Monday, July 21, 2008

Will Corporate Do-gooders Save the World and its Poor?

BILL GATES is now a philanthropic messiah and his speech at Davos where he elaborates on his new concept of creative capitalism is his new manifesto. It could enthuse people and it could perhaps even solve many of our problems with the help of corporate do-gooders.

Having worked in and reported on economic and development issues of some of the poorest parts of the world, I feel the devil could always be in the details. Once the former Indian prime minister, Rajiv Gandhi, whose youthfulness and commitment to the cause of the poor reminds me of the Bill Gates of today, had pointed out that of every 100 rupees the government spent on the welfare of the poor only 15 actually reached them. The rest disappeared into some black-holes that divide the governments/philanthropists/ NGOs and international aid agencies from the really needy people who live far away.

So what seem to be the real problems is not the lack of resources or lack of willingness of the rich to pay for the benefit of the poor. It is the sheer chasm that divides both these worlds, quite unbelievable but absolutely true.

Bill Gates speak about a number of projects launched by the corporate world for bringing better resources and benefits to the poorer sections of our world. One of the projects he speaks about is the new initiative for bringing the African coffee growers in direct contact with the major Corporations in the business so that their returns would be doubled.

I am not familiar with the African scenario, but I have seen the life and experiences of Indian coffee growers, mainly in Wayanad, a district which has seen the largest farmer suicides in Kerala, a south Indian state afflicted by widespread farm distress in recent past. During 2002-2006, this tiny district had reported as many as 179 farmer suicides, according to the Economic Review 2007, released by the Government of Kerala.

Coffee has been a major crop here, most of the plantations started by the British planters who came here in 19th and early 20th centuries when India was a British colony. Now the major plantations are owned by big companies while there are a large number of small and medium growers who solely depend on coffee for survival.

As a journalist, I went to the place during November-December 2007 to find out what went wrong with their life and why there were so many suicides in these villages. It was a distressing situation: coffee is highly dependent on global market prices and small and medium farmers who cultivate it in a few acres of land, find it hard to withstand price dips and they have no resources to wait till the prices recover. They have to sell out even at huge loss because they are, in most cases, heavily indebted to banks, money-lenders, etc.

Here is the economics of coffee production for small growers:

Malana James, a grower with 2.65 acres of coffee in Kaniyampatta panchayat, Wayanad, got 30 bags of coffee beans in the 2007 season from his plants. Each bag contains 54 kg of beans and when processed he gets 30 kg of coffee kernel from each bag. And the amount he got for one kg of coffee kernel in 2007 was just Rs. 70.

He sells in the open market, and the major corporates procure it. The prices keep fluctuating every year, every season: it was as high as Rs. 120 for a kg in 1994-95 and then it dropped to as low as Rs. 16 in 2002-03. He said last year he lost around Rs. 60,000 on his small plantation.

At the same time the value-added coffee sells in the markets, at prices astronomical compared to the prices farmers get. Nestle India’s Nescafe Classic, a premium brand, is sold at Rs. 68 per pouch containing 50 grams.

I have experienced similar situation in most of the crops that depend on global markets. There is an obscene level of price differences, the small growers being fleeced like anything. But the corporates failed to ensure even minimum price stability for the growers, even in the days of this acute farm distress and mass suicides. It was the federal and state governments who did some fire-fighting operations with the institution of a debt relief commission and higher budget outlay, etc, and taking over of the debts of those who committed suicide so that their families need not keep running from pillar to post to pay off the debts left behind by their dead bread-winners.

I am not ruling out that corporates may have a say or a role, but can they really bring about a change? I doubt it, because their philanthropic role has always been conspicuous by its absence where it really matters: that is among the most backward parts of the world where people are committing suicide because of debt, destitution and lack of any support at the time they really need some.

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