“One morning we awoke and found my dad having hanged himself in the bedroom, right here”, 20-year old Neethu says and points towards a dark corner of the dusty bedroom.
Neethu’s big brown eyes express both strength and shyness. She is home alone with her handicapped 14-year old little brother while their mother works in nearby quarry for 3 Euro per day. After the death of her father the three of them have shared the farm work of pepper and other crops on the tiny plot of land surrounding the red-brick house in the mountains of the Indian state Kerala.
“My mum and I knew we had financial difficulties. I knew that dad had taken a ‘blade loan’ but I did not know how bad the situation was”, Neethu continues matter-of-factly.
A blade loan is a ‘pay or die’ loan from local moneylenders, often with exorbitant interest rates. Neethu assumes that the moneylenders threatened her father to repay or hand over his land, but he said nothing and took his reasons with him in the grave.
Neethu’s father was not the only one. During the last decade more than 1700 farmers committed suicide in the mountainous Wayanad District in the South Indian state Kerala. In these lush and evergreen mountains, still inhabited by wild tigers and elephants, farming is the only economic activity for a majority of the population.
Debt traps in India's mountains of pepper
India produces 50,000 tonnes black pepper each year, half of this is exported. Most of the black pepper from India in your local supermarket come from Wayanad and neighbouring districts.
During a ten year period in the 00’s pepper prices crashed and caused a wave of suicide among farmers in the Wayanad District of Kerala, India. The pepper is mostly produced by small-scale farmers, comprising more than 90 percent of the population and each having 1-2 hectars of land. Farmer’s prices per kg were reduced to one fifth in a few years. At the same time the pepper yield declined because of plant diseases.
“The farmers could not repay their loans. Some took emergency loans to cover the payments of existing loans, sometimes with an interest rate higher than 25 percent. When a farmer could not repay, the bank or moneylender sent a letter of eviction. That message was the crucial point where most of the suiciders either hanged themselves or took poison by drinking their own pesticides”, Director Dr. Anil Kunar from the agro-biodiversity centre MSSRF in Wayanad says.
Today the suicides are back to ”normal” rate. Local NGOs established training activities to help the in-debted farmers or gave financial support to the remaining family members. Debt relief up to 100.000 rupees (depending on the size of the loans) were given by the Kerala State Government to small-scale farmers. But today many of the farmers still depend on loans to be able to survive.
”Debt is still wide-spread today. The debt trap still lurks around the corner. The problems facing the farmers have not changed since the suicide period”, says John Joseph from WSSS, a local NGO.
”The problem is the combination of volatile pepper prices, increasing production costs and decreasing yields”, he says.
Pepper farming is risky business
Pepper prices are among the most fluctuating commodity prices according to Aisha Schol, Manager of Corporate Sustainability Analysis at Fairfood International, a Dutch-based organisation. She says:
“Small-scale pepper farmers are in a very vulnerable position. First and foremost, they have only pepper on their fields, so if pepper prices crash they are hit as if by a tsunami. They loose everything. Secondly, the soil has seen an intensive use of chemicals from fertilisers and pesticides for decades. Diseases and crop failure is very common now. Again, they can loose everything.”
On the distant island of Bangka in the Indonesian archipelago, farmers of white pepper struggle with fluctuating prices much like their black pepper farmer colleagues in India. Bangka Island has for decades been the biggest producing place of white pepper in the country.
Diddihatono lives with his wife, son and parents in a village house made up from wodden and concrete sections at Bangka Island in Indonesia. The family consists of seven people who all share the income from their pepper plants.
“We cannot survive by pepper farming. So my brother and I work on a rubber field until noon before we go to our fields. Our pepper harvest failed last year, so we have only had the income from rubber for a long time”, Diddihatono says.
Diddihatono and Joserin harvest 10 kg. of rubber on a normal day. They get 11.000 rupiah/kg, so daily rubber income is 110.000 rupiah. That is 4 EUR pr. person. In one month each of them earn 1.1-1.2 mio. rupiah which is slightly more than the Government set minimum wage level of 1.0 mio. rupiah on Bangka Island.
”You cannot live a decent live for the minimum wage level, not as a family. You need at least 2 mio. rupiah pr. month for a family of 3-4 persons on Bangka”, Koko Sadmoko says. He is a Reuters journalist on Bangka and has done several reports from the countryside.
“And you need to remember that pepper and rubber prices were lower recent years”, he continues.
The family of Diddihatono can afford one meal pr. day. It always consists of vegetables from their fields and rice they have to buy. Meat – local fish or chicken – is a rarity and restricted to once every second week. Santila, the beautiful 22 year old sister of Diddihatono, is the only one who has had new clothes in a year.
Vulnerable farmers in unequal relations
Indonesian farmers not only struggle with price crashes and harvest failures. They are also in a vulnerable position when dealing with local pepper collectors that buy the pepper from the farmers and sell it to the big expoters in Pankal Pinang, the capital of Bangka Island.
- I can’t afford fertilizer or pesticides, I have only 400 pepper plants. But my ”boss” gives it to me when I need it. We help each other, says Silan, a 45 years old dark-skinned farmer with a big red cap and ill-looking yellow teeth
The ”boss” is a wealthier farmer, often a collector. The term is a litteral expression of the unequal relationship between small-scale farmers and collectors, a dependency where the farmers have not much of a saying.
Money is needed in white pepper cultivation on Bangka. Fertilizers, seeds and new poles for the pepper plants to wind about are necessary and costly. Pesticides are expensive too. Not all small farmers can afford these, and not at all if a harvest fails or the payment for the pepper harvest is less than expected.
The local collectors are often also the ones supplying farmers with fertilizers and pesticides. This can be lent as a favor as Silan experiences it. The dependency also includes information about pepper prices. The collectors are the only source to information about price levels for most of the small-scale farmers.
“You dont find small-scale farmers well-informed in these isolated parts of Indonesia”, says Caecilia Widyastuti, a Jakarta-based agricultural expert. “The dependency of the collectors extends to the actual trading too. Pepper farmers dont have much influence in a trading situation, their bargaining power is very poor and they are not organised at all”, she continues.
Collectors are for their part dependent on the price they are told by exporters and don't have much bargaining power either. Toni Bakar is working for one of the biggest pepper exporters called C.V. Panen Baru on Bangka Island, he says:
“The biggest challenge for us for a long time has been the international market pressing white pepper prices down. This we pass along to our suppliers of pepper (the collectors) who get a lower price. The price pressure continues to the farmers,” Toni Bakar explains. The company Panen Baru sells pepper to companies all over the world.
Pepper in Nordic countries from suicide mountains
Several of the well-known pepper brands in the Nordic countries buy black pepper from Kerala in India and white pepper from Bangka in Indonesia. Santa Maria – one of the biggest nordic spice brands – does. Also the brands Princip! and Spize from Denmark as well as Meira from Finland. Kockens, Eldorado (from Axfood), Spice Island and Kryddhuset from Sweden get black pepper from India, while Eldorado (Axfood) and Kryddhuset also get white pepper from Indonesia.
Purchasing Manager from Meira, Tarja Onnela, says that the company is not aware of the consequences of the fluctuating pepper prices.
“We do not require any standards for Corporate Social Responsibility from our suppliers. We expect them to live up to decent standards but we don’t have any certificates at the moment. We have discussed this at Meira but until now we haven’t come up with specific solutions”, she explains. Meira was in 2002 bought by the Italian holding company Massimo Zanetti Beverage Group that has no sign of social responsibility policies on it's website.
Kockens, one of the bigger pepper brands in Sweden, is aware of price fluctuations have big impacts on farmers, according to Quality Manager Christer Karlsson. “We have a long-time relationship with our Indian supplier of pepper and they work with contract farming. This is a way to secure farmers a decent price ahead doing the investments needed for farming the crop”, he says.
But “decent price” means agreeing on the price before the actual harvest and sale of pepper, so farmers have funds to buy fertilizers, seeds, etc. Paying a price higher than market price, when pepper prices hit rock bottom because of fluctuations, is not included.
Santa Maria tells that the company for years has been working with social responsibility.
“Santa Maria has worked with Ethical Code of Sourcing for several years and this spring we also started with a Code of Conduct for Suppliers for the whole Paulig Group”, says Sandra Flodström, Head of Quality in Santa Maria. Santa Maria is owned by the Finnish Paulig Group.
According to Sandra Flodström, Santa Maria visits suppliers on a regular basis. The company has in its supplier cooperation not noticed any of the pepper farmers hardships.
In Indonesia we are told by local pepper exporters that international buyers hardly ever ask questions about social and economic conditions among farmers.
In the Indian pepper mountains we are told the same. Raju is one of many local middlemen, having a shop mostly comprised of small hills of black pepper corn waiting for the big trucks to arrive and to be loaded with pepper bags for spice exporters like AVT McCormick.
“I don’t bargain with the farmers. I offer the market price. Then I sell to the exporters according to this price. I am as much a price taker as the farmers”, Raju states. He has never heard any of the big international exporters ask about social or economic conditions of the farmers: “They ask about price and quality only”, Raju says.
Director John Joseph from the NGO called WSSS confirms this picture:
“During the suicide years the big exporters visited Wayanad District as usual, but never showed any interest in supporting our programs to help the victims or prevent more deaths. They just ignored us”, he says.
In India, we talk to Sibi Thomas , Vice-President of AVT McCormick, which is a joint venture of the world's largest spice company McCormick Inc. and the Indian company AVT Group. AVT McCormick sells black pepper to Santa Maria.
”We have Code of Conducts for our suppliers and we have audit systems in place. Regarding social and economic issues we focus on, among others, child labour, working conditions, medical insurance for workers, Government regulation must be followed, etc.”, Sibi Thomas says.
But the social and economic conditions of pepper farmers are not included. The focus areas only target suppliers that do processing. If suppliers are only middlemen with no processing the Code of Conduct and audit system is not used.
”Black pepper has only few steps in the supply chain, and the suppliers do not do processing, so our audit system is not really used here”, Sibi Thomas says. Instead social training programs are supported by AVT McCormick.
What can consumers do?
“The big question is: If prices continue to fluctuate according to international market demand, how can farmers ensure a steady income? How can they get a decent pepper price?” The question is asked by agricultural and fair trade expert Suraj Padmanabhan and answered by himself: “One of the answers could be fair trade pepper”.
Some fair trade initiatives already exist. The Fairtrade Alliance Kerala (FTA Kerala) is headed by director Tomy Mathews from the company Elements;
“We established FTA Kerala in 2005 because crop prices hit rock bottom, the farmers debts and the widespread plant diseases. 3600 farmers were Fairtrade-certified the next year”, Tomy Mathews says.
“In 2010 the pepper prices were 110-140 rupees (approx. 2 Euro) per kg for the farmers. We set our Fairtrade minimum price in Kerala to 175 rupees (approx. 2,5 Euro) per kg. Now pepper prices have rocketed way above the Fairtrade price. But anytime the prices can crash again”, he adds.
But even though there are some Fairtrade initiatives, it is not the majority producing Fairtrade in Wayanad District according to Dr. Anil Kunar from MSSRF:
“You might see a demand for Fairtrade, but exporters want large quantities when they buy. They do not bother to separate Fairtrade pepper from the ordinary pepper,” he says.
At the Bangka Island in Indonesia we ask everyone we meet in the pepper business if they know about Fairtrade. Noone has heard of the concept.
When confronted with this information about pepper production in India and Indonesia, Axfood wants to discuss farming conditions with the suppliers to the company’s brand Eldorado.
“Our Code of Conduct normally is not applicable when it comes to small-scale farmers. We are aware of the fact that this is a problem. A possible solution for us could be to try to move sales from conventional products to Faitrade, but first we need to talk to our supplier about this”, says Ingmar Kroon, Head of Communikation in Axfood.
The spice brand Meira in Finland does not have a policy to secure pepper farmers a decent salary, purchasing manager Tarja Onnela says:
“We feel that the farmers should be treated respectfully, but this responsibility is left to our suppliers.” Meira does not have any CSR-policy for their spice supply chain but Tarja Onnela adds that the company is planning a trip to Indonesia in the end of 2012 to visit the farmers.
According to Sandra Flodström from Santa Maria situations like those in India and Indonesia are not acceptable.
“We visit our suppliers on a regular basis and we have not heard of this kind of incidents during our visits. We keep working closely with our suppliers on the Code of Conduct. Santa Maria is also buying Fairtrade certified pepper which ensures the farmer a minimum price,” she says and adds: “The availability is limited and there is not enough volumes for Santa Maria’s supply.”
This seems to collide with the situation experienced by K. M. George, coordinator in the non-profit organisation Wayanad Organic:
“We have several hundreds of farmers Fairtrade certified, but we experience no demand for Fairtrade organic pepper whatsoever.”
An uncertain future
Back in the Wayanad mountains skinny Neethu with the big eyes does not want to work in a quarry like her mother. She wants to study and get a better job. The same goes for a lot of children of small-scale farmers.
To realize their dreams they need money. Either from their parents’ bank loans or by a steady income from their pepper plants. If they seek advice in the pepper statistics one thing is for certain: They cannot know for sure whether pepper prices will rise or fall, or by how much. But they can know for sure that they will be the first and the ones most affected by the price fluctuations.