The number of posts, articles and new reports on the plight of produce farmers (and I am including tea in this realm), due to retailer purchasing tactics, which dislocates true value from investor returns, is myriad and yet nothing ever changes! Sorry, something does, farmers get poorer and retailers get richer; a generalization but a pretty good one!
So, what are the hindrances to affecting a sustainable and morally just relationship between, let's face it, consumers and farmers? One has to say, transparency, education and, yes, honesty!
I am not suggesting that Retailers all have hearts of iron, there are many excellent initiatives by this industry, from blockchain enabled transparency to a plethora of direct trade/relation initiatives that have brought the two sides closer BUT the issue remains; retail purchasing, not pricing, does not guarantee a living income and economic sustainability to farmers!
Is it all about the Retailer? No, the fact is that if CPG company X or Producer Y is prepared to accept the Retailer's bid then the culpability is shared and driven on up the supply chain to those least able to manage adverse pricing trends.
The NGO community produces much evidence based programming at origin but also contributes negatively to the issue in many cases. As we know, consumer facing certifications may be interpreted by shoppers as including the provisions for life while actually not delivering this at all, in fact most programmes do not have this as a mandate for passing. They may offer premiums but these, like differentials in futures, are merely top ups to market rates and those are determined by, yes, the buyers and the sum of market plus top up may still be unsustainable for farmers.
This is not a call for market manipulation either; we all know that this is sheer folly; the market determines it's own level based on supply and demand and should not be meddled with!
The answers to this perpetual groundhog day is first and foremost directional transparency to the entire supply chain, from the original input costs to living income requirements (including working and living conditions, appropriate for self determination and improvement) and costs to market from there.
Education, ably assisted by transparency.
Is this a rant against commercial enterprise? Not a bit of it, every facility within a supply chain needs to manage their business and their owner/shareholder expectations. If not satisfied through one category then the business must inevitably seek another, more profitable one and we need all participants! This very risk, demonstrated by multinational sell offs, of tea interests, reducing visibility of tea in certain markets is a warning sign to all that adhere to a model that looks to rebalance the share of overall margin.
So education is an imperative, why does she need me and why do I need him?
Zero cost management is usually applied by businesses but should be extended to supply chains, in order to inform all along it of the true cost from bush to retail till and what the value of each activity employed is.
Lack of clarity to financial reality
Obfuscates true production values and, therefore pathways to success for farmers
Enables external entities, Governments, NGOs, Investors to execute self serving policies and strategies that are not in the best interest of the industry or those employed within it.
Enables purchasing departments to pay market rates irrespective of economic sustainability
leads to unwitting consumer enablement of bad practices through ignorance
Next comes Honesty, "Oooh painful!"
We can have access to truth but what we do with it is quite another thing and honesty can seem like an imprudent cost, on the face of it, but will inevitably lead to healthier supply chains.
Honesty for Farmers may include a cease and desist order on producing tea but it could be enlightening them to the quality/price equation. Either way, they can design for success and take ownership of their responsibility in the foundations of the industry's offering.
The same applies to Producers; the incessant focus on costs comes from the continual price erosion in tea ( in real terms) has lead to increased throughput at the cost of quality, without an honest attendance to the industry need for more tea but rather an unsung war of attrition.
And those external influencers have to look honestly at the impact of their policies and strategies, whether they were truly designed to assist, or more likely to harm, the very people most precious to them, voters and/or subjects for intervention.
Blending
As with the blending of teas from different origins, we cannot employ our choice of transparency or education or honesty, we require attendance to all ingredients.
Take zero cost management, this is of no use at all if we are not going to, first, establish whether our current industry is fit for purpose. Are we indeed producing what the consumer wants and are we equipped for changes required, where identified?
If we clarify this piece then how do we manage zero cost and margin expectations, from top to bottom, honestly and beyond reproach? It is not at all easy but this is where transparency is required, where verified sources for everything from living wage to a satisfactory return (profit + costs) for all must be defined, agreed and entered into a system that protects these data points and ensures that no circumvention, of them, can occur in the calculation of the production, movement, placement and sale life of a transaction. Immutability and stage gate capabilities are the stuff of blockchain or other distributed ledger systems and, with these already providing transparency and traceability for retailers, it should not be a giant leap for the inauguration of a new supply chain management system that can deliver accountability for an end to end floor price, delivering guidance for value, rather than price, for procurement teams. For those buying teams writhing at the thought of this, consider the brand health opportunity for such a strategy as well as the sustainability of your category.
I accept that this has been a note on commercial sustainability alone and is not the b end of it all; working conditions, gender issues, the right to self determination among others are parameters that must be designed for too but trying to address these issues without giving financial security is being disingenuous to the rights of others to have that which we lucky few have.
Whatever your message to consumers is, be honest and transparent. It is not a perfect industry, by any means, but it delivers livelihoods to millions but must do better and earn it's right to survive. Drinking tea helps makes this possible, not doing so condemns the industry and those within it.
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