We started this year with high hopes for launching a Fairtrade certification program for Cashew Nut farmers in the south. Fairtrade (FT) gears towards smallholders more than any other producer scheme, hence it was our first choice for the farmers. We had also read a lot of success stories about Fairtrade certification from around the world.
At this point, the smallholders in the south sell their "in-shell" cashews to middlemen, who transport them to a warehouse in Sekotong or to the port in Lembar, West-Lombok. Only a fraction of the cashews grown in Lombok are actually consumed here on the island. From Lembar-port, the cashews get shipped to larger processing centers in Surabaya or overseas such as India (where they are shelled, salted & roasted etc.). There is very little cashew processing industry left in Indonesia. India is the big regional player for cashew nuts, really.
In talking to potential buyers for FT cashews in Europe, North-America and Japan, it became clear to us that most FT importers/buyers like to see a double certification in both Fairtrade and organic standards. That is, if a farmer group goes for Fairtrade certification, they ought to probably also go for organic certification. (Fairtrade products are not automatically organic, though the regulation specifies that producers should gradually phase out use of chemical inputs.)
Fairtrade-traded products that are also organic will always receive a higher price than conventional FT products. So: conventional FT cashew kernels attain a price of US $ 3.30 per pound, while organic FT kernels will score US $ 3.50. These prices are FOB (freight on board), so once the shipping agent and exporter deduct their fees, the farmers will see only a portion of this FOB price. In any case, it is significantly more than they can get at the moment. Which is why the Fairtrade scheme is so popular with smallholders around the world: it actually guarantees fair prices above and beyond the meagre living producers can scratch from their harvests currently.
It turns out that the many "success stories" related to certification need to be read with a pinch of salt, however. The certification process is long and pretty expensive. That's acceptable: the standards shouldn't be lax and compliance strictly enforced. The problem is this: for cashew nuts, producers go through the whole certification process, essentially altering most of their production and organization to meet the standrads, and then they wait for a buyer. That's because demand for certified cashews globally is still too low to make certification profitable for all cashew farmers who sought certification in the last one or two years.
I have written up pretty much all of the buyers/importers of Fairtrade cashews on behalf of the farmer group, to gauge the interest for FT certified cashews from Lombok, Indonesia. There have been no positive responses so far. This current market situation is also reflected in reports from projects/farmers in Sulawesi (who were the first cashew farmers in the world to attain FT certification!) and Flores. That means that we cannot, at this point at least, recommend a certification scheme to the farmers.
This also means that it will be harder to motivate the farmers to revamp their producer organizations, which are institutionally weak and fragmented. For example, the farmer groups are made up of about one-third women but they don't really have a voice. As part of a Fairtrade cerification scheme, it would have been easier to promote the status of women within the group by, for example, writing out a gender policy. Similarly, the democratic process is not entirely transparent to us. For example, is there an annual General Assembly; are there elections for the governing board; does the group hold the leaders accountable? A Fairtrade scheme would have been a perfect "hook" to get the farmers to bear on institutional and technical changes. We were all really excited about the Fairtrade prospects. But for now we need to look around for alternatives. Maybe Fairtrade demand will grow in the next years and our farmers can join in as well.
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