SIPRI ANNUAL REPORT ON GLOBAL ARMS AND MILITARY EQUIPMENT PURCHASES...

SIPRI – STOCKHOLM INTERNATIONAL PEACE RESEARCH INSTITUTE

ANNUAL REPORT ON GLOBAL ARMS EXPENDITURE

SIPRI 2007 YEARBOOK – MILITARY EXPENDITURES AND ARMS PRODUCTION (Excerpts)

Source: www.sipri...

Who purchases arms and military equipment?

Annual global military spending (2006): $US 1200 billion ($US 1.2 trillion)

3.5% increase from 2005 ($US 184/per capita; i.e. each citizen in the world contributes $184 annually for arms purchases!)

2.5% of world GDP spent on arms and military equipment

37% increase over last ten years (1997-2006)

To put this amount in perspective, the G8 annually contribute $US 50 billion in so-called “aid” to officially “fight poverty” in the so-called Third World which comprises +80% of the world population ( 5 billion people ).

Largest military spender: the USA with $US 528 billion/year ($US 177/per capita) = 46% of global annual military spending with less than 5% of global population!

53% increase from 2001-2006 since attacks on world trade centre on sept.11, 2001 (from $US 343 billion to $US 528 billion)

15 countries = 83% of total global annual military spending ($US 964 billion) accounting for 56% of global population.

Patterns and actors of major armed conflict

Inter-States: War between States

Intra-States: War within States

Non-States actors: “rebels”, “terrorists”, etc.

Link between arms expenditure and inter-states and intra-states military conflict

2006-07: 20 intra-states conflicts

Africa annual military spending (2006):

$US 15.5 billion (1.3% increase since 2005)

51% increase over the last 10 years from 1997-2006 mainly from North Africa & Algeria (50%).

Largest military spenders in Africa

North Africa share: 50% ( $US 7 billion)

(Algeria: $US 3.5 billion)

South Africa: $US 3.6 billion (1.5% of GDP)

Thus, North Africa and South Africa together account for $US 10.6 billion = 70% of arms expenditure in Africa)

Algeria largest spender in North Africa (46% share) and 2^nd largest in Africa after South Africa.

South Africa has the largest military budget in Africa ( $3.6 billion = 1.5% of GDP)

Note: Military sector accountable to civil authorities; key guidelines for control of the military have been created. (see Leroux, “South Africa: Budgeting for the military sector in S.A. The processes and mechanisms of control.)

Sub-Saharan Africa (SSA) share

46 States in SSA = $US 5 billion.

Areas competing for national resources:

Military and Social sector

Military spending made at the expense of social welfare services ( health, education, etc) and economic development.

Note: Angola & Burundi: 5.7% & 6.2% of GDP = annual arms expenditure, with lowest social welfare and economic development spending.

Latin America military spending (2006)

$ 32.7 billion

5% increase over 2005

18% increase from 1997-2006

Venezuela highest rate of military spending

35% increase since 2004, in response to perceived threath from US invasion.

Asia and Oceania military spending

$ 185 billion

5% increase since 2005 ( $ US 9 billion)

India & China = 40% ($ US 74 billion)

China: 12% increase in 2006

India: 7% increase in 2006

Japan 2^nd largest military spender after China

South Korea: 7% increase

Autralia: 5% increase

Japan, Taiwan and Malaysia decreased spending.

Note: Japan constitution only allows the use of force for defensive purposes only in response to an attack on the country ( defense vs offense)

Japan capped military spending to 1% of GDP. Still the largest military spender in Asia/Oceania after China due to ts large GDP.

China: exceeded Japan in 2006. Biggest in the region and 4^th in the world! Est. at 50-100 billion/year. 195% increase from 1997-2006!

Europe

Annual spending: $US 280-350 billion

10% increase from 1997-2006 ($28 billion)

Increase by 0,5% ($1.5 billion) since 2005

Reflects large increase in Russia, Spain, Turkey.

Decrease in Germany, Italy and UK.

Azerbaijan and Belarus (oil- rich ex-soviet republics in Eastern Europe) account for world’s highest increase (82% & 56%)

Croatia, Estonia. Latvia, Slovenia, Russia increase by 10% in 2006.

Hungary and Italy decreased military spending by 10% in 2006.

European Defense Agency

Consolidated military spending among EU countries to coordinate military procurements, research & development, to reduce costs and to profit from economies of scale.

Russia

$US 34.7 billion

4^th largest spender in Europe

11% of total

12% increase in 2006

155% increase since 1998

2.5-3% of GDP

Eastern Europe

Highest increase of last 2 years

Georgia increased by 185% from 2005

Azeirbaijan increased by 82%

Armenia increased by 17%

Belarus increased by 56%

Middle East military expenditures (2006)

$ US 72.5 billion = 6% of total

2.8% increase over 2005

Saudi Arabia largest annual increase (14%); 57% increase from 1996-2007

Military expenditures in Sausi Arabia tend to follow oil prices

Region with highest GDP-military spending ratio; average 6% of GDP (1997-2005)

due to lack of transparency and accountability in military budget (i.e. 2007 BAE arms deal in UK > corruption involving “prince” badar, SA ambassador to the US)

Saudi Arabia increase due to threaths from Iran and other Shiite dominated countries in the region.

Biggest spender in the region ( 40% of total military spending in the middle east in 2006)

64% increase from 1996-2007

Israel

2^nd largest military spender in middle east after Saudi Arabia

“democracy” but military budget secret.

Iran

3^rd largest military spender in middle east after Israel.

23% increase`from 1996-2006

Largest increase in the region

Threaths perceived by US pressure in the region and tension over its nuclear program with the Int’community.

Conclusions

World military expenditure increased in 2006

US increase by 62%

US share in world total: 46%

(regional annual average increase offset by decreases in other countries)

SIPRI – STOCKHOLM INTERNATIONAL PEACE RESEARCH INSTITUTE

ANNUAL REPORT ON GLOBAL ARMS EXPENDITURE

SIPRI 2007 YEARBOOK – MILITARY EXPENDITURES AND ARMS PRODUCTION (Excerpts)

Source: www.sipri...

Who purchases arms and military equipment?

Annual global military spending (2006): $US 1200 billion ($US 1.2 trillion)

3.5% increase from 2005 ($US 184/per capita; i.e. each citizen in the world contributes $184 annually for arms purchases!)

2.5% of world GDP spent on arms and military equipment

37% increase over last ten years (1997-2006)

To put this amount in perspective, the G8 annually contribute $US 50 billion in so-called “aid” to officially “fight poverty” in the so-called Third World which comprises +80% of the world population ( 5 billion people ).

Largest military spender: the USA with $US 528 billion/year ($US 177/per capita) = 46% of global annual military spending with less than 5% of global population!

53% increase from 2001-2006 since attacks on world trade centre on sept.11, 2001 (from $US 343 billion to $US 528 billion)

15 countries = 83% of total global annual military spending ($US 964 billion) accounting for 56% of global population.

Patterns and actors of major armed conflict

Inter-States: War between States

Intra-States: War within States

Non-States actors: “rebels”, “terrorists”, etc.

Link between arms expenditure and inter-states and intra-states military conflict

2006-07: 20 intra-states conflicts

Africa annual military spending (2006):

$US 15.5 billion (1.3% increase since 2005)

51% increase over the last 10 years from 1997-2006 mainly from North Africa & Algeria (50%).

Largest military spenders in Africa

North Africa share: 50% ( $US 7 billion)

(Algeria: $US 3.5 billion)

South Africa: $US 3.6 billion (1.5% of GDP)

Thus, North Africa and South Africa together account for $US 10.6 billion = 70% of arms expenditure in Africa)

Algeria largest spender in North Africa (46% share) and 2^nd largest in Africa after South Africa.

South Africa has the largest military budget in Africa ( $3.6 billion = 1.5% of GDP)

Note: Military sector accountable to civil authorities; key guidelines for control of the military have been created. (see Leroux, “South Africa: Budgeting for the military sector in S.A. The processes and mechanisms of control.)

Sub-Saharan Africa (SSA) share

46 States in SSA = $US 5 billion.

Areas competing for national resources:

Military and Social sector

Military spending made at the expense of social welfare services ( health, education, etc) and economic development.

Note: Angola & Burundi: 5.7% & 6.2% of GDP = annual arms expenditure, with lowest social welfare and economic development spending.

Latin America military spending (2006)

$ 32.7 billion

5% increase over 2005

18% increase from 1997-2006

Venezuela highest rate of military spending

35% increase since 2004, in response to perceived threath from US invasion.

Asia and Oceania military spending

$ 185 billion

5% increase since 2005 ( $ US 9 billion)

India & China = 40% ($ US 74 billion)

China: 12% increase in 2006

India: 7% increase in 2006

Japan 2^nd largest military spender after China

South Korea: 7% increase

Autralia: 5% increase

Japan, Taiwan and Malaysia decreased spending.

Note: Japan constitution only allows the use of force for defensive purposes only in response to an attack on the country ( defense vs offense)

Japan capped military spending to 1% of GDP. Still the largest military spender in Asia/Oceania after China due to ts large GDP.

China: exceeded Japan in 2006. Biggest in the region and 4^th in the world! Est. at 50-100 billion/year. 195% increase from 1997-2006!

Europe

Annual spending: $US 280-350 billion

10% increase from 1997-2006 ($28 billion)

Increase by 0,5% ($1.5 billion) since 2005

Reflects large increase in Russia, Spain, Turkey.

Decrease in Germany, Italy and UK.

Azerbaijan and Belarus (oil- rich ex-soviet republics in Eastern Europe) account for world’s highest increase (82% & 56%)

Croatia, Estonia. Latvia, Slovenia, Russia increase by 10% in 2006.

Hungary and Italy decreased military spending by 10% in 2006.

European Defense Agency

Consolidated military spending among EU countries to coordinate military procurements, research & development, to reduce costs and to profit from economies of scale.

Russia

$US 34.7 billion

4^th largest spender in Europe

11% of total

12% increase in 2006

155% increase since 1998

2.5-3% of GDP

Eastern Europe

Highest increase of last 2 years

Georgia increased by 185% from 2005

Azeirbaijan increased by 82%

Armenia increased by 17%

Belarus increased by 56%

Middle East military expenditures (2006)

$ US 72.5 billion = 6% of total

2.8% increase over 2005

Saudi Arabia largest annual increase (14%); 57% increase from 1996-2007

Military expenditures in Sausi Arabia tend to follow oil prices

Region with highest GDP-military spending ratio; average 6% of GDP (1997-2005)

due to lack of transparency and accountability in military budget (i.e. 2007 BAE arms deal in UK > corruption involving “prince” badar, SA ambassador to the US)

Saudi Arabia increase due to threaths from Iran and other Shiite dominated countries in the region.

Biggest spender in the region ( 40% of total military spending in the middle east in 2006)

64% increase from 1996-2007

Israel

2^nd largest military spender in middle east after Saudi Arabia

“democracy” but military budget secret.

Iran

3^rd largest military spender in middle east after Israel.

23% increase`from 1996-2006

Largest increase in the region

Threaths perceived by US pressure in the region and tension over its nuclear program with the Int’community.

Conclusions

World military expenditure increased in 2006

US increase by 62%

US share in world total: 46%

(regional annual average increase offset by decreases in other countries)

SOLUTION TO THE COFFEE CRISIS...

THE COFFEE CRISIS…

The coffee sector in Tanzania and throughout sub-Saharan Africa has collapsed due to a structural over-supply of coffee on the world market which has resulted in dramatic decreases in the world prices of coffee. In fact, over the last seven years, coffee prices have decreased by over 70%, reaching their lowest 30-year low in 2002/2003. ( see graph 1 below)

Graph 1) World market coffee prices (1989-2003) ($US/Ib)

As a direct result, millions of coffee farmers in Tanzania and across sub-Saharan Africa have been thrown deeper into poverty as the low world price does not allow coffee farmers to profitably produce and market their coffee.

The solution to help coffee farmers break-free from the vicious trap cycle of the world market is to help farmers process (roast & grind) and market their own coffee directly, thereby significantly adding-value to the coffee and significantly increasing their income in the process.

This pilot project is an initiative aimed at achieving this objective. The coffee is grown and processed by the farmer and marketed through this initiative. All sales proceeds – minus marketing costs - are then equitably redistributed directly to the respective farmer.

If the market in Tanzania responds favorably to this pilot project, then this initiative will be replicated on a larger scale in Tanzania, and can (hopefully) serve as a practical example and as a solution to revive the coffee sector in both Tanzania and in other coffee growing countries across sub-Saharan Africa.

Thank you for supporting the coffee farmers of West Usambara, Tanzania through this pilot project and to help contribute to the revival of the coffee sector in Tanzania.

For more information on this initiative, please contact:

Arya A. Tajdin

Executive Director

Yajna Centre

Dar es Salaam, Tanzania

Email: arya@yajnacentre.com

THE ROOT CAUSE OF THE COLLAPSE OF THE COFFEE SECTOR

THE COFFEE CRISIS…

The root (economic) causes behind the collapse of the coffee sector

The coffee sector in sub-Saharan Africa and throughout coffee producing nations has collapsed due mainly to a structural over-supply of coffee on the world market, which has resulted in dramatic, unprofitable and unsustainable decreases in the world prices of coffee. In fact, over the last seven years, coffee prices have decreased by over 70%, reaching their lowest 30-year low in 2002/2003 ($US 0,50 cents/kg) (see graph 1 below)

Graph 1) World market coffee prices (1989-2003) ($US/Ib)










As a direct result, millions of small-scale coffee farmers across the world have been thrown deeper into poverty as the low world price does not allow them to profitably produce and market their coffee. Meanwhile, however, coffee Multinationals generate billions of dollars annually from coffee sales…

Multinational monopoly power in the coffee sector

• 4 multinational corporations control over 70% of the coffee trade in the world.
• Through this concentration of monopoly power, they control the world supply of coffee and set prices on the world market.
• While millions of small coffee farmers are struggling to survive by growing coffee for their subsistence, these multinational corporations are generating profits in the billions each year.

The “4” coffee multi-national corporations: Revenue 2001-2002

1) Phillip Moris/USA. : $US175billion

2) Nestle/Switzerland.: $US65billion

3) Procter & Gamble/USA: $US40 billion.

4) Sara Lee/USA: $US 30billion.

Coffee trade statistics demonstrating results of unfair world trade practices in the coffee sector in favor of foreign multinational corporations
source: International coffee organization

• Coffee market value 1992: $US 30 billion
• Producers’ share 1992: $US 12 billion.









• Coffee market value 2002: $US 50 billion
• Producers’ share 2002: $US 8 billion.









FACT:

• While the global market value for coffee in the world has increased from $US 30 billion to $US 50 billion in the last ten years, the value share to producers has decreased from 40% to 16% respectively, as a direct result of unfair world trade practices biased in favor of foreign multinational corporations.

• Furthermore, since 1970, the value of commodities produced in the South has declined in relation to the cost of manufactured goods. In 1975, 8 tons of African coffee could buy 1 tractor; by 1990, it took 40 tons of the same coffee to buy one tractor*.

*source: Crowley Sarah, Teaching about Fair Trade, May 1998.


FACTORS LEADING TO FARMERS’ IMPOVERISHMENT

• Declining commodity prices on the world market resulting from structural over-supply and from biased and exploitative terms of global trade.
• Continuous increases in the price of (imported) farm inputs (seeds, fertilizers, etc.), resulting from IMF’s liberalization policies (infamous Structural Adjustement Programs) & from biased, unfair and exploitative terms of global trade ( illegal, unfair and trade-distorting agricultural subsidies paid to so-called “farmers” (multinational disguised as ‘farmers”) in the G8, market entry barriers ( escalating tariffs) applied to processed commodities originating from the so-called “Third World”, etc. keeping “poor developing” nations trapped in the “Colonial Pact”…
• Widespread corruption and mismanagement in so-called farmers’ organizations or cooperatives.
• Massive local and global exploitative trade practices and inefficiencies along the supply chain.
• Failure of farmers to organize themselves and failure of (illegitimate and criminal States) to develop and implement intelligent and coherent economic development policies in favor of farmers.)
• Low commodity prices, no access to credit, no technical assistance, no logistical support (transport, processing, storage) and no direct access to export markets.

Small-scale coffee farmers

• Over 50% of the world’s coffee is grown by small family farmers. Most small farmers who are not organized into marketing cooperatives are at the mercy of middlemen or processing plants to sell their coffee, earning a mere 1%-2% of the retail price of coffee on the export market.
• Low prices and lack of control over the storage, transport, processing, marketing and exporting of coffee beans trap both the farmers and the countries for whom cash crops such as coffee constitute a major export commodity, into a vicious circle of poverty, “aid”, and debt.

Processing mills

• Processing of coffee is generally carried out on large farms or in coffee mills.
• Most coffee mills are privately owned, though occasionally they may be owned by small farmer cooperatives.

Local middlemen

• Middlemen are intermediary traders who buy coffee beans from small farmers. They take advantage of the farmer’s lack of access to credit, marketing tools, and access to export markets.
• The farmers’ weaknesses are his strength!
• They often act as bankers to the desperate farmers and provide loans on condition that farmers sell them their coffee at the lowest price and repay their loans at the extremely high rates of interest.
• This strategy not only allows the middlemen to maximize profits at the expense of the farmer, but also plunges the farmer into the vicious circle of loan-debt-poverty.

Exporters

• Exporters are either independent companies or subsidiaries of multinational corporations that export coffee beans to importers in the export markets.
• The primary goal of the conventional exporter is to buy coffee beans at the lowest possible price and to resell it at the highest possible price so as to maximize profit.

Brokers

• Brokers buy and sell coffee on commission without ever owning the coffee that they trade. They act as intermediaries between the exporters and the importers.
• Multinational corporations have their own brokers and have enormous buying and selling power which allows them to speculate and to influence the supply of coffee on world markets ( New York and London Coffee Exchange).

Importers

• Importers purchase raw green coffee beans either from brokers or exporters, which they subsequently sell to roasters.

Roasters

· Most roasters buy their coffee from importers. After roasting and packaging the coffee, roasters then sell the processed coffee either to distributors or directly to retail and institutional accounts at phenomenal profits. Some roasters have their own retail outlet chains and sell coffee directly to the consumer.

Distributors

• Distributors are sometimes involved in channeling processed coffee to retail and institutional accounts (ie; schools, universities, hotels, airlines, etc…)

Retailers

• Retailers are supermarket chains, grocery stores, restaurants, cafes, etc… that sell coffee directly to the consumer.

Consumers

• Consumers are the final link in the coffee trade.
• They are usually unaware of the unfair conditions under which the coffee was produced and traded.







Ex: The crisis within the coffee sector



• In the last three years, coffee prices on the world market have drastically fallen by over 70%.
• This is a direct result of unfair world trade practices enforced by the WTO and supported by both the IMF and the World Bank in favor of the G8 countries and their multinational corporations.

World price of cash crops

• In more than fifty so-called “third world” countries, more than fifty percent of export earnings depend on three cash crops, among them coffee. Moreover, agriculture exports account for more than 50% of foreign exchange revenue in Kenya and more than 70% of the total population in Kenya depends on agriculture for their livelihood*. (*Exporting in East Africa, Francois Alland)

• Thus, a substantial decrease in the world price of any of these leads to severe economic crisis for both the farmers and for the countries producing these crops, and throws them into a vicious cycle of poverty, “aid” and debt.

“ Structural over-supply in the commodity market lies at the heart of global poverty and instability.” Brandt Report, 1980

Paradox of coffee trading : Highly Lucrative trade that creates mass poverty among coffee farmers around the world.

Let’s consider and reflect on the following figures:

Average world market price for coffee beans over the last 7 years: $US 1.2/kg

Average share of world market price paid to farmers: 30%-50% = $0,36-$0,60 depending on quality, type, stages of processing, region, etc.

Average price paid by consumers for regular (i.e. not organic or Fair Trade certified) processed (roasted) coffee: $US 10/kg

Average minimum price paid for a regular cup of coffee in a (i.e. not organic, (so-called) “Fair Trade” or cappuccino, espresso, etc…): $US 1 –Euro 1 per cup.
Note: 1kg of coffee makes on average 40 cups of coffee; thus, the market retail price paid by consumers for a cup of coffee ($US 1/cup) works out to $US 40 per kg!

However, the small-scale coffee farmers who grows the coffee only gets 1% to 1.5% of the minimum market retail price! Thus, these numbers clearly reveal that the coffee farmers are MASSIVELY exploited by the multinationals and all those working within the coffee supply chain and MASSIVELY profiting from the MASSIVE exploitation of coffee farmers from around the world.

The “voluntary” role and responsibility of consumers in the (massive) exploitation of coffee farmers…

Indirect participation in exploitation resulting from indifference is far worst than participation stemming from ignorance. In fact, coffee consumers are creating and sustaining – consciously through indifference or unconsciously by ignorance - the poverty of millions of coffee farmers around the world. The market responds to money, not to human needs; thus, if consumers are willing to buy and pay $US 10/kg for processed coffee beans or $US 1 or more for a cup of coffee without any concern or regard for the economic or social welfare of the coffee farmers and for the way in which the coffee was traded, then they are directly encouraging the exploitation of the coffee farmers and creating and sustaining their poverty – through indifference or ignorance.

So what can consumers of coffee do to put an end to the massive exploitation of coffee farmers resulting in their poverty…

Fair-Trade coffee: How “fair” is Fair Trade certified coffee…?

What is Fair Trade?

• Fair Trade is an alternative global trading network that ( officially claims to ) seeks to address structural inequalities resulting from unfair and exploitative world trading rules and practices under the current so-called “free market” global economy, by promoting grassroots development through “direct, equitable trade with farmers.”
• Furthermore, by educating consumers about the issues that affect global poverty, Fair Trade encourages them to use their purchasing power as a political and economic tool to change the prevailing current unfair and exploitative world trade practices which create and sustain poverty.

• To do so, Fair Trade:

1) Purchases coffee and other cash crops directly from farmers organized into cooperatives or other forms of democratic association representing the farmers.
This allows farmers to break free from dependence from the numerous exploitative middlemen along the classic supply chain…( to be replaced by exploitative economic actors working within the highly lucrative and profitable Fair Trade “business”)

2) Fair Trade purchases cash crops at a pre-determined (so-called) “fair” price, which is set as a percentage of the world market price. Furthermore, Fair Trade claims that member farmers are encouraged to invest in sustainable development projects within their respective communities using the income generated from Fair Trade prices… (ie; health, education, sustainable agriculture and environmental protection.)

3) Fair Trade further claims to provides access to export markets in the North (G8 countries) through its own vertically integrated infrastructure (ie; importers, processors, distributors, retailers: +10,000 fair trade retail outlets in Europe and USA; distribution network in over 50,000 supermarket chains; distribution network on the internet and through institutional, commercial and industrial accounts, etc.)

4) Fair Trade provides pre-harvest interest-free financing ( up to 60% of the FOB export contract) to local farmers to help them organize their production and to break free from dependence from exploitative sources of financing and individuals.

5) Fair Trade provides technical assistance to farmers to help them achieve optimal efficiency and productivity within their sector so as to maximize the return on their labor and investment.

6) Fair Trade organizations promote Fair Trade in the export markets (G8 countries) and educate consumers on the issues affecting global poverty so as to incite them to buy and consume fairly traded products so as to help the developing nations break free from the vicious circle of poverty, “aid” and debt caused by unfair global trade practices under the actual “free trade” global world market economy.

Consumers are educated and encouraged to use their purchasing power to change the current unfair global trading system which exploits resources and labor in the so-called “third world” and which is at the root of human poverty and suffering in a large part of the globe.

Table 1. Fair Trade vs World market coffee prices






























Graph 1. Fair Trade coffee prices


Graph 2. Fair Trade vs world market price of coffee
















• Importers of Fair Trade certified coffee pay the above set & so-called “fair” prices for coffee directly to farmers’ cooperatives.
• If the coffee is certified organic, there is a premium of $US0,15 or $US 0,33/kg = $US 3,10/kg
• When the world price exceeds the Fair Trade floor price of $US 2,77/kg, the Fair Trade price will be $US 0,11/kg higher than the world price for non-organic coffee and $US 0,33/kg higher for certified organic coffee.







How “Fair” is Fair Trade…

Now, let us objectively analyze and look more deeply beyond the impressive official rhetoric preached in the Fair Trade literature.

As Table 1 & graph 1 & 2 above clearly indicate, the Fair Trade price is set at a pre-determined ceiling price above the world market price for each respective type of coffee and processing stage. However, the inherent weakness and ineffectiveness of Fair Trade to “fight poverty” lies in the fact that the coffee (and all other Fair Trade labeled commodities) are then exported raw and processed abroad; thus, all the wealth created from the value addition (processing) of the coffee/commodities is carried out outside the country of origin and thus does not economically benefit the producing country in terms of local employment, export earnings, etc. The coffee is then processed, marketed and sold at Fair Trade and/or organic premium prices abroad under the Fair Trade “label” often using misleading and deceitful claims of poverty eradication among small-scale (coffee) farmers in the so-called “Third World” from whom the coffee has been purchased, while in reality it is the foreign economic actors working within the Fair Trade “business” who are profiting and prospering the most from this business model. Consider the percentage share of the “fair” price paid to coffee farmers under Fair Trade ( $US 2.33 -$US2.77/kg) verses the average final retail price ( $US/Euro 20/kg -$US/Euro 25/kg) paid by consumers for Fair Trade and/or Organic coffee beans; the farmers’ “Fair” Trade price is thus only around 10% of the final retail price; the balance ( 90% of the retail price) is pocketed by the (non-farmer) foreign economic traders ( exporters, transporters, local & foreign importing countries’governments, processors, packagers, wholesalers/distributors, retailers, etc.) working within the Fair Trade highly lucrative “business” supply chain…Thus, in this context one cannot but wonder who is helping who under “Fair Trade”…and thus question the real effectiveness of Fair Trade in “fighting poverty”…

Suggested effective alternatives to revive the coffee sector and to improve the economic welfare of small-scale coffee farmers around the world…

1) Addressing and resolving the root economic causes leading to low and declining prices of coffee on the world market, namely, short, medium & long-term market imbalance between supply and demand leading to structural over-supply of coffee on the world market which results in decline in the real price of coffee over the long-run.

2) Local processing and local marketing of coffee by coffee farmers.

A more effective (and sincere) solution to help coffee farmers break-free from the dictate and the vicious trap cycle of the world market – and all those prospering from the massive exploitation of coffee farmers - is to help farmers set up the processing and marketing infrastructure to locally process (roast, grind & package) and market their own coffee directly, thereby significantly adding-value to the coffee and significantly increasing their income in the process. Under this scheme, the coffee is grown, processed & marketed directly - on the local market - by the organization set up and managed by the farmers themselves. All sales proceeds – minus marketing costs - are then equitably redistributed directly to the individual member-farmers.

Under the current system, coffee farmers sell their non-processed coffee beans to exporters at exploitatively low and often unprofitable world prices; the coffee beans are then exported and processed abroad and then re-exported and resold on the local markets at high prices: average retail price for processed coffee beans $US 20/kg (sounds familiar…i.e. essence of the colonial economy and of the logic of the Colonial Pact with all the profits generated from the trade enriching the coffee processors and coffee traders, while leaving the impoverished farmers poor… and desperately struggling for survival…

The coffee sector in sub-saharan Africa and throughout coffee producing countries has collapsed due to massive exploitation of small-scale coffee farmers by coffee traders, Multinationals and (illegitimate) States in numerous coffee producing nations. As a result, millions of small-scale coffee farmers throughout the world have been thrown into further poverty and economic misery.

We all have a moral responsibility to help the weaker members of our society.
Survival of the strongest is the law of the jungle. Uplifment of the weakest is the law of humanity.

As Mahatma Gandhi clearly said:

“ You cannot build a non-violent society based on exploitation. Exploitation is the essence of violence.The extension of the Law of non-violence in the domain of economics means nothing else than the introduction of Moral Laws in regulating international commerce.” Mahatma Gandhi

Truthfully,

Arya.

" In a world surrounded by deceit, telling the Truth is a revolutionary act." George Orwell

ACCRA DECLARATION: Declaration of economic incompetence & mediocrity....

2nd ALL AFRICA COCOA SUMMIT
ACCRA, GHANA
03-06 OCTOBRE 2007

ACCRA DECLARATION

Declaration of economic incompetence & intellectual mediocrity

Below is the Accra Declaration made by the African cocoa producing countries attending the 2nd All Africa Cocoa Summit in Accra, Ghana from 03-04 September, 2007.

The official mission and objective of the Summit is to find an effective solution to stabilize cocoa prices at remunerative levels for both cocoa producing countries and millions of cocoa farmers across Africa.

I have added my own observations and comments with reference to each one of the Statements contained in the Accra Declaration.

I welcome your comments & feedback. Thank you.

ACCRA DECLARATION

1) ELIMINATE TARIFFS TO IMPROVE MARKET ACCESS

Personal observations:

Eliminating (escalating) tariffs in consuming countries will no doubt favor local-value addition in producing countries. However, it will not resolve the root economic cause leading to low, declining and un-remunerative prices of cocoa on the world market, namely the structural over supply of cocoa on the world market resulting from market imbalance between supply & demand.

Since over 90% of the cocoa in West Africa is currently exported raw, it is crucial to FIRST stabilize cocoa prices at remunerative levels to generate sufficient financial resources from cocoa exports required to build the infrastructure and the capacity to locally process the cocoa, thereby creating local employment, significantly increasing income and gradually breaking-free from the dictate and the vicious trap cycle of the commodities world market.

Assuming that cocoa producers were successful in eliminating escalating tariffs in cocoa/chocolate consuming countries (which is wishful dreaming since the cocoa & chocolate industry will obviously not dig its own economic grave by removing escalating tariffs on cocoa…) without FIRST stabilizing cocoa prices at remunerative levels, it will still not enable cocoa producing countries to export processed cocoa in consuming countries since cocoa producing nations will not be in a position to generate sufficient financial resources from its non-processed cocoa beans exports ( +90% of total annual production) to set up the processing infrastructure and the capacity to economically process cocoa locally.

This is obvious! You cannot put the cart in front of the horse!

2) EXAMINE THE IMPLICATIONS OF THE USE OF SUPPLY MANAGEMENT & OTHER MARKET INSTRUMENTS WITH THE VIEW TO ACHIEVING MARKET EQUILIBRIUM AND REMUNERATIVE PRICES.

Past ( Copals’ Gold Coast cocoa’s farmers’ strike in the 1940’s) & more recent failed supply management attempts ( Copal’s 2006 Libreville Declaration on Production Management Program) have all failed because Copal’s policies’ to stabilize cocoa prices at remunerative levels have failed to effectively identify, address and resolve the root economic cause leading to low, volatile, continuously declining and resulting un-remunerative cocoa prices on the world market.

Copal: A toothless and ineffective dog…

Furthermore, Copal members producers have repeatedly – since the creation of Copal more than 40 years ago- failed to respect and to implement the policies developed and prescribed by Copal to stabilize cocoa prices at remunerative levels, which seems to clearly indicate that Copal members’ are not disciplined and seems to suggest that they have no faith in the effectiveness of Copal’s economic policies.

The 2006 Abuja Declaration of the 1st All Africa Cocoa Summit held in Nigeria in 2006 ,has also brilliantly failed to effectively address & resolve the root cause leading to volatile, low, declining and un-remunerative prices of cocoa on the world market (structural over supply). Instead of using supply management instruments to address and resolve the structural over supply of cocoa on the world market, the Abuja Declaration has wrongly recommended and adopted the use of demand management market instruments ( local value-addition & promotion of local consumption) as a means to address the structural over supply of cocoa on the world market.

Copal & cocoa producers in Africa need to consider & adopt the cocoa cartel strategy which I have proposed as an effective solution to achieve market equilibrium between supply & demand to stabilize cocoa prices at remunerative levels ( see copy of Cocoa Cartel proposal on this blog.)

However, it is surprisingly depressing and disappointing to observe that Copal has not even considered or proposed this solution to African cocoa producing countries during the 2nd All Africa Cocoa Summit held in Accra and has not even mentioned it in its Accra Declaration.

As the following proverb rightly says: “God has put a limit to human intelligence, but he has put no limit to human stupidity…”

3) CALLED ON MEMBERS OF COPAL TO ENCOURAGE HARMONIZATION OF INTERNATIONAL QUALITY STANDARDS & PROCEDURES USED TO MEASURE QUALITY AND PROVIDE FINANCIAL RESOURCES TO BUILD HUMAN CAPACITY & TECHNOLOGICAL CAPACITY FOR QUALITY INSURANCE.

Personal observations:

A perfect example of sterile “intellectual masturbation” which clearly reveals the intellectual paralysis and incapacity of Copal and its members to identify, address and resolve the root economic cause plaguing the cocoa sector: (i.e. Structural over supply of cocoa resulting from market imbalance between supply & demand and leading to low, volatile, constantly declining real prices of cocoa resulting in *un-remunerative cocoa prices on the world market (i.e. *prices unrelated to **real cost of production (i.e. ** not taking into account inflation, currency depreciation, terms of trade, etc) , which naturally affects quality…!)

“Rectify one angle of the square and the other angles automatically rectify themselves…” Mahatma Gandhi.

4) PROMOTE DOMESTIC CONSUMPTION OF COCOA

Personal observations/comments

See above comments relating to 1) Removing tariffs to improve market access.

To promote domestic consumption – which both Copal & its members have brilliantly failed to do over the last 40 years – you need to develop and implement intelligent and coherent development policies to locally process the cocoa and other commodities; and to locally process cocoa, you need to generate sufficient financial resources to invest in the processing infrastructure and to build the capacity to locally process the cocoa and to promote and to develop local consumption of cocoa products. However, to generate the financial investment resources, you need to FIRST stabilize cocoa prices at remunerative levels since currently over 90% of the cocoa produced in West Africa is exported raw at un-remunerative prices and at a loss for cocoa farmers…!

Again, this is (or should be) self-evident!

5) PROVIDE FUNDING FOR RESEARCH

No further comment!!! Cannot respond repeatedly to unintelligent statements! Refer to above observations/comments.

6) RESOLVE TO ENHANCE DOWNSTREAM RESEARCH & DEVELOPMENT FOR VALUE ADDITION

How do you “enhance downstream research & development” for local value addition if your sector is bankrupt due to un-remunerative cocoa prices because you (Copal & its members) have been incapable to develop & to implement intelligent and coherent economic policies to (let alone even implement local value addition ) obtain and secure remunerative prices for their cocoa farmers…???

7) STRENGHTEN INTERNATIONAL COOPERATION AMONG AFRICAN COCOA PRODUCERS TO ENCOURAGE OTHER AFRICAN PRODUCERS TO JOIN COPAL.

COPAL is a toothless dog…as its +40 years history clearly testifies...In fact, Copal has brilliantly failed to identify, address and resolve the root economic cause leading to low, volatile, constantly declining and un-remunerative real prices of cocoa over the last +40 years since its creation…So do not waste declining, scarce and fast depleting cocoa financial resources…to pay incompetent bureaucrats…with the cocoa farmers’ hard earned (but not paid) income…!

8) “TOUCHED” ON CHILD LABOR… RESOLVED TO TAKE MEASURES TO ELIMINATE THE WORST FORMS OF CHILD LABOR ON COCOA FARMS.

Beyond the obvious commercial hypocrisy and lack of concern for the real issue of slave children working on cocoa plantations, the only effective “measure” to effectively eliminate child forced labor on cocoa plantations is to pay the cocoa farmers fair and remunerative prices so as to give them the financial means to hire labor on their cocoa farms. And to do so, market imbalance leading to structural over supply must be addressed and resolved. That is the only and most effective solution to resolve and eliminate the use of forced child labor on cocoa plantations.

The other currently widely and totally ineffective approach adopted by the cocoa industry is the use of deceitful propaganda preached by cocoa/chocolate industry-funded organizations such as the Cocoa Foundation, Cargill, etc…denying the existence and use of forced child labor and trying to cover the issue through deceitful propaganda and ineffective “cosmetic” social projects in cocoa growing countries…

9) IMPROVE PRODUCTIVITY THROUGH PLANTING OF DISEASE RESISTENT & HIGH YIELDING PLANTING MATERIAL…DELEGATES RESOLVED TO PROMOTE INTENSIFICATION OF PRODUCTION TO IMPROVE INCOME FOR FARMERS…AND TAKE MEASURES TO MAKE COCOA FARMING MORE ATTRACTIVE FOR YOUTHS.


Summum of stupidity…!!! Annual production surpluses over the last + 40 years have led to a structural over supply of cocoa on the world market ( 2006 world stocks levels= 1.5 million metric tons = 50% of annual demand = 6 months stocks!) leading to low, volatile, constantly decling and unremunerative cocoa prices on the world market. As a result, millions of cocoa farmers in Africa have been thrown deeper into poverty. Thus, by resolving to improve productivity and to promote intensification of production cocoa producers are actually digging their own economic graves and those of millions of cocoa farmers instead of “improving income for farmers…” The summum of stupidity has been reached through this Statement…!

9) DELEGATES NOTED THE ECONOMIC IMPORTANCE OF COCOA IN COCOA PRODUCING COUNTRIES IN AFRICA AND IN THE LIVEHOODS OF A LARGE PERCENTAGE OF ITS POPULATION AND NOTED THE DECLINE OF REAL PRICES OVER THE LAST TEN YEARS AND THE INEQUITABLE DISTRIBUTION OF INCOME AMONG STAKEHOLDERS.

Bravo!!! At least cocoa producing countries have realized the importance of cocoa in their economies and among a large portion of the farmers and the local inhabitants!!! They have also realized the decline in real prices…and the massive exploitation to which they are subjected!!! So the billion dollar question is: WHAT ARE YOU GOING TO DO ABOUT IT…?

Final reflections…

Beyond the unbelievably & limitless level of economic & intellectual mediocrity that the Accra Declaration reveals, what is crystal clear is that both Copal, its members and other cocoa producing nations in Africa have BRILLIANTLY failed to identify, address and resolve the root economic cause leading to low, volatile, constanly declining and un-remunerative cocoa prices on the world market for over half a century since so-called “independence”.

What is even more depressing and discouraging for me is that even after having written and explained in detail to both Copal’s General Secretary – Mr. Sona Hope Ebai – and to the Producers’ Representative/spokesperson at the ICCO - Mr. St-Cyr Djikou - the root economic cause leading to volatile, low, contantly declining and un-remunerative cocoa prices and proposed an effective policy and solution to stabilize cocoa prices at remunerative levels ( setting up a cocoa cartel), neither has acted upon it ( see copy of email exchanged between myself and Mr. Hope Ebai on this blog) In fact, to this day (+3 months since I wrote to him), Mr. St-Cyr Djikou has not even acknowledged nor responded to my letter…

With GREAT disappointment and despair for the fate of millions of exploited (cocoa) farmers accross Africa…

Truthfully,

Arya

« In a world surrounded by deceit, telling the Truth is a revolutionary act. » George Orwelll

ASHOKA FELLOWSHIP APPLICATION PROCESS : INEFFECTIVE AND INEFFICIENT

Ashoka aims " to build a world that responds quickly and effectively to social challenges" but evidently seems incapable to respond quickly and effectively to its own Ashoka Fellowship application process...!

Please find below a copy of emails exchanged between myself and the Ashoka regional office for East Africa with reference to my Ashoka Fellowship application...

RE: Ashoka Fellowship Application...‏

From: Yajna Centre (arya@yajnacentre.com)

You may not know this sender. Mark as safe | Mark as unsafe

Sent: March 6, 2007 2:58:08 PM

Reply-to: arya@yajnacentre.com

To: East Africa (eastafrica@ASHOKA.ORG)

Cc: annetum@ashoka.org; DSerwadda@ASHOKA.ORG; musuuza@ashoka.org; akaturamu@yahoo.com

TO: ASHOKA EAST AFRICA Uganda, Kampala Mrs. Annet Tumwijukye, Please allow me to express and share with both yourself and your colleagues at Ashoka my thoughts and reflections about my disappointing experiences with your organization with regards to my Ashoka Fellowship application submitted to you over 6 months ago, on 21 August 2006. First of all, I must admit that, although you had indeed pointed out to me that the Ashoka Fellowship selection process is “long and rigourous” – I did not think that it would take over a year to “maybe” meet with you and your colleagues “sometime when you come to Tanzania” for the first interview…In fact, when I contacted you in November 2006 to inquire about the status of my application, you told me that: (see copy below) . Wed, 15 Nov 2006 01:11:37 -0500 From: "East Africa" View Contact Details Add Mobile Alert To: arya@yajnacentre.com, "Annet Tumwijukye" CC: "Debbie Serwadda" , "Abu Musuuza" , "nkaturamu" Hello Arya, Thank you for the email. I am fine and doing well. Indeed it has been quite sometime since I last communicated to you regarding your application for the Ashoka fellowship. I apologize for that. But on the other hand, I should have informed you that the Ashoka selection process is long and rigorous. I have not forgotten you yet. I have your application and documents on file and hope to meet you sometime when we come to Tanzania. I will let you know when this will be. I encourage you to keep in touch and to contact me incase you need more clarifications on this issue. Have a good day. Annet. I then wrote back to ask you to please tell me when you were planning to travel to Tanzania so as to allow me to organize my future plans accordingly.(see copy below) Wed, 22 Nov 2006 04:01:35 -0800 (PST) From: "Yajna Centre" Add to Address Book Add Mobile Alert Subject: Travel plans... To: "annet tum" CC: "Deborah Kaddu Serwadda" , "musu uza" , "akatu ramu" , eastafrica@ashoka.org Hello again Annet, I hope that you are well. I wish to inform you that I plan to be travelling within the cotton growing regions of Tanzania next week and will thus be away from Dar es Salaam. Therefore, could you please let me know when you plan to travel to Dar es Salaam so that I may organize my future plans accordingly to be able to meet with you. Thank you. Kind regards, Arya. I never got a response from you regarding your travel plans to Tanzania. Nevertheless, I chose to cancel a trip I had planned in December in the cotton growing regions of Tanzania, while waiting for your response; unfortunately my inquiry remained unanswered to this day and I never saw you in Tanzania nor did I hear back from you since…Elementary rules of courtesy and of professionalism dictate that you at least respond to correspondence that is addresses to you! I then recently wrote to you on 02 March ( see copy below) to inquire about the status of my application – since I had not heard back from you since November - and was shocked to read that: " Yes, we still have your application for the Ashoka > fellowship but we can not put it into consideration > before we meet with you. We have not been to Dar Es > Salaam for quite sometime but we will plan for this, > maybe early next year..." ( see copy below) " WE CANNOT PUT IT INTO CONSIDERATION BEFORE WE MEET WITH YOU...WE WILL PLAN FOR THIS MAYBE EARLY NEXT YEAR...!" You must be extremely busy at Ashoka in Uganda…to plan to meet with me "MAYBE early next year...", although I noticed that you have only elected 3 fellows in Tanzania over the last 6 years since you opened a regional office in Uganda in 2001. Frankly, given the “long and rigorous” selection process, I am not surprised of this outcome… Furthermore, I do not quite understand why a candidate to the Ashoka Fellowship must wait for YOU to travel to his area of residence to meet with him…? Would it not be easier, more time-efficient and more cost-effective to have a candidate travel to the nearest Ashoka regional office…instead of waiting for the Ashoka office/representative to travel to the candidate for the first interview…??? In any case, my role is not to make reforms within the selection process at Ashoka. I hereby limit myself to sharing my disappointing experiences with you and your colleagues. Hopefully, you and your colleagues will use my remarks to make some much needed reforms within the Ashoka Fellowship selection process. I can’t help but wonder how long the whole selection process takes on average, if the first interview "MAY" take place over a year after the application is submitted…? In its website, Ashoka states as its vision: “Ashoka envisions a world where Everyone is a Changemaker: a world that responds quickly and effectively to social challenges, and where each individual has the freedom, confidence and societal support to address any social problem and drive change." However, it is difficult to imagine how Ashoka can “respond quickly and effectively to social challenges” when it evidently seems incapable of responding quickly and effectively to Ashoka Fellowship candidates…and its own selection process? Implementing this vision in practice is crucial to successfully resolving urgent social challenges. As far as my project is concerned, responding “quickly and effectively” is of crucial importance. As indicated in my Project Idea, both the cotton and the textile sector is near collapse in Tanzania and throughout sub-Saharan Africa mainly as a result of massive illegal cotton subsidies paid to cotton farmers in the US/EU and is seriously threatening the survival of both the cotton sector and the millions of cotton farmers who rely on cotton farming for their livelihoods in Tanzania and throughout sub-Saharan Africa. Beyond my +40 pages detailed analysis of the crisis prevailing within the cotton & textile sector in SSA submitted to you, I have, over the course of the last few months, forwarded you with several recent press articles relating to the cotton crisis in Africa and describing the resulting plight, and the REAL suffering and poverty of the African cotton farmers, hoping that you would realize how severe the crisis is and how urgent it is to act “quickly and effectively” to help the millions of suffering African cotton farmers who are caught under the crushing wheel of poverty, hunger and misery. But evidently, my efforts have been vain! INACTION ROOTED IN INDIFFERENCE IS FAR WORSE THAN INACTION STEMMING FROM IGNORANCE... In any case, I shall continue fighting for global social and economic justice with or without Ashoka. Fortunately, Ashoka does not have a monopoly over social and economic justice and, as history testifies, those few great men ( i.e. Gandhi, Martin Luther King, Mandela, etc) who really made a difference in the world, were able to successfully pursue their cause without ( fortunately) having to go through Ashoka’s Fellowship selection process… I wish you all at Ashoka success in your mission to change the world... Truthfully, Arya A. Tajdin Executive Director Yajna Centre Dar es Salaam, Tanzania --- East Africa wrote: > Hello Arya, > > > > Thank you very much for all your communication. Yes, > we still have your application for the Ashoka > fellowship but we can not put it into consideration > before we meet with you. We have not been to Dar Es > Salaam for quite sometime but we will plan for this, > maybe early next year. Please get to know that the > Ashoka selection process is long and always open. I > apologize for being silent so such along time but I > did not forget all about your application. Please, > keep in touch for updates and have a good day. > > > > Annet. > > > > _____________________________________________________________________________________ > ASHOKA East Africa > Office No. 3 Kisozi Complex, Kisozi Close (Off > Kyaggwe Road) > P.O. Box 71510, Kampala Uganda - East Africa > Tel: +256 41 348780, +256 31 261190 > Fax: +256 41 230359/235681 > www.ashoka.org <http://www.ashoka.org/> > www.changemakers.net <http://www.changemakers.net/> > > > ________________________________ > > From: Yajna Centre [mailto:arya@yajnacentre.com] > Sent: Fri 3/2/2007 3:34 AM > To: Annet Tumwijukye > Cc: Debbie Serwadda; Abu Musuuza; nkaturamu; East > Africa > Subject: Fwd: Ashoka Fellowship Application... > > > Hello Mrs Annet Tumwijukye, > > I am writing to you to inquire about the status of > my Ashoka Fellowship application sent to you over > six months ago on 21 August 2006 ( pls see copy > below). Surprisingly, I have not heard back from you > since. The last time I contacted you in November > 2006, you told me that you would be travelling to > Tanzania in the near future and would meet with me > then. Unfortunately, I have only met utmost silence > on your part since...Could you pls tell me whether > my application is being considered and its status? > Thank you. > > Arya. A Tajdin > Executive Director > Yajna Centre > Dar Es Salaam, Tanzania > Cell: (+255) 753-170010 > > Yajna Centre wrote: > > Date: Mon, 21 Aug 2006 05:42:22 -0700 (PDT) > From: Yajna Centre > Subject: Ashoka Fellowship Application... > To: annet tum > CC: Deborah Kaddu Serwadda , > musu uza , akatu ramu > , > eastafrica@ashoka.org > > > TO: ASHOKA EAST AFRICA > ATT: ANNET TUMWIJUKYE > > > Dear Mrs Annet Tumwijukye, > > I hope that you are well...Please find enclosed the > information you requested. I naturally remain at > your disposal for further information and/or > clarifications. > Meanwhile, I thank you for looking into my project > and for considering my application to become an > Ashoka Fellowship member and I look forward to > hearing back from you in the near future. > > enclosed: > > 1) Ashoka Fellowship Application form > 2) Ashoka Project Idea > > Thank you for confirming reception. > > Kind regards, > > > > > Arya A. Tajdin > Executive Director > Yajna Centre > Dar es salaam, Tanzania