PowerPoint Presentation

Document Sample
PowerPoint Presentation Powered By Docstoc

   Paul Chandler
      Terms of reference
“To develop an analysis of supply
  chain for handcrafts … to improve
  the standards and procedures of
  FT so that producers’ added value
  and market access are significantly
  increased … make
  recommendations to inform setting
  of quality standards and system”
        Terms of reference
• Focus on baskets and jewellery
• Traidcraft Market Access Centre
• Interviews with
  –   13 Southern FTOs
  –   7 Northern FTOs
  –   4 UK mainstream buyers
  –   2 consultants and steering group
      Presentation structure

•   EU crafts market potential
•   Value Chain Analysis
•   Producer impact
•   Recommendations
•   Discussion
      EU Crafts market: size

•   Gifts and decorative articles:
•   €12.7 billion (2003); 38% imports
•   Germany, UK, Italy, France =75%
•   China dominant source of imports
•   Sales through independent shops,
    department stores and mail order
       EU Crafts market:
        formal barriers
• Few tariff barriers for handcrafts
• Increasingly strict H&S
  – Hazardous substances (esp if food
    contact); infestation; skin allergies;
    recyclable packaging; labelling
    requirements etc.
      EU Crafts market:
      consumer demand
• Growing interest in interior
  decoration; homes more central to
  well-being and self image; one-off
  items, to personalise homes
• But: functional rather than purely
• Concern for environment/ethics
• Downward price pressure
    EU Crafts market:
commercial buyers’ concerns
• Cheap products; high volumes
• Consistent (good) quality;
• New designs; design-led product
• Short lead times; on-time delivery;
  agile customer service
     EU Crafts market:
    Fair Trade handcrafts
• Handmade products can be unique
  selling point
• But: will struggle to compete with
  cheaper machine-made products
  unless quality and design superior
• EU FT market €100 million
  (0.75% of total) – static, ethical
  consumer only
      EU Crafts market:
• A sizeable potential market
• Mainstream opportunities in more
  up-market niche areas
• But price/quality and service levels
  will be crucial – and need to
             Crafts Value Chain

              Producer   Exporter    Importer/
 Producers     Group/               wholesaler   Retailer   Consumer

• Short; straightforward;
  mainstream and fair trade similar
• Mainstream may use agents to link
  importer and exporter (3-15%
  commission, never own product)
Crafts Value Chain: NFTOs
• Fair Trade additional services:
  – FT advocacy; advance payments;
    capacity building; market
    information; capital investment;
    forgiving and loyal customers
• But: not growing/innovating; some
  lack professionalism; loyal to
  existing suppliers only
     Crafts Value Chain:
• Are also values-led mainstream
  actors: many deal with SFTOs
• But care: values-led players are
  not typical of the mainstream:
  – tough price negotiations; inflexible;
    slow payers; not regular orders;
    frequent staff changes; don’t try to
    understand producers’ situations
  Crafts Value Chain: key
     issues - sourcing
• Raw material sourcing –
  environmental and ethical
  sourcing of growing concern
• Pricing issues between
  – how is labour valued?; local living wage?
  – overheads and “free” raw materials?
  – opportunity cost / contribution?
   Crafts Value Chain: key
       issues - pricing
• Northern buyers not aware of
  what producers get from SFTOs:
  likely to become more important
• SFTO gross margins vary greatly
• FT prices received by SFTOs are
  generally better than mainstream;
  though some good mainstream
  payers too
  Crafts Value Chain: key
      issues - pricing
• Mainstream mark-ups from 500%
  to 3,000% (highly branded)
• FT mark-ups are often lower at
  300-500% (but does this devalue
  perceived value?)
• Levels of mark-up in Europe not
  seen as concern by most SFTOs.
   Crafts Value Chain: key
     issues - governance
• FT pro-poor bias means lower
  supplier competence; theory
  suggests this will lead to more
  intervention from buyers.
• Pressures to be market-led.
• High dependency on NFTOs;
  insufficient diversification; few
  examples of FT supplier
  Crafts Value Chain: key
    issues - governance
• FT price negotiations fairly
  standard and well-managed
• Some SFTOs want more market
  information from NFTOs
• Lack of critical feedback from
  NTOs impedes development
   Crafts Value Chain: key
    issues - environment
• Inefficiencies in infrastructures
• NFTOs/SFTOs insufficiently
• Lack of investment and
  technological innovation in FT –
  (fears it will reduce labour
  inputs?; small is beautiful focus?)
• Exchange rate vulnerability –
  dollar fluctuations
   Crafts Value Chain: key
issues–failure to mainstream
• NFTO lack of vision/skills?
• NFTO lack of capital?
• Lack of FT label (but
  costs/benefits, standards?)
• SFTO/producers lack of
  technological investment
• SFTO lack of scale/productivity;
  quality; design; lead times
 Producer livelihood impact

Sustainable livelihoods model

  Financial             H

  Physical         S            N

  Social           P        F

 Producer livelihood impact

• level of income increases;
• regularity and security of income;
• SFTO savings schemes for
  BUT: contract workers/seasonal
  labour issues
 Producer livelihood impact

• Income used to acquire assets
• Better access to infrastructure e.g.
  electricity, education, health (via
  BUT: Limited capital investment
  in productive capacity
 Producer livelihood impact

• Training programmes
• Empowerment
• Confidence
  BUT: heath and safety of
  processes; social/family tensions;
  more education to be done
 Producer livelihood impact

• Formation of producer groups
• Reduced isolation
  BUT: also creates new obligations
 Producer livelihood impact

• Environmental issues considered
  in fair trade chains
  BUT: in reality this is relatively
  low on the movement’s agenda
 Producer livelihood impact

• A generally positive picture – but
  based on SFTO/NFTO inputs, not
  direct producer research
• Many FT producers still near
  poverty line
• Diverse experience across products
  and countries
 Recommendations: market access
• Improve sales and marketing of existing work
• Develop strategy to mainstream handcrafts;
  establish a success story in handcrafts
• Establish and invest in market led supply
• Ensure the right product is created for
• Ensure FT verifiable supply chains top to
• Promotion FT and ethical purchasing
• Develop FT standards and (possibly) label
• Review and scale up
  Recommendations: social quality

• SFTOs need to improve producer capacity and
  understanding of FT
• Reduce dependency - local markets; small
  businesses as well as manufacture
• Develop stronger groups and networks
• Address risk: regular employment, currency
• Southern advocacy for SME friendly
  environment and individual access to
  affordable services

• Do findings/descriptions ring true?
• Relationships SFTOs/producers;
  costing and pricing models
• Reaction to recommendations:
  – Specialisation
  – Investment needed to mainstream
  – Issues in enabling environment

fighting poverty through

Shared By: