From poverty to power - Oxfam-Québec

FROM POVERTY TO POWERin their relative power – millions of isolated small producers versus ahandful of corporate giants. Just four companies account for 45 percent of all coffee-roasting activities. 29 In cocoa, four companies control40 per cent of the grinding industry, 30 and similar stories can be toldfor other food sectors. Six companies now control 80 per cent of globalpesticide sales, 31 down from 12 firms in 1994. 32Some transnational corporations have stepped belatedly into rolesvacated by the state under structural adjustment programmes, albeitwith a very different approach. Global seed and fertiliser giants nowprovide small-scale farmers with inputs, finance, and extension services.Such services are sometimes part of production agreements that alsoinclude a guaranteed price, a practice known as ‘contract farming’. Theimpact on small farmers of such arrangements depends on the natureof the contract – there are examples of both ‘good’ and ‘bad’ contractfarming. When it works well, it combines the best of both small andlarge farm systems – the higher productivity per hectare of smallfarms and the access to capital, markets, and technology enjoyed bylarger players. 33However, contract farming can also involve extortionate interestor extraction of profits, and may push smallholders towards themono-cropping favoured by the companies. The arrangement shiftscontrol away from women, who still do much of the work but nolonger receive the money because contracts are usually signed by men.Most seriously, under contract farming, poor farmers must bear allthe risk inherent in their trade. If crops fail it is the farmers, not thecompanies, who take the hit, and contract farmers can easily get intoserious debt as a result. 34A study of contract farming in Thailand found that farmers’incomes fluctuated wildly. 35 Farmers had to take on bank loans thattook five to ten years to pay off, while companies signed contracts onlyyear-to-year. Some farmers were left without a buyer for more than sixmonths, with no notice or compensation. The average debt of householdsinvolved in contract farming was more than ten times thenational average for farming households, making it almost impossiblefor the farmers to quit. They often never received a copy of the contractbinding them, and sometimes did not even have the opportunity toread it. The study concluded that the farmers are de facto employees,124