Fairtrade Value Chain Empower Negros Agrarian Reform Communities and

Local Economies

Alter Trade Foundation Inc. August 29, 2013

The Negros Agrarian Reform Beneficiaries

The Negros agrarian reform beneficiaries are former farmworkers who earned an average of P71/day ( or US$1.40) in the former Sugarcane Haciendas. Women workers were paid half of what the men received. Child labor was a common practice in the plantations.

Each agrarian reform beneficiary received land grants from the government’s Land Reform Program at an average of 0.5 hectare to 1 hectare per beneficiary. But land distribution is not enough.

The ARBs still need production capital, sustainable technologies, capacity building and access to a stable market in order to become self-sufficient and sustainable.

The Cycle of Misery of Negros Agrarian Reform Beneficiaries *

•Landlessness •Mono-crop •No Capital•No Technology• No access to Market•Soil Degradation

Low Productivity

Low Income

Malnutrition, No Education Poor HousingNo Hospitalization

Low Working CapacityNo Management CapabilitySickness and Diseases

* From the ATFI Strat-Planning of 2001

To effectively alleviate rural poverty, ATFI matched each major problem of ARBs with a corresponding support service:

Landlessness Support to Agrarian Reform

Farmers’ Lack of Capital Credit and CBU

Lack of Technology Sustainable Agriculture

Low Management Capacity Organizational Empowerment

Low valued Products Access to Product Processing

Limited Market Access Linkage to Fairtrade / and Domestic Market

The Negros ARB has to be transformed

From a farmworker

Into a farmer

To a farm entrepreneur

Alter Trade Foundation’s Programs As a Fairtrade Service Provider

ARBs’ Capacity Building

Holistic Organizational Empowerment Sustainable Agriculture Technologies Credit and Savings Program Advocacy and Networking

ARBs ATFI

Alter Trade Foundation’s Service Programs empowering Negros ARBs

Major activities:• Community Development Planning• Sustainable Management Systems• Project Planning, Implementation, Monitoring, Evaluation• Farm Management Systems • Marketing Strategies and Planning

HOE: Holistic Organizational EmpowermentA program on organizational development that empowers agrarian reform beneficiaries to manage their community resources including ecology, their production activities, their finances and investments, and strategic development plan.

Alter Trade Foundation’s Service Programs empowering Negros ARBs

Major Activities :• Agro-Ecological Farm Systems Analysis and Planning• Bio-Organic Conversion Program / Inspection and Certification• Organic Soil Nutrient Management • Crop Production and Harvest Planning• Diversified Crop and Livestock Production• Climate Change Risk Reduction/ Adaptation and Mitigation• Farm Equipment and Enterprise Development

SPADE: Sustainable Production and Area Development EnterprisesA program empowering agrarian reform beneficiaries on sustainable and organic farming technologies and farm enterprises through participatory technology development , farmers’ field school and cross-farm visits.

Alter Trade Foundation’s Service Programs empowering Negros ARBs

Major Activities:• Installation of Finance Management system per ARB association• Business Planning / Feasibility Study • Project Proposal Making• Training on ‘Accounting for Non-Accountants’• Savings and Capital Build-Up• Annual Finance Audit of ARB associations

CRASP: Credit Access and Savings ProgramA program providing access to affordable credit for farm production and enterprises and empowers the agrarian reform beneficiaries by enabling them to manage their project funds, build-up their own capital, accumulate assets and equipment, investment planning on farm-enterprises.

Alter Trade Foundation’s Service Programs empowering Negros ARBs

Major Activities: • Propagation of SA-OF/FT orientation• Building the local producer-consumer solidarity • Development of a domestic fairtrade movement

Advocacy: A service program for propagation of sustainable agriculture-organic farming and fairtrade orientation among agrarian reform beneficiaries associations, participation in LGUs’ local development planning, engaging government agencies in relevant programs (anti-poverty, organic agriculture, marketing and fairtrade, peace and development, etc.)

ARBs empowered by Alter Trade Foundation Inc. through “Sustainable Agriculture for Sustainable Communities”

A Program assisted by Bread For the World since 1995

Community Devt’ Planning and Gender Mainstreaming

Sustainable Agriculture Participatory Trainings

Production planning and Feasibility Study

Credit Access and Finance management Trainings

Production Implementation and monitoring

Annual Organic and Fairtrade Inspection

Harvest-PostharvestPlanning/ Implementation

Annual evaluation and Management Trainings

NOFTA

Alter Trade Foundation Inc. (ATFI)

( NGO Service Provider)

Fairtrade Processor

Fairtrade Distributor

Alter Trade’s Organic and Fairtrade Value Chain empowering Negros ARBs

“From Gate to Plate”

Fairtrade Trader

NOFTA Fairtrade Haus

What is Fairtrade?Fairtrade is an alternative trading system that hopes to:

•Improve the socio-economic situation of small producers in developing countries

•Contribute to poverty reduction

•Reform the unfair trade relations and structures at the global and domestic levels

Main Features of Fairtrade:

• Built upon the principles of transparency and partnership• Promotes economic justice by safeguarding the rights of disadvantaged producers• Encourages small producers to self-organize to attain economy of scale and a competitive volume of products at a better price • Promotes ecological sustainability• Improves the situation of women and children• Protect the rights of consumers to quality and safe products

Alter Trade’s Organic and Fairtrade Value Chain empowering Negros ARBs

ATFI NOFTA FT PROCESSOR FT TRADER FT DISTRIBUTOR

RESPONSIBILITIES

Responsive ParticipatoryTimely DELIVERYOF SERVICES

Delivery of Raw Materials on agreed QUALITY VOLUMEPRICETIME

Transformation into Products on specifiedQUALITY VOLUMEPACKAGEPRICETIME

Marketing of Products on specifiedQUALITY LABELVOLUMEPRICETIME

Delivery to Consumers on specifiedQUALITY LABELPACKAGEPRICETIME

REWARDS

Satisfaction of ConsumerNeeds and demands

Reasonable Profit

50% Advance Payments

Stable Price

Niche Market

Assured Profits

Sustained Orders

Sustained Operations

•Sustainable Production • Assured Income • Secured Land Tenure • Support Services• Stable market • FT Premiums

Fulfilment of MISSION

SustainedDevelopment Work

• Major ingredient in Fairtrade Chocolates in Switzerland, Germany and France

• Ingredient for Cosmetics in France.• Table sugar in all countries• Ingredients for saki & soy sauce

ARBs’ muscovado were marketed domestically and in the Fairtrade Markets in Europe and Southeast Asia

Alter Trade provides access to market to Negros ARBs

90% of ARBs’ sugarcanes are milled as centrifugal raw sugar and are marketed domestically

• Marketed domestically as table sugar and as ingredients for food processing

• Has potential for fairtrade centrifugal sugar market

Half of the Sugarcane Harvests Of ATFI Partner ARBs were marketed domestically

From the total sugarcane production alone, the partner POs in 2011-12 : earned a total net income of P39,323,417.56 , distributed dividends amounting to P25,856,627.49 to CLOAholders,

provided labor incentives amounting to P1,950,339.32. to non-CLOAholders,

saved a total Capital Build Up (CBU) of P6,404,067.27 aside from acquired farm equipment, tractors and postharvest trucks,

paid land taxes amounting to P691,175.97 and land amortization P1,755,194.77 for year 2010-11.

Export Price per Kg: US$ 2.47 Export Price per 25Kg Bag: US$ 53.00

Domestic Price per Kg: Php 78.90

Fairtrade PremiumUS$ 80 / MT Muscovado

2007 = Ph 2.2 M ₱2008 = Ph 1.8 M₱2009 = Ph 1.2 M ₱2010 = Ph 1.51M ₱2011 = Ph 2.2 M ₱

Self-Reliance Fund from Korean Consumers

PH ₱ 950,000 per year Period: 2006-2010

Fairtrade Market rewards to Negros ARBs

E F T A

A P N E T

Fairtrade Muscovado

Fully furnished Community Farmers’ Training Centers Computerization of Producers’ Organizations Electrification of remote upland villages Expansion of production areas Small rice farm tractors/ threshers Livestock integration into farming systems Irrigation facilities especially during the drought caused by climate change Micro-finance program in farmers’ associations Community Guest House Postharvest financing program for ARBs

The Fairtrade Premiums improved ARBs community facilities and quality of life year upon year:

Impact of Organic Farming and Fairtrade on NOFTA Producers

Using the the National Statistical Coordination Board (NSCB) 2009 statistics: A family of five needs P4,869/mo. or P 58,428.00/year to fulfil total food needs; and P7,017.00/mo. or P84,204.00/year to keep out of poverty.

ATFI Partner 653 ARBs’ achievement:

69% or 452 Households are food sufficient or have crossed the poverty line

31% or 211 Households are still moving towards the poverty line

Lessons in Value Chain Development

Value Chain as a strategic complementation of players in a supply chain, sharing common vision and goals.

For a value chain to contribute to social development it should empower marginal producers by building their capabilities in processing and trading, ‘beyond the farmgate.’

Value Chain is demand-driven and consumer-oriented in ensuring the volume, quality (organic, traceability, social-impact, ecologically friendly) and competitive price of its product.

But the Fairtrade value chain is characterized by producer- consumer solidarity too. The Fairtrade premium is a valuable reward by consumers to producers.

Transparency, dialogue and mutual-cooperation in responding to changing requirements of consumers and emerging problems of players in the value chain.

ATFI’s Immediate Plans and Prospects

Mainstream Fairtrade in Negros to incude more ARBs in the development and poverty reduction program

Develop processing capability of producers through community enterprises , such as, farm-based muscovado mills, unpolished rice mills.

Diversify production towards coffee, cacao, rice and livestock production and food processing at the farm level and establishment of value chain for each product.

ATFI’s Immediate Plans and ProspectsFrom sustainable communities, we should proceed to develop local economies at the municipal and provincial level, if we want to achieve broader results in poverty reduction and sustainable people’s development

ATFI is pursuing the strengthening of the basic pillars for local economy development in La Castellana, Negros Occidental through a dynamic partnership between:

LGU /LGAACADEME

CONSUMERSBANKS / MFIs

CSOs

PRODUCERS &SOCIALENTERPRISES

Onward with Social Development !