More from Satemwa

Hello again-- although I am back in the States, I have more to say about Satemwa. I told you in the last post that I would describe the Fair Trade situation in some detail. So:

Satemwa achieved Fair Trade (FT) status about a year ago. It is the only tea plantation in Malawi to have it, though some others are going through the process necessary to get it. The process is quite rigorous; the FT association (FTA) sends an "auditor" to the business in question and spends days or weeks checking whether or not the business meets FT standards. If the business receives FT status, they still get audited regularly.

The auditors check for things like whether or not the laborers receive a "living" wage, whether or not they have access to health facilities, whether their hours are reasonable, and so on.

Satemwa, like many other FT businesses, does not meet every single standard set by the FTA. They are, however, supposed to make measurable, significant progress towards achieving them; otherwise, the FT folks can revoke their status.

One problem for Satemwa is that many of the standards are unreasonable in their situation. For instance, the FTA is telling Satemwa that they must have bathrooms accessible throughout their tea fields for the workers to use. This, however, would cost hundreds of thousands of dollars which Satemwa cannot afford-- although tea used to be a cash crop back in the days of the British East India Company and for many years after that, it is now almost like a commodity-- and Satemwa, being a small producer, has less market power than most other players. In fact, there are estates in India that produce more tea than all of Malawi combined!

Aside from the bathroom requirement, there are other standards that make it difficult for Satemwa to compete. According to Satemwa staff, the reason that so many of these standards do not jive with the Malawian tea business is that the standards were developed in Costa Rica, which, developmentally, is like New York City compared to Malawi, one of the poorest countries on a pretty poor, materially speaking, continent. Ideally, every laborer in the world would have benefits like they do in Scandinavia-- but the world is not yet there, and besides, who wants to pay 10 bucks for a cup of tea? :)

Fair Trade should challenge companies. If it did not, then it would not be improving the lot of laborers. However, FT standards should not be so rigorous that businesses consider abandoning them in order to stay afloat. This would be self-defeating-- although the tea pickers and other laborers at Satemwa have a hard life, they are much better off with their jobs than without, a fact borne out in multiple conversations here.

The solution, according to Mike the VSO volunteer and many Satemwa staff members, is to tailor FT standards to each country individually. They can be rigorous and demanding while at the same time making concessions to a country's stage of development.

In the last post I mentioned that Mike is helping the workers manage the funds they are receiving as a result of their FT status (he and his partner Penny also provided us with housing in the latter half of our stay, relieving us of the beautiful but time-consuming walk to and from the Sports Club). The sums they are receiving are significant, and dwarf those received by Satemwa's management. Most of the workers are illiterate, however, and earn a dollar or two per day. They do not know what to do with all the money pouring into their coffers. Mike is there to help them learn to manage their money for projects like boreholes, micro- and macro-loans, and English classes for workers. Without such guidance, much of the money would likely be funneled into pockets and local shebeens.

It is interesting to note that Satemwa's FT status has benefitted its workers far more than the Management. Yes, the improvement in the workers' quality of life probably improves morale and thus Satemwa's overall efficiency, but this benefit is minor when one considers the effort and money that Satemwa Management funnels into the effort to maintain their FT status.

So why did they decide to get FT status? Although management felt that it was the right thing to do for the workers, ultimately I think they saw that this is one way to escape the commodity trap-- a way for them to escape the vagaries of the market price for tea. Achieving FT status is a way of differentiating their product and making it more appealing to some consumers. The estate is also beginning to sell more specialty teas, enabling them to further differentiate and increase their profit margin.

There are so many interesting issues here, and so many of them touch on the relationship between business and international development. It's hard to focus on any one issue, because they all interconnect and influence each other.