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Thursday
Jul022015

Global South Trade Boosted with Increasing China-Africa Trade in 2013

New UNOSSC banner Dev Cha 2013

It was announced in January 2014 that China has surpassed the United States to become the world’s number one trading nation, as measured by the total value of exports and imports. This new economic behemoth also continued to grow its trade relationships with Africa.

US exports and imports of goods totaled US $3.82 trillion in 2013, according to the U.S. Commerce Department. China’s annual trade in goods passed US $4 trillion for the first time in 2013 (Guardian).

Zheng Yuesheng, a spokesman for China’s customs administration, told The Guardian that becoming the world’s number one trading nation was “a landmark milestone for our nation’s foreign trade development.”

Significantly for Africa, 2012 was also a record year for China-Africa trade, which reached 5 per cent of China’s total foreign trade and made up 16 per cent of all of Africa’s international trade, according to a new report from South Africa.

Consultancy Africa Intelligence (consultancyafrica.com), a South African-based organization with more than 200 consultants focused on “expert research and analysis on Africa” highlights the achievements of this strong trade relationship – and also some of its threats and weaknesses – in its report.

Trade between China and Africa has surged during the decade since China joined the World Trade Organization (WTO) (wto.org) in 2001, rising from around US $10 billion in 2000 to US $198.49 billion in 2012, according to China’s Ministry of Commerce. Ambitiously, it could reach US $300 billion by 2015, announced Cheng Zhigang, secretary-general of the China-Africa Industrial Cooperation and Development Forum (www.zfhz.org) (China Daily).

The World Bank reported South-South trade now surpasses South-North trade, meaning exports from developing countries to other developing countries exceed exports to wealthy developed countries. South-South trade experienced rapid growth in the 2000s, accounting for 32 per cent of world trade by 2011 (World Bank).

South-South trade and investment between Africa and lower-income and middle-income developing countries rose from 5 per cent in the 1990s to almost 25 per cent in 2010 (Consultancy Africa Intelligence). Before the 1990s, over 90 per cent of trade for Africa was with high-income or developed countries.

China is attractive as a trade partner for many reasons. One of them is the strong admiration for its success in lifting millions out of poverty through an aggressive growth strategy and rapid urbanization with big investments in education, science, technology, infrastructure – modern airports, ports, roads and rail – and research and development.

Since 1978, it is believed China has lifted 500 million people out of poverty, out of a population of 1.3 billion people (World Bank). Incomes have doubled every 10 years with average GDP growth of 10 per cent a year, meaning the country has almost reached all the Millennium Development Goals.

Building a trade relationship with China has led to Zambia’s copper mines running again, Gabon’s oil fields being re-explored, and Sudan becoming a major oil exporter to China. Angola, Democratic Republic of Congo (DRC), Equatorial Guinea, Republic of Congo and South Africa are all benefiting from exporting commodities to China.

The relationship has not been entirely beneficial, according to the Consultancy Africa Intelligence report. Some African industries, such as textiles, have suffered from competition with cheaper Chinese imports, leading to factory closures and job loses.

Non-commodity exports from Africa to China amounted to just 10 per cent of the trade total. Many of the contracts signed for projects also go to Chinese companies, the report found.

Renewed concern has also emerged over rising debt levels in Africa.

In summary, the report finds a growing trade relationship with China has brought to Africa commodity booms, growing GDP (gross domestic product), and lots of foreign investment. On the negative side of the ledger, there have been job loses due to cheaper imports, rising personal and government debt levels and an over-dependence on minerals for economic growth.

Across Africa, new infrastructure has emerged where it probably would not have come about under the continuing debt burdens from the 1970s and 1980s. The continent has received a shot of energy, but it remains to be seen whether governments can sustain this  economic jolt and make the wise choices that create African jobs and build liveable cities for the 21st century.

By David South, Development Challenges, South-South Solutions

Published: March 2014

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=xIzkBgAAQBAJ&dq=development+challenges+Cheap+Farming+Kit+Hopes+to+Help+More+Become+Farmers&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challenges-march-2014-published

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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Tuesday
Jun232015

Chinese Trade in Angola Helps Recovery

 

Two-way trade between Africa and China has been an outstanding success story of the past decade. It has led to significant new investment in the continent and brought many new job opportunities. The Chinese community in Africa comprises a mix of entrepreneurs and workers. In formerly war-torn Angola, Chinese workers and investors have led an economic boom as the country recovers from decades of conflict.

The Chinese are generally young, well-educated, English-speaking, ambitious and hard-working. Estimates put the number of Chinese people in Angola at 100,000, and about 1 million across Africa.

The reason these bright young things need to come to Africa goes back to the essential reality of modern China: despite rapid economic growth, per capita incomes classify it as a poor country. While the outside world sees the glitzy, go-go progress of China’s cities, the country’s rural poor go unseen. Around 400 million of China’s 1.3 billion people have annual per-capita income equivalent to US $8,000, while the remaining 900 million have per-capita incomes as little as one-tenth that amount.

Some 6.3 million people in China will graduate this year from university, and it is still very hard for a well-educated Chinese person to get a good job right away. More than a quarter of these graduates will be unemployed, according to the Education Ministry.

There has also been disquiet in parts of Angola over China’s role, with some calling it “neo-colonialism”. But clearly, both Africa and China have much to gain by increasing cooperation.

In the southern Chinese city of Guangzhou (http://en.wikipedia.org/wiki/Guangzhou), a trading hub nicknamed “Africa Town” has emerged since 1998. There are officially 20,000 African traders and entrepreneurs in the city of 18 million, but unofficial estimates put the number at more than 100,000. This African trading hub has emerged to the benefit of both the Chinese and Africans. It is a coming together of small traders matching Africa’s strong demand for consumer goods with China’s manufacturing powerhouse.

In Angola, the mix of entrepreneurs and workers is having a big impact on the country’s development.

Betty, a 22-year-old Chinese woman who has various projects in Angola, including the local Chinese language newspaper, is a typical go-getter.

“I am doing much better here than if I had stayed in China,” she told the BBC.

Another beneficiary of the two-way trade is Deng, a construction a worker: “I earn twice as much as I would at home and I have got a better job,” he said.

For most Chinese, foreign travel is still rare and the excitement of going to Africa to work both attracts and repels because of the continent’s reputation.

“At first I found it frightening, “said Wang. “You hear lots of stories of Chinese people being robbed by the locals.” But he found “there are great opportunities here.”

Another, Jet, who runs an air conditioning business, came to Angola five years ago.

“Everything had been destroyed,” he recalled. “There were no roads, railways, shops, nothing. Some Western companies were already here selling their products but I knew I could import things cheaper from China.”

The large infrastructure projects being undertaken by major Chinese companies are also creating new opportunities. Many Chinese labourers are working on building roads, railways, hospitals and vast housing complexes.

One of the more visible symbols of Chinese investment in Angola is the restoration of the Benguela Railway (http://en.wikipedia.org/wiki/Benguela_railway), considered one of the great routes of Africa and built by British contractors. An engineering triumph, its 1,344 kilometres (835 miles) of track stretch up the Angolan coast, right into southern Congo. The railway took almost 30 years to build in the late 19th and early 20th centuries, but little remained. Until very recently all but a tiny stretch of the line was closed. Now Chinese investment is rebuilding the railway and bringing economic improvement in its wake.

“I couldn’t do this before the railway was fixed,” a woman using the train to get to the market to sell her plump red tomatoes told the BBC. “Before, I had to travel by car which was much more expensive.”

And her income has improved along with the refurbished railway. “I am not rich, but a bit richer,” she said.

And unlike the British, who used the railway to export copper without paying for the resource, the Chinese labourers are getting paid and the Angolan government is paying back the Chinese loan for the railway repairs by selling oil overseas for a market rate.

By David South, Development Challenges, South-South Solutions

Published: October 2010

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=iymYBgAAQBAJ&dq=development+challenges+october+2010&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsoctober2010issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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Sunday
Jun212015

Afghanistan’s Juicy Solution to Drug Trade

 

Afghanistan is the world’s largest source of the illegal drugs opium and heroin (International Narcotics Control Board), both of which are derived from the bright-red flower, the poppy (http://en.wikipedia.org/wiki/Poppy).

The country produced 8,200 tons of heroin in 2007, up 34 percent from the previous year.

The negative consequences of the flourishing drug trade are numerous: it is destabilizing Afghanistan’s neighbours and undermining political and legal institutions, addiction rates are soaring, and addicts are spreading HIV/AIDS.

All of this gives Afghanistan’s farmers a bad image. But that could change with the launch of a new brand for Afghanistan: “Anar, Afghan Pomegranate.” It is hoped this sweet fruit will lure farmers away from the illegal trade and boost the country’s image at the same time. The red fruit that contains hundreds of seeds (http://tinyurl.com/dhrzfq), is a local delicacy and has a regional reputation for excellence. It is hoped the pomegranate fruit trees will draw farmers away from the market for the red poppy flower.

By launching the product with its own logo and brand, producers hope the Afghani pomegranate will be able to benefit from a wave of interest in Western markets in the antioxidant qualities of the fruit (http://en.wikipedia.org/wiki/Antioxidant). Boxes of the fruit come clearly stamped with the logo, a sliced fruit with seeds spilling out, and the brand name.

A sophisticated branding and marketing campaign can make all the difference when a Southern country is exporting its products to wealthier nations.

Rather than having the product disappear amongst the plethora of products on a market stall or in the supermarket, clear and sophisticated branding quickly fixes a reputation with customers and significantly increases return purchases.

As consultants KPMG make clear, “For many businesses, the strength of their brands is a key driver of profitability and cash flow.”

Yet many small businesses fail to think about their brand values or how design will improve their product or service.

The Afghani pomegranate had been enjoying export success since 2007, when it became a big a hit with supermarket shoppers in Dubai. The French supermarket chain Carrefour expanded its order to all its Middle Eastern stores. It is hoped the branding will grow and secure these export markets.

There are more than 48 kinds of Afghani pomegranates. The highly prized Kandari pomegranate – named after its home province in the south of the country – is so popular in India, it will be branded “Kandari Pomegranate.”

Afghan Agriculture Minister Mohammad Asif Rahimi told a Kabul launch ceremony last November that Afghan pomegranates are the best in the world. “It’s sweet; it’s juicy,” he said.

The launch was an apt reflection of the risks of doing business in Afghanistan: it had extensive security and bomb-sniffing dogs.

For Afghani farmers, the pomegranate offers the attraction of more profit than growing poppies: farmers can make US$2,000 per acre, compared to US$1,320 for poppies.

While the financial incentive is there, there are many obstacles to making this alternative market a success. The country is a war zone in many places, and exporting through the road network can be perilous, with frequent attacks. Things became so bad last year, a shipment of the pomegranates had to be sent by US military aircraft.

Taking on the lucrative drug trade and its highly sophisticated global networks is not easy. Drug traffickers provide farmers with credit, advance payments, long-term contracts, technical advice and many other benefits farmers do not receive for growing legal crops.

It is hoped the fruit will be more than just a success on its own, and that it will boost the brand of Afghanistan as a nation as well.

“Afghanistan has a mixed-brand heritage,” said Loren Stoddard, USAID’s head of alternative development and agriculture.

Stoddard said the country is hoping to break with its image of war and extremism, and play to its exotic image in the Western mind. The Afghani pomegranate industry is receiving US$12 million from donors to modernize and expand.

Using design to profit from overseas markets has many advantages. But according to Monique Thoonen, managing director of Dutch Design in Development – an NGO experienced in helping Southern entrepreneurs break overseas markets – getting the steps right is critical.

“If you want to focus on a wider market you have to convince buyers that you understand what is wanted in all fields: design, product development, good presentation at a (trade) fair,” she said. “And if you have convinced the buyer, then you must make sure that your organization is organized in such way that you can make promises come true.

“Designing good products is one thing, but during product development also a good and effective production process has to be taken in account. Making the process too complex will result in high price setting, long lead times and maybe even poor quality. Besides, also the transportation of goods must be taken in consideration, bulky goods are very expensive, goods should be easy to pack and not easily break during transport. Goods must be able to resist high humidity and temperatures during transport.”

The Netherlands is well known as a global centre for high-quality product design. Dutch Design in Development works with importers, retailers, NGOs and foundations, matching them with a Dutch designer to develop their product and then provide them with advice on the Dutch and European markets.

By David South, Development Challenges, South-South Solutions

Published: February 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Google Books: https://books.google.co.uk/books?id=mLKXBgAAQBAJ&dq=development+challenges+february+2009&source=gbs_navlinks_s

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsfebruary2009issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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Friday
Jun192015

Computer ‘Gold Farming’ Turning Virtual Reality into Real Profits

The rapid spread of the internet around the global South is bringing with it new forms of work. One of these trends is so-called “gold farming”: making money in the virtual world of computer gaming by trading in virtual money, prizes and goods for busy gamers who don’t have time to do it themselves. This work now employs 400,000 people – mostly men and mostly in China, but also elsewhere in the South, according to a new report.

Working out of internet centres where they can get access to high-speed or broadband internet connections, “gold farmers” use the global trade in virtual goods for online computer games in the same way stockbrokers trade shares on the world’s stock exchanges. The trade operates similarly to the stock market, with prices fluctuating based on demand and changing by the minute.

And as the report discovered, this trade is acting as a gateway into the world of information technology employment, where computer-literate young men are able to earn an income they could not have done otherwise.

It is a trade that can provide gold farmers with US $145 a month in income. They are often given free food and accommodation to do it, and many have few other economic choices.

“You can probably think of two models,” said the report’s author, Professor Richard Heeks of Manchester University’s Development Informatics Group. “They could play as an individual at a local cybercafe doing their own in-game farming and then selling to one of the trading sites (that buy from farmers at one price, then sell on to player-buyers at a higher price). Or they could be organized into a small/medium enterprise by an owner, all working together in a room full of computers.”

There is a dark side to gold farming too: there have been reports of youths forced to gold farm by gangs who make them work 12 hour days. Crime gangs sometimes become involved and scams proliferate.

Heeks says the downside is the result of governmental ignorance. “The main problem is a lack of understanding about ICT and ICT enterprise generally in some governments in developing countries and in particular a relative lack of understanding about the spread and implications of computer games.”

Supporters see gold farming as a flourishing Southern economy that is worth hundreds of millions of dollars, and exposes participants both to information technology skills and the wide horizons of the virtual computing world. Its defenders say it shows that those who dismiss the expansion of IT infrastructure as a waste of time are missing the emerging economic opportunities it is creating.

Heeks said we still know too little about this fast-evolving sector, but that “gold farming does seem to be providing income/livelihood for young men who would otherwise be unemployed. There are claims that it has helped mop up youths who had otherwise been involved in crime, but we don’t yet know how generalized such claims are.”

The number of players engaged in online gaming has grown by 80 percent per year, and Heeks sees the rise in gold farming as linked to a bigger trend: “in both North and South, we will spend increasing amounts of work and leisure time in cyberspace. Couple that with the growing penetration of ICTs into developing countries, including into poor communities, and there will be growing opportunities for this kind of ‘virtual outsourcing.'”

Currently, more than 300 million people worldwide have access to the internet through fast broadband connections (mostly in developed countries, although this is changing quickly), and more than 1.1 billion of the world’s estimated 6.6 billion people are online.

China is working hard to capture the economic power of the internet. The country’s economic boom has helped create an affluent urban middle class clamouring for the social aspects of internet access like chat rooms, while the government has been driving the roll-out of internet access in rural areas.

The country’s largest Cyber Park is under construction in Wujin New and High-tech Development Zone of Changzhou. It will be a technology incubator, a research and development centre, and a place for small and medium-sized enterprises to innovate.

China’s most ambitious digital media industry development is the Beijing Cyber Recreation District (CRD), a collection of digital media academies and company incubators spread over 100 square kilometres, creating the world’s largest virtual world development. It is already home to more than 200 game and multimedia content producers in western Beijing.

And even in Africa, where broadband penetration rates are very poor, countries are now looking to the mobile phone companies to provide their populations with access to the internet, as they struggle to find a place at the digital table.

Mauritius, an island in the Indian Ocean strategically close to Africa and better known for tourism and luxury hotels, wants to become the world’s “cyber island”, and Africa’s e-gateway. Armed with the first 3G network in Africa (the third generation of mobile phone technology – offering high-speed internet access and video telephony), Mauritius is moving fast to make good on this advantage. And it is even moving to the next level of mobile-phone speed, High-speed Download Packet Access (HSDPA) – allowing even greater quantities of information to be exchanged.

Mauritius joins a select few countries, including Japan and South Korea, at the forefront of access to 3G. Wireless – or wi-fi – computer access is available in three-quarters of the island.

By David South, Development Challenges, South-South Solutions

Published: September 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

Follow @SouthSouth1

Archive.org: https://archive.org/details/Httpwww.slideshare.netDavidSouth1development-challengessouthsouthsolutionsseptember2008issue

Slideshare: http://www.slideshare.net/DavidSouth1/development-challengessouthsouthsolutionsseptember2008issue

Southern Innovator Issue 1: https://books.google.co.uk/books?id=Q1O54YSE2BgC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 2: https://books.google.co.uk/books?id=Ty0N969dcssC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 3: https://books.google.co.uk/books?id=AQNt4YmhZagC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 4: https://books.google.co.uk/books?id=9T_n2tA7l4EC&dq=southern+innovator&source=gbs_navlinks_s

Southern Innovator Issue 5: https://books.google.co.uk/books?id=6ILdAgAAQBAJ&dq=southern+innovator&source=gbs_navlinks_s

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Friday
Jun192015

Connoisseur Chocolate from the South Gets a Higher Price

 

Like coffee beans, cocoa beans are grown around the world and are a major commodity, highly prized in wealthy countries. West Africa accounts for 70 percent of the world’s output, with the rest grown either in Indonesia and Brazil (20 percent), or on a smaller scale in countries across the South, from Belize to Madagascar.

Global sales of cocoa beans have grown by an average of 3.7 percent a year since 2001, and the World Cocoa Foundation estimates 40-50 million people depend on cocoa for their livelihood.

But harvesting cocoa comes at a price to the farmers and those who work on the farms. It is estimated that 284,000 children in West Africa work under abusive conditions to harvest the beans. Cocoa farmers usually only benefit from the price of cocoa in the harvest season between October and February. In Ghana, the second largest producer of beans, child slavery allegations have plagued the cocoa plantations, along with too-low prices paid to farmers. Fluctuating global market prices constantly put small-scale farmers at risk of losing everything they have worked for.

But consumers are developing ever-more sophisticated tastes for chocolate, paying more attention to the quality and origin of the beans. Savvy cocoa producers are using this greater awareness to increase prices for farmers and improve conditions for those who work on the farms.

Maturing consumers’ palates are now picking chocolate and other food products from the South in much the same way as connoisseurs pick wines. In the United Kingdom alone, sales of Fairtrade-branded goods (www.fairtrade.org.uk)- a scheme that offers guaranteed prices and better trading conditions to farmers – have reached £560 million (US$1.1 billion) a year. A survey of consumers in six countries found awareness of fairly traded chocolate was highest in the UK, with 43 percent of people having tried it (http://www.barry-callebaut.com).

British consumers willing to pay more for ethical products are at the forefront of a global surge in fair trade. Hans Vriens, chief innovation officer with Belgian chocolate makers Barry Callebaut, told The Independent newspaper: “Nowadays, chocolate consumption is coming to resemble the way we enjoy wine: we sample and compare different tastes.”

The world’s appetite for chocolate is voracious: For example by 2007, volume sales of chocolate confectionery increased from 1998 by 30 percent in Eastern Europe, and by 40 percent in the Asia Pacific region. Europeans devour 35 percent of the world’s cocoa.

In order to be classed as Fair Trade, a producer must meet a strict set of criteria governing how people and the environment are treated. The Fair Trade scheme pays farmers a higher price for cocoa beans, calculated on the basis of world market prices, plus fair trade premiums. The Fair Trade premium for standard quality cocoa is US$150 per tonne. The minimum price for Fair Trade standard quality cocoa, including the premium, is US$1,750 per tonne. Fair Trade ensures a minimum price of 80 US cents a pound under long-term contracts, with access to credit, and prohibits abusive child labour and forced labour.

At the Chuao Plantation in Venezuela, the local Chuao Empresa Campesina cooperative, representing 100 farmers, is reaping the benefits of developing an exclusive relationship with an Italian chocolate company. Chocolatier Alessio Tessieri was willing to pay a lot more for the beans if high standards were maintained. His sister Cecilia was struck by the aroma of the rare Criollo bean grown by the farmers: it is the least productive in terms of output, but prized for its flavour.

“We found an aroma that was greatly reminiscent of ripe red fruit and plum preserves, with an extremely delicate aftertaste,” she said. “A highly complex and sophisticated aroma lacking any trace of acidity.”

Located in Parque Nacional Henri Pittier, a road and sea trip from the capital Caracas, the town of Chuao, population 1,500, has ideal growing conditions because of its high humidity. In the village, the women take care of the drying process. Throughout the town the cocoa beans lay out in the open on verandas. In the warehouses the enormous “masorche” – the fruit of the cocoa trees, looking like big red melons – are split in half and the pulp is removed, revealing the super-sweet white-coated beans inside.

Alessio struck a good deal with the farmers in recognition of the exclusivity of the beans. He pays US$4 per kilogram against the US$1.30 per kilo paid by the local merchants. He also took on the farmers’ debts with the merchants. But most importantly, he ensured that one of his agronomists would stay behind and supervise the plantation and increase its production, from the current level of 120-130 kilos per hectare to a projected 250-300 kilos.

The Toledo Hills Cacao Cooperative in Belize, South America has developed a relationship with one of the UK’s pioneers in fair trade chocolate, Green & Blacks. The Mayan Indians who farm the cocoa live a traditional life more or less as they have done for centuries. They also live in one of the poorest areas of Belize. The profits made are ploughed back into buying machetes, or rubber boots to protect against snake bites. The cocoa harvest helps supplement their traditional way of life.

Green & Blacks has been buying organic cocoa from the farmers’ co-operative since 1994 and paying a guaranteed price above the world cocoa price. In 2003, they extended their activities with the cocoa farmers and started the Belize Programme to provide even more support. With an investment of £225,000 (US$443,350) over three years, the investment was used to help improve management and farming practices, rehabilitate hurricane-damaged crops, plant more cocoa trees, and train farmers in better growing methods. Green & Blacks continues to provide technical advice and support to the farmers. The business relationship with Green & Blacks has been so successful that other farmers in Belize are now interested in cocoa farming.

The pattern is being repeated elsewhere in Latin America. In San Martin, Peru, rice farmers have moved into cocoa to reap the rewards of the higher prices. Alvis Valles Sajami and Alberto Inou Amasifuen are both graduates of the Peru Farmer Field School. Sajami uses a plant nursery as an extra source of income by selling cocoa plants to other farmers. “I already have 4,000 plants, he said. “This (the nursery) will be so important to increase my cocoa area. I can sell planting material to other farmers in order to have a new source of income for my family.”

Amasifuen has already increased his own cocoa production from two hectares to five, and has also established a nursery to produce cocoa and timber tree seedlings to sell to area farmers.

“We have an increase in demand for cocoa plants in San Martín,” he said. “We expect to provide seedlings not only to our farm, but also to other farmers in expanding their production area.”

By David South, Development Challenges, South-South Solutions

Published: June 2008

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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