September 8, 2005

At a conference in Lagos, Fair Trade unveiled its latest business strategy for farmers operating in Nigeria.

Its goals are:

• To improve the livelihood and well-being of producers
• Improve market access
• Strengthen producer organisations
• Pay a better price
• Provide continuity in trade relationships

Fair Trade will establish a Nigeria commodity exchange to serve as a place where buyers and sellers meet. The exchange itself will not buy or sell commodities, execute contracts nor fix prices. It would initially operate as an exchange that assists local producers of commodities to sell their featured products.

Also, it would feature a comprehensive database and network system that facilitate such selling groups. All trade would be done through physical contracts.

How does it work?

Local farmers tend to be small operators. As such, they have problems selling their produce on the commodities market which have standardised bulk contract requirements.

The attendant problem of raising enough finance to provide commodities in sufficient quantities limit the ability of a local producer to trade on normal international contracts.

The answer is in the provision of a facility for local producers to be able to sell their products collectively as part of a selling group. International buyers will utilise the system to obtain reliable supplies of required products.

Local producers place their products in a warehouse owned by a certified inspection agency, and receive a warehouse warrant. The warehouse warrant is then traded across the system as part of a selling group with other local producers ensuring that local producers could sell on the international market at international prices.

The commodity exchange would help local farmers in the following ways:

• Provide opportunity to sell to international buyers
• Improve exportation
• Allow long business relationship with buyers
• Local farmers would be open to international standard and trends
• Producers receive a price at a premium to those on world markets
• For commodities, farmers receive a stable, minimum price
• Buyers and producers trade under direct long-term relationships
• Producers have access to financial and technical assistance
• Sustainable production techniques are encouraged

A pilot Fair Trade online Exchange is being set up to enable Nigerian farmers utilise this trading opportunity.

eFair Trade is about the use of the Internet to help farmers. The Internet could be of use to co-operative sellers by helping them:

• Support members to source inputs for their activities
• Market members products
• Collective selling of members products
• Information, training and consulting services

The Internet could be very useful to Fair Trade buyers in identifying suitable sellers, and facilitate all aspects of the process.

Subsequent write-ups will reveal more effects of IT in farming and in turn showcase a big farm in Nigeria that now enjoys the same IT technology facility and will soon be an international producer.

Source: This Day Online.com