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Pepper farmers

A crash in pepper prices has been linked to a wave of suicides among farmers in India, often leaving families vulnerable (photo from Danwatch)

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Special report Pepper: how our favourite spice is tainted by a deadly legacy

Frederik Johannisson and Peter Bengtsen

25th January, 2011

From India to Indonesia pepper farmers are increasingly vulnerable to harvest failures, food price crashes and price fixing, an investigation by Frederik Johannisson & Peter Bengtsen of Danwatch has revealed

‘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 Euros 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 to the grave.

Neethu’s father was not the only one. During the last decade more than 1,700 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 'lurk around the corner'

India produces 50,000 tonnes of black pepper each year, half of this is exported. Much of the black pepper from India in your local supermarket could come from Wayanad and neighbouring districts.

During the 2000’s pepper prices crashed and have been linked to a wave of suicides among farmers in the Wayanad District. The pepper is mostly produced by small-scale farmers, comprising more than 90 per cent of the population and each having 1-2 hectares of land. Farmers' 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 per cent. When a farmer could not repay, the bank or moneylender sent a letter of eviction. That message was the crucial point where most of [those committing sucide] 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 farmers in debt 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.

A 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 lose everything. Secondly, the soil has seen an intensive use of chemicals from fertilisers and pesticides for decades. Diseases and crop failure are very common now. Again, they can lose 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 wood and concrete. 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 per kg, so daily rubber income is currently 110,000 rupiah. That is 4 Euro per person. In one month each of them earn only slightly more than the Government set minimum wage level for Bangka Island.

‘You cannot live a decent life for the minimum wage level, not as a family,' 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 just one meal per day. It always consists of vegetables from their fields – the 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

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 exporters in Pankal Pinang, the capital of Bangka Island.

‘I can’t afford fertiliser 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 literal 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. Fertilisers, 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 of information about price levels for most of the small-scale farmers.

‘You don’t 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 don’t 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, who works for one of the biggest pepper exporters called C.V. Panen Baru on Bangka Island, 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,’ he explains. The company Panen Baru sells pepper to companies all over the world.

Pepper from 'suicide mountains'

Several well-known pepper brands based in Western countries source black pepper from Kerala in India and white pepper from Bangka in Indonesia. Some don’t appear to have any formal Corporate Social Responsibility policies in place in relation to purchasing pepper. Others say they are committed to long term relationships with contract farmers which secures a decent price for producers. One larger company says it has been working on an ethical code for several years  and visits suppliers on a regular basis. The company says it has not noticed any of the pepper farmers’ hardships.

In Indonesia however 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 peppercorn waiting for the big trucks to arrive and to be loaded with pepper bags for spice exporters.

‘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 and is linked to the UK brand Schwartz.

‘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 regulations must be followed…' 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 apparently not used.

‘Black pepper has only a 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.

There is no suggestion that AVT McCormick or its parent companies are involved in any wrongdoing or bad practice.

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,’ Mathews says.

‘In 2010 the pepper prices were 110-140 rupees (approx 2 Euros) per kg for the farmers. We set our Fairtrade minimum price in Kerala to 175 rupees (approx. 2.5 Euros) 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. No one has heard of the concept.

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 realise 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.

DanWatch is a Danish research and media centre doing investigative journalism on corporations' impact on humans and the environment around the world

 

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