Case Study: The Kasinthula Cane Growers (KCG)
The Kasinthula Cane Growers (KCG) smallholders' project is located in an inhospitable region in the south of Malawi, one of the poorest countries in Southern Africa. Long droughts occasionally result in famine and the twice-yearly rains frequently bring floods. Most families eke out a living from the arid land or work on nearby sugar plantations.
KCG was jointly set up in 1996 by a commercial sugar mill and the state-run Sugar Corporation with the objective of converting an area of largely uneconomic land to sugar cane production. This would increase the supply of raw cane to the mill and at the same time provide an income for the subsistence farmers who owned the land and were barely able to grow enough food to eat.
Tough beginning, brighter future
From the start, the project was threatened by enormous and escalating debts. The mill had taken out a considerable loan from foreign creditors to finance the installation of an irrigation system and prepare the land for cane production. But the amount owed was multiplied several times over when the local currency was dramatically devalued against the US dollar and interest rates rocketed to more than 40%.
It then transpired that KCG and its 282 members were liable for the debt as owners of the land. Through no fault of their own the co-operative was suddenly thrown into serious financial difficulties. Proceeds from the first harvest didn't even cover interest repayments let alone reduce the capital amount. But with key issues now clarified, good management in place and support from the government, KCG has started to make headway in paying back some of the debt. Although still a long way from turning a profit or breaking even, the farmers can afford to pay themselves a living wage.
But the future is looking much brighter. KCG was Fairtrade certified in 2002 and is now supplying sugar on Fairtrade terms to a growing number of companies in the UK, Europe and the US.
The additional income earned from the Fairtrade premium is ring-fenced for much-needed community development projects. Members agreed that the first priority was to provide clean water to three villages that had to draw water from the Shire River, risking water-borne diseases and attack from crocodiles. KCG is also looking forward to building a secondary school and health clinic.
Cane grower Exford Dimo welcomes the partnership with Fairtrade: ‘It is so exciting because I understand that the aim of Fairtrade is to help us improve conditions in our community. There is so much we need to do.'
Having invested hope and a huge amount of hard work, the farmers have fought hard to get where they are today and it is clear they will stay the course. Given the chance, they will fulfil their ambition to work their way out of poverty. And their children will go to school and have better opportunities in the future.
What difference is Fairtrade making?
Around 30% of KCG's production is now sold to Fairtrade buyers. They include companies from Belgium, Germany, Norway and the US as well as Billington's, the Co-op, Equal Exchange, Napier Brown, Nirvana Sugars, Traidcraft and Whitworths in the UK.
KCG's sugar is available in brown and white sugar packs and catering sticks, as well as in biscuits, cakes, drinking chocolate, sweets and even spiced drinks such as mulled wine.
The first priority for the farmers was the provision of safe, clean water to the three villages still dependent on the crocodile-infested Shire River. Apart from the obvious danger of collecting water there, many people become ill after drinking it. Access to clean water is literally a lifesaver here.
The first borehole was dug in the village of Kapasule in March 2004. The 500-plus villagers no longer have to use the river or make the 2.5 km walk to Siseu village to collect clean water. A second borehole was dug in Chinangwa village in 2005.
The extra income from Fairtrade sales has allowed virtually all members to build new houses. Small mud huts with flimsy thatch roofs have been replaced by larger, sturdy houses with brick walls and tin roofs.
Malawi suffered a severe drought in 2005, with the Lower Shire valley particularly badly affected. The drought caused crops to fail so the premium was used to make two cash payments, five months apart, to each farmer for the purchase of food. In 2006 a donation for the purchase of anti-bilharzia drugs was made to the Kasinthula Bilharzia Clinic after the government repeatedly failed to provide them.
Following consultation with FLO KCG members have agreed to use the Fairtrade premium as follows:
- 30% direct cash payment to farmers to help pay for necessities.
- 30% for community projects (support to water and electricity supply, health centres, schools, roads etc).
- 40% for initiatives to ensure the sustainability of the business (annual plough-out and replant, replacement of vital machinery etc).
Significant premium funds have been earmarked for 2007 to support a government electrification project that will eventually make electricity available to 532 households in villages where Kasinthula members live.
In Phase One, power was extended to 103 households located close to the new power line and grid infrastructure. But the villages in Phase Two are located outside the geographical scope of the government project so Kwacha 4.2m (£15,500) has been allocated to pay for the infrastructure and labour needed to extend power to the villages. This will happen during 2007 and the project will be completed within two years when Phase Three brings electricity to a further 250 households.
The Premium Committee's decision to set up a low-interest loans scheme will help farmers get connected to the power supply. While the main infrastructure is provided at no cost, each household is responsible for installing wiring and fitting sockets to a standard that will pass government inspection.