The Economist has a fine short piece on the tensions running through the thriving Kenyan horticultural trade. Kenya is a fantastic place to grow things. Their export market is thriving. The problem is that consumers on the other end of that trade want two contradictory things:
more value for money and more corporate social responsibility (CSR). Many shoppers’ incomes have been stagnant since the financial crisis. But at the same time Westerners worry increasingly about labour conditions in poor countries and environmental degradation. Britain’s supermarkets are particularly powerful conveyors of these messages: the four biggest, which control about 70% of the grocery market, are relentless in imposing their will on their suppliers. They are caught up in a fierce price war: even the posh ones, such as Waitrose, promise to match competitors’ prices. They are also caught up in a CSR race to show they are model employers: a wallchart in an office in Longonot is jam-packed with the dates of inspections by NGOs and industry groups.
How to square that circle? Consolidation and vertical integration:
These three forces are producing a wave of consolidation and vertical integration, as economies of scale and close ties to retailers become more important. Large companies such as the VP Group (which owns Longonot Farm), Swire and Finlays are expanding while smaller family farms are going out of business. The big firms are creating production chains that stretch from seeds to cellophane and spawning subsidiaries to handle transport and marketing. They are also forming tight relationships with European retailers. The people who once dominated Kenyan horticulture—independent farmers, many of them white, and sharp-eyed middlemen, many of them Indians—are being displaced by company men who speak of scale economies and integrated supply chains.
Which provokes further tensions:
The Kenyan horticultural industry has provoked a predictable debate. Critics say it is folly to transport flowers, fruit and vegetables halfway across the world. Defenders retort that growing roses in Kenya, where it is hot and light all year round, produces fewer carbon-dioxide emissions than growing them in dank, dark Britain or the Netherlands. Critics complain that poor Kenyans are labouring long hours to produce salads for lazy Europeans. Defenders reply that horticulture is creating jobs in parts of Kenya where they are in short supply. But the most interesting thing about the industry is the way that it is shaking up ideological certainties. The West’s demand that companies be good citizens is confounding many on the left by consolidating more power in the hands of giant agribusinesses. At the same time it is confounding many on the right: far from choking enterprise, it is encouraging firms to become more productive and innovative.
I would underscore four things here. We have to be clear about the tensions embodied within what we demand from the economy. We need to always be aware that the social costs of displacement are often more obvious and emotional compelling than the broad and diffuse benefits of economic and technological progress. Instead of turning to a ‘common sense’ metric like food miles, we we need to really do the math when comparing the environmental impact of two alternatives. Finally, small independent businesses are not always the best way to achieve high returns on the triple bottom line.