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Wanted: A Fair Price

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This article was originally published in Hecho en Buenos Aires.

Precios Cuidados looks after the consumer. But who protects small producers? Lucía Bertotto and Roberta Ríos went to the small producers’ distribution centres and found out how prices are formed and what’s behind a fair price. Who is who in the value chain. Find out why caring about the producer means caring for your health and the environment. You have to choose in life, right?

Photo courtesy of Hecho en Buenos Aires.

Photo courtesy of Hecho en Buenos Aires.

Bus fares go up, subte fares go up, rents go up, beetroot, lettuce, meat; it all goes up. There’s no escaping the conversation with the taxi driver, with the neighbour, and with shopkeepers themselves. “Look how expensive the lettuce, yerba, tomato is…” There’s talk of speculation, of opportunism by large traders, there’s talk of the dollar, of the government. And of Precios Cuidados, the government’s price agreement scheme. (There’s even a mobile app through which you can monitor prices). But almost no one mentions the small producer in this process.

Choripán in hand, sitting in a parrilla in the Greater Buenos Aires, a taxi driver talks to his friend about the price of lettuce: “In the end, of the price we pay, only a few coins go to those who work the land, any half-wit that does nothing makes more than the farmer…” The comment refers to an old but ever-present situation. The farmer, the one who breeds chickens, the one who rears his animals, the primary producer does not benefit at all from Precios Cuidados.

Any food item, from the moment it leaves the ground all the way up to your table, goes through a process that determines the price you pay for it. Wholesalers and big supermarket chains buy these items for change and sell them for a lot more. That’s their trick. And here’s another trick: now Precios Cuidados regulates, inevitably, the competition’s prices. Are they enough to cover costs? Is it prejudicial to others?

The famous Precios Cuidados list is the result of an agreement between the government and the supply chains and shops to offer food, drinks, cosmetics, cleaning products, education, and building materials at low prices. In terms of consumer defence, it helps; it is a participative measure aimed mainly at the middle class.

Precios Cuidados will extend until the end of the year. The website explains: “Reference prices for the products in the programme are based in the analysis of the value chains, with the aim to secure competitive economic conditions, look after Argentines’ wages, and guarantee the consumers’ right to make informed choices.”

Let’s Not Look the Other Way

Let’s turn to the farmers from alternative and non-pesticide markets which are part of the fair trade circuit. How do they avoid being left out? How do they set their prices?

Fruit for sale at El Galpón de Chacarita (Photo: Brian Funk)

Fruit for sale at El Galpón de Chacarita (Photo: Brian Funk)

“When it comes to vegetables you can never have set prices because it’s all about supply and demand, and because it depends on the harvest. If there’s a lot of tomato, it’s cheap; if there’s not much, it’s expensive. Simple. The government can’t set the price, we do. We must look after ourselves, make sure we have enough to make a living and to make it sustainable,” explains Alicia, from the Don Juan Group, which brings together agro-ecological producers from Parque Pereyra who sell their produce at organic market El Galpón de Chacarita.

“The government can’t set the price of vegetables. We do, because we must be able to pay all our costs: wages, increases in the price of fuel, etc. Absorb all the prices that go up. TV doesn’t show that when 3kg of courgettes cost $10 the farmer starves because their produce is worthless; it only shows when it’s expensive,” says Alicia from her stall, proudly declaring: “We produce without pesticides from the seed.”

The price in the fair trade circuit is not just the result of a simple addition, it reflects a different approach that is not merely economic.

Luis Razeto, a Chilean social economist who coined the concept of ‘solidarity economics’ in the ’70s, says: “The market always favours those who have money and capital, to the detriment of consumers and producers. This is why it’s important to introduce ethical values in price setting, within a solidarity-based market; a relationship system where decisions are not only based on selfishness but also on ethical values, social experiencies, and cultural options. Prices are not just inherent to the product and can’t be modified at random. Prices are formed in a relationship between individuals, the buyer and the seller -that is, the producer and the consumer- in such a way that the price is established in a relationship of exchange, participation, and dialogue in which both parties agree to a price.”

According to the International Fair Trade Association (IFAT), a fair price is that which is agreed between both parties, guarantees an equitable retribution, and is sustainable in the market, covering not only production costs but also social and environmental costs.

Agustín Botessi, from the Iriarte Verde cooperative, a green market in Barracas, explains what setting a price means for them and how they do it. “Price is not just a number… to us, the project is more important than the final price, though we try to keep it reasonable. We want the work of that group to be valued, a group where the whole family works, without employees.”

“Those of us who participate in the agro-ecological circuit get together with producers, agree on prices and keep them stable for about six months. This is how we stay away from market fluctuations. Even though in terms of the competition we fall behind, we think it’s important to think whose prices we’re looking after,” says Botessi, who also suggests we should be more conscious about the natural cycle of vegetables. “Some people buy tomatoes off season and complain because they’re not good. There’s no reason why they should be. What matters is to know how that tomato made it there. When you buy at the supermarket, you don’t know where products come from. We know where they come from and how each of the things we sell are made, who makes them, and where. For each product we offer, we first visit the producers, we meet them, we have all the information available for the consumer. The product is part of the producers.” About 90% of the Iriarte Verde farmers are from Parque Pereyra, but when there’s no direct contact with the producer -as is the case with some fruits- they go through organic certifiers.

Botessi gives an example: “Specifically, this season we’re paying $7 per kg for pumpkins, and to that we add transport costs and the wage of the shop keeper. We sell it for around $11. A farmer who sells pumpkin to large wholesalers is paid, I think, about 50% of what we pay.”

Supermarkets have agreed to price freezes (photo: María Candelaria Lagos/ Télam/jcp)

Supermarkets have agreed to price freezes (photo: María Candelaria Lagos/ Télam/jcp)

Agrochemicals Do Not Kill Products

After the peso devaluation, there was a general increase in prices. Although some think that it’s not so much devaluation as speculation and opportunism by the big chains that explain the rise in prices. Federico Arce, from El Galpón de Chacarita, is clear: “This is not the first time that wholesalers and intermediaries speculate with shortages and try to push prices up when they are the ones that set the prices. Farmers are always left behind and they are the ones who, day after day, work to supply the domestic market when there’s scarcity due to excessive exporting. A small, agro-ecological farmer is not the same as a large production or distribution chain such as a supermarket. Products treated with chemicals or genetically modified to keep longer favour abuse. An agro-ecological product doesn’t have a very long shelf life. Small cooperatives can’t engage in speculation, because if they don’t sell, they can’t eat or live.”

According to Arce, the quality of our food intake is affected by the programme: “In the supermarket shelves, the only options within Precios Cuidados are lettuce and tomatoes, which don’t guarantee the diverse food intake the body needs. It’s a very small selection, but there is a greater variety, and within season.”

Several factors go into the price of a product. Firstly, supply and demand, also related to competition, which forces shops to keep the same products at around the same prices, ie., at a market average. Other factors include production costs, transport, distribution, etc. And the retailer’s markup.

“We breed our chickens in a totally different way, we take 90 days, rather than 45 like supermarket do; we feed them with corn, not with feed or hormones. It’s another animal, bred in a natural way. It has another build, another taste. In any case, Precios Cuidados should be there from the beginning. Our main cost is diesel, it was $8 and now it’s $12, corn was $1.50 per kg and now it’s $2.80. Tolls were $4 and now they’re $5. Electricity -we get it through a cooperative and it’s very expensive- which we use for the water pump. It all moves up the chain and it ends up being paid for by the consumer,” says a stall keeper from Cañuelas’ Establecimiento Grafer, at the Galpón.

Put the Kettle On (And Look After the Tarefero)

As an example, there’s the tarefero (yerba mate picker). Let’s look at yerba mate. The market is made up of 17,444 producers; 76% own fewer than ten hectares and take up 52% of the cultivated area. The process continues through 239 dryers, 118 mills, and 12 packing facilities. Retail distribution is the same as with any other product: through supermarkets. Why not all yerbas make it to the supermarket? Because the stages of milling and packing are dominated by only four groups: Las Marías (Taragui, Unión, La Merced); Molinos Río de la Plata (Nobleza Gaucha); Hreñuk S.A. (Rosamonte), and Corp. Gral. de Alimentos -acquired by Molinos- (Cruz de Malta). This puts farmers at a disadvantage, and packers in a position in which they can impose the buying price.

The organisation United Tafereros reiterates the need to continue with their struggle for dignified conditions for rural workers in the yerba industry. In a statement, they declare: “Whilst our colleagues are paid between $0.37 and $0.45 per kilo of yerba leaf, shops and supermarkets sell the kilo of yerba for $40.” They accuse Urrutia, Agroindustrial Itatí, Las Marías, Gerula, Mate Rojo, Molinos, Mate Larangeira for making the situation worse. They affirm that the reason for price increases is speculation, the costs at every point in the supply chain, and also “the exploitation of rural workers and the concentration of land in fewer and fewer hands.”

Fields of Argentina Yerba Mate in Establecimiento Las Marías, (Photo by MateRojo)

Fields of Argentina Yerba Mate in Establecimiento Las Marías, (Photo by MateRojo)

About the potential government plan to implement ‘Yerba for everyone’ in order to keep prices low (the state would purchase part of the yerba production straight from cooperatives to then have it processed and packed), the director of the dryers’ sector within the National Yerba Mate Institute (Inym), Sergio Delapiere, states: “I think it’s an interesting proposal for cooperatives that don’t have a presence in the yerba market and that can’t reach the consumer.” If carried out, Delapiare emphasises that the government should ensure the prices set for the product are fair for farmers and dryers.

Have you heard about brands like Yemico or Mbopicuá? Misiones-born Miguel Rodríguez, social economy activist and manager of Jepe’a (a shop where you can get yerba from cooperatives, which can also be bought in fair trade stores), says: “From here, we encourage customers to purchase within a community-based circuit, where the consumer becomes part of a ‘socially committed project’.” That means that “you have the chance to show solidarity by purchasing or by helping spread the word about these products, supporting an iniative that is part of multiple efforts carried out by small, family-based producers to obtain a fair price.”

Although Rodríguez points out that Jepe’a sells some 60 tonnes of yerba per year, whilst the the big brands sell some 50,000 tonnes per year, without a doubt the consumer, using their purchasing power, can choose whether to support the big chains or the small producers. In life, you have to choose.

 

Hecho en Buenos Aires LogoHecho en Bs As is a magazine sold by unemployed and homeless people. Vendors buy copies for $5 and sell them for $15. Since we launched in 2000, we have helped more than 3000 people regain control of their lives. Hecho en Bs As is an independent and challenging publication, with exclusive interviews and current affairs articles. Vendors undergo an induction process and sign up to a code of conduct. Hecho en Bs As is a business solution to a social problem.

Who Fills Up Your Cupboard

58% of sales of food and beverages in the country are done by Carrefour, Cencosud, Coto, La Anónima, Walmart, and Casino, according to the Centre for Solidarity Economy Management.

500 companies in Argentina concentrate 25% of production.

35 economic groups own -in the province of Buenos Aires alone- almost 2m hectares of land.

20 companies control 50% of exports.

8 multinationals control almost 90% of soy exports, according to the Frente Popular Darío Santillán.

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- who has written 420 posts on The Argentina Independent.


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2 Responses to “Wanted: A Fair Price”

  1. Werner Almesberger says:

    Very interesting article, thanks !

    One thing that strikes me as odd is that these alternative products seem to exist in a completely parallel universe, all the way from production to retail. This raises the barrier for customers – they not only have to accept a considerably higher price but they also need to go to shops that are probably further away than their usual supermarket, may have less convenient opening hours, may not always have sufficient stock, and you may have to visit multiple shops for all the different things you need. Worse yet, since some of your products perish more rapidly, people would have to do all this more often.

    In other words, these customers must not only be willing to pay more but they also have to be highly motivated to make a considerably greater effort for their shopping. Perhaps that sets the bar just too high.

    What are the impediments to getting “healthy” products into supermarkets – be it big chains, their branches, or the smaller Asian ones, even at low volume ? Or bakeries, greengrocer’s shops, and meat markets, in areas where they’re abundant ?

    It would obviously be impossible to sell such products as “just another brand” in the same category, so they would require marketing (in the comprehensive sense, not just ads although they may be part of it) that emphasizes the difference. E.g., have a “natural power” corner in the supermarket where people can find these goodies, even if they buy them only occasionally.

    I don’t quite get the connection to “Precios Cuidados”. As I understand them, they never apply to product categories but only to either specific products from specific brands, or one product out of a category. So they shouldn’t directly force the prices of alternative products down. Of course they increase the price difference within the same product category and make high-value products look even less affordable – one more reason to try to steer customer attention away from direct comparison.

    - Werner

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