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International Trade and Development at the

Grassroot: A Case Study in the context of the

Mango Economy of Malda

Presentation by:

Arnab Ganguly,

CUTS International

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International Trade and Development at the Grassroots

Trade can be a powerful source of economic growth

International trade

Expands Market

Facilitates Competition

Creates Opportunities for Growth

Facilitates Poverty Reduction

Fosters human development

International trade by itself does not necessarily lead to human development. It requires supporting domestic policies and important safety nets

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National Foreign Trade Policy 2004-09: The Indian Context

In the Indian context the National Foreign Trade Policy, 2004-09, envisages a programme that seeks to secure economic growth and national development.

Formulated and effective from August 2004, major landmarks attained are:

Increase in exports from US $63 billion in 2004 to US $155 billion in 2007-08 i.e. 2.5 times increase in what it was 4 years ago

Total Trade in goods and services accounts for 50% of India’s GDP

In the last four years increased trade activity has created 136 lakh new jobs

Source: Foreign Trade Policy 2004-09, Annual Supplement – 2008-09

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National Foreign Trade Policy 2004-09:

The Indian Context………(contd.)

The Question is

How much of the resultant benefits have accrued to the real producers?

How increase in exports of specific products have affected various stakeholders at the Grassroots?

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CUTS-International with the support of Royal Norwegian Embassy, New Delhi and Oxfam (The Netherlands) conducted a case study on the mango economy of Malda.

Objectives of the Case Study:

To understand whether NFTP has impacted (or not impacted) export of

Specific Products

To explore the various channels through which benefits of International

Trade trickle down at the grassroot thereby affecting specific variables

like employment generation, women empowerment etc.

Relevance of the Case Study

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Tools used for the Study

Questionnaire Survey of the various stakeholders

Focused Group Discussion with Growers, Exporters and Mango

Merchants and Processing Units (wherever applicable)

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Stakeholders interviewed for the study

Government Officials

Mango Growers

Exporters

Mango Merchants

Aratdars

Processing Units

Daily Labourers working in the mango orchards

Wooden Box Manufacturing Units

Women Groups (wherever applicable)

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Stakeholder Category

Their Role in the Mango-Economy Number

Mango ExportersExport mango to Other countries (though a majority of them export mango to Bangladesh)

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Mango Merchants (Mahajan)

This group of stakeholders invest their money in mango cultivation which includes buying and selling of orchards. They appoint Barials, who purchase/ sell orchards on behalf of the mango merchants and also oversee the activities necessary to maintain the orchards during the entire cultivation period. The mango merchants share profit with barials on pre-specified terms. These mango merchants may or may not have their own marketing network. During the ripening season for mango, the mango merchants sell the produce either to the local wholesaler (aratdars) or to the exporters.

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Growers

Primary stakeholders who grow mango. They are different from the barials in the sense that the barials are more like contractors and share profit with the merchants. Growers on the other hand invest their own fund, look after their own orchards and finally sell the product themselves to the aratdars. Growers also do not share their profit with any other group of stakeholders.

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Stakeholder Category

Their Role in the Mango-Economy Number

LabourersThis refers to the wage labourers working in the orchards. They get their payment either daily or, weekly.

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Processing Units in the Formal Sector

The processing units registered with the DoFPI&H or any other government certifying agencies

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Processing units in the Informal Sector

The unregistered units mainly engaged in selling mango slice to the various registered Food Processing units for preparing pickles

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WomenThey prepare various mango products like Amshawtto, Amchur. They also work in various fruit processing industries (locally called SLICE FACTORIES, during May-August

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Packing Box manufacturing unit

After the mango is plucked, it is packed in wooden boxes for exporting to Bangladesh or other states of India. This is necessary to prevent the fruits from perishing in the transit.

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Total 110

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Step-1

Interviewing the exporters and identify the major mango growing areas in the district, the major export destinations, change in livelihood pattern of the grassroots stakehodlers related to production of mango in the district and involvement of women in the entire mango economy

Step-2

Interviewing the Mango Merchants and identify the major mango growing areas in the district, their nature of contract with the growers, the barials and the wage labourers, change in livelihood pattern of the grassroots stakeholders related to production of mango in the district etc

Step-3

Interview the growers and the labourers to understand the nature of contract between the merchants and the exporters

Step-4Interview the processors and understand their role in the mango economy

Approach to the Survey

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Major Findings of the Field Survey

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Interlinkage among various stakeholders in the Mango Economy of Malda

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Growers Aratdars

Indian Exporters

Importers in BangladeshBangladesh Market

Middleman / TradersIndian Markets

Rs10/Kg + 5% (Commission of the ARATDARS to be paid by the growers) = Rs10.50/Kg

Rs10.50/Kg + 5% (Commission of the ARATDARS to be paid by the Exporters) = Rs11/Kg

Rs11 + 2.5% (Exporter’s Profit Percentage) + Rs18/Kg (Import Duty) ≈ Rs30/Kg

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Mango Merchants

Bariyal

Aratdars

Indian Exporters

Importers in BangladeshBangladesh Market

Middleman / TradersIndian Markets

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Reasons why the growers, mango merchants, and the exporters prefer trading with Bangladesh

Perspective of Growers

Price of mango in Bangladesh is higher than in any other market in India. For example, the same Fajli variety that sells for Rs10/Kg in Indian markets, will fetch anything around Rs. 12-13/Kg when sold to a Bangladeshi importer

Bangladesh consumes almost sixty percent of the mango produced in Malda

Due to the geographical proximity of Malda and Bangladesh, chances of the consignment getting perished due to transportation lags are less

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Reasons why the growers, mango merchants, and the exporters prefer trading with BangladeshPerspective of the Mango Merchants

Due to long standing trading relation with a few mango importers in Bangladesh

It is much cheaper to export to Bangladesh when compared to other countries due to proximity, low transportation charges and loose or no quality control specifications for mango,

They have limited knowledge about other export markets.

The mango merchants do not directly export. They send the consignments to Bangladesh via the local exporters. Since most of the exporters are keen to send the consignments to Bangladesh, the mango merchants follow suit.

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Reasons why the growers, mango merchants, and the exporters prefer trading with Bangladesh

Perspective of Exporters

• The exporters have long standing trade relationship with the importers in Bangladesh

• Cost of transporting consignments of mango to Bangladesh is much less than any other country

• Due to the proximity to Bangladesh the exporters can visit Bangladesh frequently and can follow up with the importers. This helps in reducing the default risk to a large extent

• Quantum of orders received from importers in Bangladesh is much higher when compared to any other country

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Different Types of Employment Opportunities in a Mango-

Economy

Wooden Box Manufacturing Units

Various Unskilled / Skilled jobs in the

mango Orchards & packaging units

Women Preparing Mango Products at

home

Men & Women* working in the

Processing Units (Formal / Informal)

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Increase in the area and production of mango

Improvement in the quality of mango orchards

Increase in daily wage of the labourers

Increased employment in supporting sectors

Exporters are being able to access various government schemes better than

before

Women are more involved in Mango-Economy than before

Beneficial Changes in the Mango-Economy

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Some Roadblocks to a better Mango–Economy

Security of Payment

Growers were not sure whether exporting mango to other countries will be Profitable

Lack of necessary export infrastructure in Malda

Processing Units in the District suffer from infrastructural weaknesses

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Key Recommendations

Promoting mangoes from Malda as a brand in International Markets

Orientation to the local growers and exporters in the district to export to countries apart from Bangladesh

Promoting formation of Growers’ cooperatives

Providing the necessary infrastructural support required for export

Strengthening the Processing Units in the District

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