Ambition meets reality: Lessons from the taro boom in Nicaragua

Between 2006 and 2011, Nicaragua shipped an average of US$ 9.4 million per year of smallholder-produced fresh taro (Colocasia esculenta) to the United States; however, by 2016, the US market for Nicaraguan taro had effectively collapsed. We analyse the short-lived taro boom from the perspective of complex adaptive systems, showing how shocks, interactions between value chain actors, and lack of adaptive capacity among chain actors together contributed to the collapse of the chain. Primary data was collected from businesses and smallholders in 2010 and 2016 to understand the actors involved, their business relations, and the benefits and set backs they experienced along the way. The results show the capacity of better-off smallholders to engage in a demanding market, but also the struggles faced by more vulnerable smallholders to build new production systems and respond to internal and external shocks. Local businesses were generally unprepared for the uncertainties inherent in fresh horticultural trade or for engagement with distant buyers. Existing guides and tools for designing value chain interventions will benefit from greater attention to the circumstances of local actors and the challenges of building productive inter-business relations under higher levels of risk and uncertainty. Results demonstrate the need for a greater awareness of adaptive capacity within marketing systems that involve smallholders, a more critical look at the underlying assumptions of interventions for building these value chains, and the need for alternative planning scenarios, better risk mitigation and adaptation strategies. This case serves as a wake-up call for practitioners, donors, researchers and the private sector on how to identify market opportunities and the design of more robust strategies to respond to them

Fair Trade – Is It Really Better for Workers? A Case Study of Kaisa Grass Baskets in Bangladesh

WP 2006-21 October 2006This paper analyzes the extent to which fair trade organizations increase wages for rural poor women in Bangladesh. Fair trade is a fusion of market-oriented business with grass-roots activism attempting to reduce poverty through market mechanisms by creating trading partnerships between poor artisans and rich consumers. The intent of fair trade organizations is to return a greater share of value-added to the artisans as wages or other non-monetary benefits. Information for this study was collected through interviews with a variety of fair trade organizations, staff and artisans in Bangladesh over the summer of 2005. To test the hypothesis that fair trade organizations increase incomes for the rural poor, particular attention was given to an NGO, a Non-Profit company, and a For-Profit business that export nearly identical kaisa grass baskets. Worker incomes hover around subsistence levels and are not very different from what agricultural day laborers in the surrounding areas receive. The For-Profit business pays more in wages than the NGO and Non-Profit company, bringing into question the effectiveness of Fair Trade as a mechanism for raising incomes of the poor in low income countries such as Bangladesh

Fair Trade – Is It Really Better for Workers? A Case Study of Kaisa Grass Baskets in Bangladesh

This paper analyzes the extent to which fair trade organizations increase wages for rural poor women in Bangladesh. Fair trade is a fusion of market-oriented business with grass-roots activism attempting to reduce poverty through market mechanisms by creating trading partnerships between poor artisans and rich consumers. The intent of fair trade organizations is to return a greater share of value-added to the artisans as wages or other non-monetary benefits. Information for this study was collected through interviews with a variety of fair trade organizations, staff and artisans in Bangladesh over the summer of 2005. To test the hypothesis that fair trade organizations increase incomes for the rural poor, particular attention was given to an NGO, a Non-Profit company, and a For-Profit business that export nearly identical kaisa grass baskets. Worker incomes hover around subsistence levels and are not very different from what agricultural day laborers in the surrounding areas receive. The For-Profit business pays more in wages than the NGO and Non-Profit company, bringing into question the effectiveness of Fair Trade as a mechanism for raising incomes of the poor in low income countries such as Bangladesh

Farm Subsidy Incidence in the Presence of Bertrand Competitors of Complementary Factors of Production: A Theoretical Approach

We analyze the impact of various subsidy policies using a two-stage dynamic game between a buyer (intended beneficiary) and two Bertrand suppliers of technical complementary inputs. Though we identify market power is one of the root causes of subsidy incidence, we also find that input product substitutability plays a much larger role. Furthermore, we identify that subsidy incidence occurs across multiple input markets. However, the multiplier effect of the subsidy enhances sector welfare, though disproportionally in favor of the input suppliers