Examination of Witnesses (Questions 20
- 39)
TUESDAY 27 FEBRUARY 2007
HON ROOSEVELT
SKERRIT AND
MS HARRIET
LAMB, CBE
Q20 Chairman: Why does DFID need
to give you a grant? Why does not Marks & Spencer or Sainsbury
do it?
Ms Lamb: Absolutely. We could
always do more but at some point we have to cut our cloth. At
the moment 75% of all our operations are financed out of the licence
fee which is what companies pay when they put the FAIRTRADE Mark
on the product. We believe that that is about the right balance.
That is quite a transformation over recent years; it is not that
long ago that the balance was different and we were very dependent
on grant funding, but in the end our model is sustainable; it
has that mechanism within it because companies pay the licence
fee. What the extra bit of grant funding from government, the
public, trusts and foundations does is preserve our independence
which is absolutely critical to the public's trust and our ability
to work with the most disadvantaged farmers.
Q21 Chairman: Mr Skerrit, you have
been extremely patient but I hope you feel that has been a helpful
introduction from our point of view. Thank you very much for being
here. Obviously, your country is heavily engaged in this, particularly
in bananas. Perhaps you would spend a couple of minutes explaining
from your point of view as Prime Minister of Dominica why Fairtrade
is of interest to you and what your involvement in it is. We have
a number of questions, so perhaps you would make a brief introduction.
Mr Skerrit: Thank you for allowing
me to be here this morning. To put it in context, one looks back
to the WTO ruling against the EU banana regime which afforded
us a preferential share in the UK market based on our historical
arrangements with the UK. In 1992 the Windward Islands exported
on average about 274,000 tonnes of bananas to this country. By
1996 that had fallen to 67,000 tonnes. We saw a decrease in direct
employment in the industry; there was a reduction from 15,000
to 3,000 farmers in the same period. There was a deep hopelessness
within the agricultural sector in the Windward Islands. People
felt that the markets would be erased over the next couple of
years, in about 2000, and gradually farmers left the sector and
banana production in particular. One understands the tremendous
social dislocation resulting from the action of the WTO. Poverty
and unemployment levels, especially among young people, increased
and crime and violence increased in all the Windward Islands.
With the advent of Fairtrade hope was given back to farmers and
many of those who had left the industry returned. As a representative
of the people—here I speak for the entire Windward Islands—I
appreciate and understand the importance of the banana sector
to our economic survival. What Fairtrade has done for us is ensure
that the social stability of our country is maintained; that poor
people, particularly in rural communities, can enjoy a better
standard of living as a result of a committed price in the UK
market, and that once farmers produce bananas under the Fairtrade
label they will be sold in the UK market and consumers will purchase
them. There has been a multiplier effect on our economies as a
result of Fairtrade. We have to understand the tremendously serious
recession that occurred after the WTO ruling in every single island
in the Windward Island group. That recession reached unmanageable
levels. A number of us have engaged our creditors in debt restructuring
exercises. Some of us have had IMF structural adjustment programmes
because of the remarkable decrease in the profitability of industry.
In the case of Dominica, it went from an average of US$30 million
to about US$8 million a year. One can understand the serious fiscal
gap that has been created as a result of the WTO ruling. We have
been able to take decisions to close that gap. When one looks
at the banana exports sold under the Fairtrade label and the economic
growth of the country it is certainly assisting. Once there is
a decline in banana production and export there will be a decline
in the growth of the economy. We have seen a gradual increase
in growth as a result of the increase in the export of bananas
under the Fairtrade label. As Prime Minister I am not an adviser
or employee of the Fairtrade Foundation, but I understand its
importance to our economy and the people throughout the Windward
Islands. That is why I have decided to come here and speak on
behalf of farmers and also to thank the British people for standing
by the Fairtrade label as a matter of principle. That is why we
seek from the Caribbean standpoint to have principles enshrined
in the Economic Partnership Agreement with the European Union.
Mr Battle made a point about factories leaving the north and going
south. In this Agreement there are no enshrined principles; it
is purely about trade. What we say to the European Union is that
certain principles must be enshrined and must be at the core of
the Agreement, and let development rather than trade and economics
be the focus. Without that principle, yes, we will have agreements
but there will be no positive results emerging from them.
Q22 Chairman: You said that production
fell from 274,000 to 67,000 tonnes in four years and from US$30
million to US$8 million. Can you give an indication of what you
are back to now?
Mr Skerrit: In Dominica over the
past few years when we have been involved in the sale of bananas
under the Fairtrade Foundation we have moved from US$8 million
to US$15 million, and it is growing. We now have young people
who are coming into banana production and who before could not
be attracted to that industry. It is also due in part to the social
premium to which farmers have access. What better way to promote
democracy in third world countries where you allow people to take
on the leadership, management and the implementation of projects
and programmes in those countries? In Dominica's case you can
go to every single community and see the impact of the social
premiums on farmers. The Government takes no part in deciding
which project farmers fund, how it is implemented, who is contracted
to do it and who is employed on it. It is left entirely to the
farmers to decide it. We have somebody who is illiterate but sits
in a meeting and contributes to a decision to assist a particular
school or build a playing field or basketball court because he
has some young people in his community who are becoming involved
in delinquency. Those people are willing to find a mechanism and
create facilities where children can channel positive energy and
move away from crime. It is amazing to see the joy and sense of
achievement among those poor farmers as a result of the social
premium which Fairtrade offers them. We have to understand that
not one cent—or penny in your case—goes into the farmers'
pockets directly. Every dollar or cent that is received goes straight
into the communities. In our case over the past few years we have
received well over US$2.3 million which has been spent across
the country. One can understand the tremendous positive impact
that that has had on various communities. That is one of the reasons
why I am a strong advocate of Fairtrade. When we started there
was a certain hesitance on the part of farmers to get involved.
Personally, I had to go to farms and on the streets to meet farmers
and encourage them to participate in Fairtrade. We felt that the
only way we would survive in this environment was for farmers
to become organised and ensure that bananas were sold under the
Fairtrade label. We have seen tremendous benefits coming out of
that arrangement.
Q23 Mr Singh: When we were in Ethiopia
we found that a minority of coffee farmers and growers were organised,
and yet in the Windward Islands last year 72% of your banana exports
were Fairtrade. That is quite a high figure. How have you achieved
that? Will it rise, or have you reached the peak in terms of Fairtrade?
Mr Skerrit: I can assure you that
over the next couple of years you will see 100% of Fairtrade bananas
coming from the Windward Islands. The reason for it is that the
governments, local groups and farmers are involved. In some countries
people may be fearful of becoming organised, perhaps for political
reasons, but we believe that the only way to get out of poverty
is by people organising themselves and playing their part in nation-building.
If we keep giving handouts to our people in no way will they get
out of poverty. Fairtrade gives people the opportunity to manage
their own affairs in their respective villages and communities,
and that is why you see a high percentage of farmers who are organised
under the Fairtrade label. That number will certainly increase
by 200% over the next couple of years. Once there is a guaranteed
price for bananas in the UK market you will see farmers becoming
involved. Importantly, this is not only about bananas. Dominica
has also started to export coconuts and grapefruits. Some of you
may remember that in the 1970s we exported some of the best grapefruits
to the UK. We are looking at the export of grapefruits, oranges
and pineapples and a number of other agricultural products and
fruits for the purposes of Fairtrade. Another area where we can
do well with Fairtrade is to take advantage of our growing tourism
industry. How do we sell more Fairtrade products to the cruise
ships that arrive in Dominica and the Windward Islands? At present
we sell bananas, pineapples and jelly nuts to cruise ships that
call at Dominica, but we should like to sell them under the Fairtrade
label to tourists sensitive to the fact that it is a place which
does not promote exploitation, child labour, bad farm practices
or the destruction of the environment. The Fairtrade label speaks
to the promotion of best farm practices, the protection of the
environment and ensures that if a man works for a day he is paid
for that day and not half a day, and we have to sensitise tourism
to that fact.
Q24 Mr Singh: Has any attempt been
made to promote resistance to Fairtrade by private companies or
profiteers?
Mr Skerrit: No. I am absolutely
certain that there are several of our merchants in Dominica and
the rest of the Windward Islands who would love to sell Fairtrade
products.
Q25 Ann McKechin: Mr Skerrit, can
you clarify for the Committee the difference in price between
a Fairtrade product and a non-Fairtrade product that the farmer
obtains? You have given some indication that communities make
their own decisions about how they use the social premium or benefit
from Fairtrade products. Can you give us some examples of how
it is being used by local communities? In what sectors are they
investing the money? Is it going into health or education? In
addition, certainly one of the problems that the Windward Islands
have always suffered from economically is over-reliance on one
particular crop. To what extent do you think the social premium
can be used to try to assist diversification into other forms
of production?
Mr Skerrit: As to whether or not
farmers sell under the Fairtrade label, the good thing about it
is that it guarantees a minimum price for the product, whereas
under other labels it fluctuates. Difficulty arises when farmers
cannot get a minimum price for their product.
Q26 Ann McKechin: Can you give some
indication of what the range would be between the set price under
Fairtrade and prices obtained elsewhere?
Mr Skerrit: I have been told by
my chief executive that there is about a 25% difference. As to
those areas where farmers use the premium, we are talking about
the construction of farm access roads and the purchase of school
buses. In some cases students walk over a mile to school. This
is no longer the case in many communities in Dominica. One is
talking of scholarships and agricultural credit extended to farmers.
Agricultural credit assists farmers in their diversification efforts.
Most small farmers are engaged not only in banana production;
they are involved in all sorts of root crops and citrus. That
is why they are now looking at diversifying under the Fairtrade
label. Our marketing arm in the UK, WIBDECO[3],
is now in discussion with the Fairtrade Foundation to assist us
in setting the standards and requirements for other areas. A consultancy
study has been agreed to look at the supply of products for the
Windward Islands to sell in the UK market. Certainly, over-reliance
on one crop is reducing. Once we have a guaranteed market and
a fair price our people will work and produce, and that is what
Fairtrade seeks to do with us in the Windward Islands and why
governments are so supportive of the effort. We in the Windward
Islands are not interested in handouts; we do not want to come
to the UK and ask the British Government for £5 million.
All we say is that if you assist Fairtrade through this grant
it can assist us in developing the markets and products and we
can be independent. We can raise money, employ our people, pay
our debts, pay salaries and meet our commitments. That is what
we say to our friends here. There is a commitment to work. A former
Prime Minister, Dame Eugenia Charles—some of you may know
her—came here to speak to a most distinguished former Prime
Minister of Great Britain, Lady Thatcher. She said to her that
if we could not have some kind of agreement it would be either
bananas or drugs. That was the debate. Drugs would come from South
America, transit through the Windward Islands and get onto BA
and Virgin Atlantic flights every day to this wonderful country.
What we need to do is find constructive and sustainable ways to
stem that, and the only way to do it is to keep people gainfully
employed. I believe that this grant would be used for the benefit
of all concerned. We in the Windward Islands seek to enshrine
and entrench in the Economic Partnership Agreements the principles
for which Fairtrade Foundation stands. We believe that without
those principles or agreements we cannot do it. We have to set
certain standards. We do not want certain things to be dumped
on us that are no longer possible in the European Union because
of the existing laws in the EU. It is absolutely critical that
the necessary support for the Fairtrade Foundation be continued,
because it will make a remarkable difference. I believe that it
will be a model for us to look at when entering into similar trade
arrangements. We have repeated this often enough.
Q27 Joan Ruddock: You have given
us a tremendously optimistic and positive presentation of how
important Fairtrade has been in the recovery of your banana economy.
I think that that makes all of us who may have bought your Fairtrade
bananas feel that we are part of that. Thank you for that; it
makes it all so worthwhile. But I imagine that there were difficulties
along the way. You said that some small farmers were initially
quite reluctant. Can you give us a flavour of those difficulties
and how they were overcome, not just by your being on the streets
and in the farms yourself?
Mr Skerrit: Farmers tend to be
experts in their own right. They have been doing the same work
for 40 or 50 years and somebody comes along and says that the
world and standards have changed and they have to change their
way of doing things on the farm. They must change the packaging
of the fruit or install washing facilities or take a record of
what is used on the farms and so on. There is always resistance
to change anywhere in the world at any level. It is not that they
did not understand the importance of it. They have been doing
the same thing for 40 years and then somebody, who has not reached
the age of 40, comes along and tells them what to do. There was
some resistance to it, but as time went by farmers started to
become advocates. Farmers went on the radio; they went to the
information service and attended public village meetings and explained
to colleagues that they had to change and make a 360-degree turn
in order to survive. Once they started to see the tangible benefits
of it at the social level and also from their own economic standpoint
they became converts and disciples of the word. That was how we
were able to get farmers to move to Fairtrade. It has been a remarkable
experience, and they continue to participate in the whole process.
Farmers have really had to change. Farmers have not done anything
different for 30 or 40 years. I have a farmer here with me who
has been in farming for 45 years. You will understand his reluctance
to listen to somebody who tells him he has to change.
Q28 Chairman: He is smiling.
Mr Skerrit: He knows what personal
benefit has come to him as a result of Fairtrade. It has been
a remarkable experience. The problem was to get people to change.
"Problem" is a complex word and involves a complex demand.
People become fearful when they hear of change, but change is
good. People would like to see the tangible benefits of change
in order to support it, and I believe that they have seen it.
Q29 Joan Ruddock: Is the reason why
farmers have not yet moved into such a system that they may be
too small or too poor? Is anyone too small or poor to come into
the system, or is it just a reluctance to change?
Mr Skerrit: It is reluctance.
I speak for the entire Windward Islands, but in the case of Dominica
we have 100% Fairtrade certification. There are a couple of islands
in the Windward Islands that we are still working on.
Q30 Chairman: There is 72% coverage
of the Windward Islands?
Mr Skerrit: Yes, but I am confident
that over the next couple of years we will see the rest coming
in and it will be 100% across the board.
Q31 Joan Ruddock: I think you said
that you had earned US$23 million from fair trade?
Mr Skerrit: It is US$2.3 million.
I would love to have US$23 million.
Q32 Joan Ruddock: To which other
countries do you export? I know from my colleague Glenys Kinnock
that a lot of work is being done by the EU as a whole. How many
other countries are participating? I presume that it is not just
export to the UK.
Mr Skerrit: We export only to
the UK. We tried a couple of markets in Switzerland but it was
not sustainable. The UK has been our strongest supporter and ally
in our efforts in the banana industry, so we have concentrated
on this market. The UK housewife as a consumer has a long history
of buying Windward Island bananas. This is where we are and we
hope to stay there, but certainly if the opportunity presents
itself in other countries we will have access to them. I believe
that we could gain access to France, but it has two dependent
territories, Guadeloupe and Martinique, which produce bananas
and supply that market.
Q33 Joan Ruddock: You said that you
did not want handouts but you very much needed the support of
the Fairtrade Foundation. Do you also require direct donor assistance
and, if so, what is the nature of it? What do you seek for further
development in the future?
Mr Skerrit: One is in the area
of product development; another is access to markets and, linked
to that, transportation; and another is the development of infrastructure,
for example farm access roads. As you know, our countries are
mountainous and hilly. The terrain can be difficult, unlike other
countries in Latin America which are flat. Because of that we
need easier access to farms. Those are the areas where I believe
we need some technical assistance to make us more competitive
and sustainable.
Q34 Joan Ruddock: Whilst you were
giving your answer I was passed a note to remind me of the deal
that you have made with China.
Mr Skerrit: We have an arrangement
with China which has agreed to do several things for us. It has
agreed to build a hospital and a secondary and primary school
in Dominica and provide assistance with what is called West Coast
Road from the capital to our second town. China has also offered
us scholarships. We now have 25 students studying in China, and
we expect to send an additional 15 in September. But the European
Union is our biggest donor.
Q35 Richard Burden: Could you elaborate
on the kind of ways that you think donors may be able to help
in the area of product development? Earlier you emphasised the
importance of local farmers accepting change and improving the
quality of product; and that was also mentioned by Ms Lamb when
she referred to the importance of good organisation to allow those
things to happen. Perhaps you can assume that you are addressing
a government and not the Select Committee and saying this is what
it could do to help not only your farmers but perhaps those in
other countries to improve and develop their products in such
a way as to maximise their potential.
Mr Skerrit: In terms of product
development, we still lack the necessary depth of human resources
and expertise. I believe that if we receive technical assistance
to train our local people and in turn provide ourselves with that
kind of technical assistance in terms of quality and practices
in the farms and packaging of the product in keeping with the
requirements and standards set by Fairtrade and the UK market
it will certainly help us. We have the grapefruits, oranges and
coconuts, but we have farmers who may not be doing it in a proper
way. We do not want a situation where we send fruit to the UK
market that is not in keeping with the required standards. We
want to ensure that we correct our errors at the initial stage.
Whatever the country, normally the people engaged in farming are
small producers who have not really moved on to take advantage
of educational opportunities; they are middle-aged people and
senior citizens, so that capacity is not there. Certainly, to
have in place proper facilities for the packaging and shipment
of products would be helpful to us.
Q36 Richard Burden: Perhaps you would
elaborate a little further on the form of technical assistance
that you have in mind.
Mr Skerrit: I agree that "technical
assistance" is a broad term. One area is to assist us in
attracting human resources to help us; another is possible assistance
in the construction of proper facilities, such as a central packaging
facility to which farmers bring their product from the farm where
the quality is inspected and so on before it is placed on the
ships for shipment to the UK. Therefore, I have in mind assistance
in the form of human resources and the physical construction of
facilities where farmers can transport their produce where it
can be inspected and packaged in keeping with the required standards.
Those two areas of assistance when looking at diversification
efforts would be very helpful. We already have the raw material
and it is a matter of having the proper packaging and ensuring
it meets the required standards to export it.
Q37 Chairman: To round it off, obviously
you have had a huge recession as a result of the WTO ruling and
withdrawal of EU support and you have not got back to where you
were. You have given us a very enthusiastic, positive and upbeat
view of what Fairtrade is doing for Dominica and the Windward
Islands. Do you believe that this offers you a more secure future
than the preferential deal that you had before, and perhaps one
over which you have more control than was the case?
Mr Skerrit: To be quite frank,
we would love to have a preferential market, but we are practical
people. We believe it makes no sense to fight the case for preferential
treatment; it will not happen and we have moved beyond that. What
we say in respect of the Economic Partnership Agreement that we
have signed and is to be renewed at the end of this year is that
this is something that the EU must consider and place in those
agreements. That was why I made the point about putting development
at the heart of the EPA. We say that the European Union has concentrated
too much on trade. We feel that it should have been a development
round, but nobody speaks of development. If we speak about trade
but not about inequalities, infrastructure and human resources
we will not achieve what we want to achieve through the EPA. That
is why we say that there must be certain principles. Every constitution
has a certain preamble. If within the EPA, which in a sense ought
to be a constitution, we do not have development at its centre
or any principles it will not achieve what we want. It will achieve
greater poverty, recession, crime and violence and more drugs
entering European markets. I speak from a very practical standpoint.
There does not appear to be flexibility from the standpoint of
the European Union and that was why in Hong Kong the discussions
fell apart. We went to Hong Kong to discuss development. When
we got there they wanted to talk only about trade. We said that
we could not discuss it if development was taken off the agenda.
When we left our capitals we came on the understanding that we
would be discussing development. Let us bring development back
to the fore of the discussion and let it be the centre of the
EPA. I emphasise that there must be principles enshrined in the
EPA. If there are no principles how will we measure our achievements?
Q38 Chairman: I can reassure you
that this Committee has spoken out very forcefully on the need
for the EU to bring development back into the trade round. We
have produced a report which we will be updating. A few weeks
ago we met some of your colleagues from the ACP[4]
group, ambassadors to the EU, and had a very lively, forthright
exchange with them. We also engaged with Commissioner Mandelson.
We shall be publishing an updated report, so I hope you will find
that at least this Committee is fighting your corner.
Mr Skerrit: We have quite a number
of friends in the UK Parliament.
Q39 Chairman: You have made a few
more today. We thank both witnesses very much for coming to give
evidence.
Mr Skerrit: Chairman, I made a
statement at the launch of Fairtrade Fortnight and, for what it
is worth, I should like to provide the Committee with a copy of
it.
Chairman: Thank you.
3 Windward Islands Banana Development and Exporting
Company (WIBDECO). Back
4
Africa, Caribbean, and Pacific (ACP). Back
| 
