted, that is ok with us, but we never intended it to be for the international arena. Some members were initially concerned about adding another label, but locally this label can differentiate us from other businesses. It is not a problem to add another logo to the labels.”

While talking with Ronald about developing local markets, he mentioned Bote Central as an “interesting case,” but what I discovered is more aptly described as unconventional, even revolutionary in their approach! Because their efforts are so direct, and on the surface they sound so effective, I decided to investigate more closely. Currently, I am in the beautiful mountains of the Philippines to follow up on Bote Central and their approach  to developing Fair Trade in local markets. With this, I will leave you in anticipation of what is to come in the next posting, but one thing I can assure you at this point is that it is a fascinating study and much can be learned here! 

Thank you for joining me in this journey. Feel free to follow this blog and to add your comments, ideas or suggestions as we go.


Mitch Teberg, MA

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