Cebu’s Fair Trade Company Absorbs Economic Crunch

A proponent of fair trade in Cebu is suffering from losses in the dried mango business, for the sake of protecting the interests of both producers and consumers amidst the worsening economic crisis.

Contributed to Bulatlat
Volume VIII, Number 27, August 10-16, 2008

A processing and trading organization in Cebu has incurred losses in the dried mango business, and fears that the economic crisis faced by the country will further pull other companies in the region deep into debt.

Geraldine Labradores, managing director of Southern Partners and Fair Trade Corporation (SPFTC), a company which advocates fair trade, said that her group had increased their buying prices for mangoes, for the sake of mango producers who have to endure the rising cost of production.

“The prices of raw materials have increased because the price of farm inputs dramatically increased in the last year,” she disclosed.

She said that SPFTC bases the price of mangoes mostly on the cost incurred expenses for farm inputs, which include fertilizers, pesticides, and chemicals that induce flowering.

“This has prompted us to also increase our buying price because as proponents of fair trading we must ensure that the farmers would not be at a disadvantage in the trading process,” said Labradores.

As “a development-oriented organization,” the SPFTC states in its website that it serves as a “direct link between the producers and the consumers, working to minimize or eliminate the multi-layered transfer-pricing scheme of middlemen and traders who stand between the producers and the consumers.

SPFTC processes mangoes for export in Europe and in Asia. It has partnerships with fair trade organizations like CTM Altomercato of Italy, Japan Net, Yotsuba Cooperative and PEPUP of Japan, and principled individuals like Martin Eichhorn of Germany, and Fanny Min-Becker of Hong Kong.

Natural calamities like Typhoon Frank have also contributed to the decrease of the supply of mangoes in the market.

Labradores added that they are buying mangoes from farmers at PhP 45 to P50 ($1.01 to $1.127 at an exchange rate of $1=P44.34) per kilo. “This is already very high compared to the cost level of raw materials reflected in the current price (of dried mangoes) that we pegged at PhP 30 ($0.676) per kilo,” she lamented.

Must increase price

Labradores explained that the reason why other traders could lower their buying price is because they pay for the fertilizers and other farm inputs used by the farmers. Aside from lowering the price, this arrangement is also used to ensure a steady supply of raw materials. “We should understand that with traditional traders the dealing is actually unfair for the farmer and almost often the farmers would be trapped in debt. It’s a cycle,” she said.

Labradores said that SPFTC is mulling a price increase in their products. However, she fears that this would in turn reduce their market. “But we have to do this, otherwise we would be at a losing end,” she said.

Other reasons that are pushing up their price include the increase in the price of other raw materials like sugar, Philippine lemon, and ascorbic acid; the increase in the cost of utilities like electricity, water, and fuel; and the weakening dollar value.

“As much as we would be pleased when the value of the peso strengthens, sadly for us, being export-driven, this means that the value of our products also decrease based on the dollar price that we give our partners. This means that the US $12.08 per kilogram price that we give to our clients before is equivalent to a little less than $10.57 today. That is $1.51 loss for us,” she explained. “And this price is not even close to our manufacturing cost which we have computed to be at US$16 per kilogram. We are actually losing $5.43 for every kilogram of dried mango that we produce.”

Despite these challenges, Labradores is positive that with the help of their Northern partners they would be able to cope with the looming crisis that the movement is experiencing.

“Already we have appealed to our partners in Europe, Japan, and the rest of Asia that we direly need to increase our price. We have appealed to them that despite the increase they would not decrease their orders, otherwise we would still be soaked deep in this crisis,” she said. SPFTC is still waiting for a response from their northern partners on the matter.

Labradores believes that the farmers need subsidy on farm inputs. She said that if the production cost would be lessened then the mangoes could be priced lower. “We would be able to justify the price. This is what they have been clamoring for a long time already, but we just can’t do it because we don’t have the funds for it,” she said.

Labradores said that they are asking their Northern buyers and partners to help subsidize the cost of mango production for the farmers. “We are currently looking for agencies and people’s organizations that are willing to help our partner farmers,” she said.

“If we could get a Northern partner who could subsidize the cost of farm inputs then I am optimistic that our fair trade organization would be able to cope better, specially with our expenses. And the farmers would benefit more,” she said.

Go organic

SPFTC is encouraging their farmer partners to engage in organic and natural farming, believing this to be one of the solutions that could help decrease the cost of mango production. “We still have a long way to go on this aspect because for this we need to change the attitude of the farmers on natural farming. Now, chemical-based farm inputs account for the bulk of their farming cost,” she lamented.

“Our thrust is for them (partner farmers) to go organic. In fact, we are already developing an internal monitoring system that will aid in the transition of these farmers from chemical-based farming to natural farming. This, however, would take time and money, and we have to consider that the immediate needs of the farmers must be met first,” she said.(

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