Governance of Agricultural Exports

1. Governance of Agricultural Exports SOAS/Mo Ibrahim Foundation Governance for Development in Africa residential school, Mauritius 2014 Christopher Cramer (SOAS)

2. 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

3. 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.

4. 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

5. 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

6. 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)

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

8. 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

9. 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

10. 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…

11. 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

12. 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)

13. What is enforced, how and by whom? • Product vs process • Lead firm vs external agencies • Legal force vs voluntarism, codes of practice

14. 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

15. So what – for development? • Market access • Learning curve, productive capabilities • Distribution of gains • Leverage for policy intervention • Funnel for technical assistance

16. 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

17. 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…

18. …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?

19. 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

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

22. Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda

23. Is this just (ph)antasy?

24. 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?

25. 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?

26. 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

27. 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

29. 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.

30. PDAs Sampling and locating respondents Questions and data processing on the spot

31. Sample overview (individuals)

34. Ferro site - Sidamo

35. Zeway Flower site

36. Electronic questionnaire on tablet

37. FTEPR findings

38. WHAT WE FOUND: Prevalence of wage employment

39. 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.

41. Mubende site contains Kaweri coffee plantation

43. WHAT WE FOUND: Poverty of wage workers

44. 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

45. D H S

46. E R S S D H S

47. Fair trade, fair work?

48. 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 muchless 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