Wednesday, March 17, 2010

Teaconomics 101

Tea Maths is fascinating, isn't it?
Let's call it 'Teaconomics'
Take Fair Trade and other 'conscience' schemes.
At source, paying workers a bit more and adding some facilities - even if the facilities are actually built and the workers actually paid more - might add about 2 cents per kilogram, based on local costs.
Further let's assume that the tea plantation should also be rewarded for its investment - and its decency - and let's give them 100% return on investment.
So we've added 4c per kilo.
Not a single other person in the transaction - not the shippers, not the wholesalers, not the tea merchants add any value to this process. They do what they do, regardless of the provenance of the tea.
So, when it arrives in a tea shop, it should be 4c per kilo more expensive.
Where's the extra gone, then?
The middlemen work on percentages, so they might argue that they need to earn more per kilo to justify their extra expenditure (a pretty dubious argument, but let's allow it) and further more the importers might make the same claim.
Let's assume that the middlemen make 100% profit, and the importers likewise - and that's a lot of profit! So 4c becomes 8c and then 16c.
Even if the tea store is also making 100% profit there's still only a price differential of 32c.
Boggles the mind, doesn't it?
So, let's change tack, and look at not where the extra money is coming from, or where it goes, but what it does.
A tea plantation can operate successfully if it makes a certain amount of money.
When prices are cheap, that's a lot of tea needed. However, if you can get more money for your tea, you need to sell less tea to make that money.
And if you need to sell less tea, you can pick less tea.
And if you pick less tea, you need to give less work to tea pickers.
There's evidence that some of these arrangements designed to help workers actually work against them.
The feel-good Fair Trade-style Teaconomics is basically a version of the old US Reagan-style 'trickle-down economics', which says if you support the very rich, some money will trickle down to the poor.
As a theory, it's pretty sound. In practice, there's a few stagnant pools that stand between the rich headwaters of this river of gold and the poor at the end of the stream.
In most tea-producing countries the gap between rich and poor - as well as the ability to access justice - is huge.
But, as I sit here and sip some delightful Chun Mee, I can't do much but hope a thin trickle of brightly coloured green tea is carrying a whisper of economic benefit to the person who picked my tea.

Monday, March 1, 2010

More tea, Vicar?

I've been further exploring the idea that tea is mostly produced by estates that exploit cheap labour, in very poor conditions.
With some honourable exceptions, it seems almost universally true.
These days, there's no excuse for ignorance. Not when you can find just about any information.
A simple example from Media Global:
At the Needwood Bio Tea garden in Sri Lanka, a fair trade tea estate, workers are fired after three months of employment, only to be rehired immediately thereafter. In doing so, Needwood does not have to distribute the social benefit provisions guaranteed by full employment, but the company is able to retain nearly all of its workers year-round.
For me, there's no question that my favourite beverage is the result of some very poor practices. The big question, though, is what to do about it?
Fair Trade is of mixed benefit. There's no doubt some workers have benefited, but in all likelihood, the majority have not. It's probably not too cynical to say that various 'middlemen' have sucked most of the extra funds from most Fair Trade transactions.
So, as an example, let's take the "Tea-Tribes" of Assam. Descended from indentured workers - let's face it, slaves - brought in by the British to pick tea, they are amongst the poorest social groups in India.
Fair Trade or any other scheme is not helping them much. The Indian Government appoints a welfare officer to each estate to look after their interests, but of course, it's much cheaper for an estate to just bribe the welfare officer, who are themselves not well paid.
So, I love Assam tea. How do I protect against exploitation?
The only sensible way seems to be to go there. Pay out maybe AUD$5000 in travel expenses, tour some plantations, make a decision which plantation to support, slip a few rupees to some of the workers, and return feeling smug.
But if one does that, there's some uncomfortable thoughts that might intrude in your self-satisfaction:
What about the people working at the bad estates. Surely they are even more in need of my support?
Could I have spent the money doing more for tea workers?
I keep typing, and all I seem to do is come up with more problems, not answers.
Complicated, isn't it?