How ownership of retail brands is transforming the lives of Sub-Saharan farmers
Global poverty rates have been falling for several decades now, but more than 800 million people still live on less than $1.25 per day, and much of this population is concentrated in developing countries. The United Nations estimates that there are 443 million people in sub-Saharan Africa living in poverty. While options for alleviation are limited, farmers in these countries can work through cooperatives and export businesses to open up new possibilities.
An estimated 100 million poor Africans produce high quality, distinctive products, for which many consumers are willing to pay a premium. However, African companies and producers often lack the power to negotiate an export price higher than the price of a non-distinctive commodity product, resulting in their exclusion from the market.
Social entrepreneur Ron Layton is the founder of Light Years IP, an organization using intellectual property law as an economic strategy to empower poor farmers. He has designed twenty repositioning programs for African business sectors and implemented three large plans to help lift farmers out of acute poverty. Earlier this year, Ron met with Terry Donovan, Senior Consultant, Global Media and Communications at ASHOKA, to discuss how his organization is repositioning the power and transforming the lives of shea butter and coffee producers in Sub-Saharan Africa.
Terry Donovan: Your organization, Light Years IP, has helped millions of poor producers of Africa’s finest quality export products earn much higher income through repositioning for power. Tell us more about this work.
Ron Layton: Better positioning enables producers to earn a greater share of the retail value generated by exports in wealthy, global retail markets. To global consumers, these products are distinctive from basic commodities in that they are seen as superior in taste, aroma, efficacy or reputation. So consumers usually pay premiums for them.
For example, fine coffee farmers gained $101 million in additional income for Ethiopia’s three most famous fine coffee exports in 2008. Their business strategy was to enable Ethiopia to own and control the brands of three fine coffees and use the power of that control to manage distribution for higher income to farmers and exporters.
We estimate that projects from 200–250 empowered groups of Sub-Saharan African producers are likely to add $20–25 billion per year for about 100 million producers and their families. Economic multipliers in remote parts of rural Africa are estimated by the World Bank to be over 1.5 times [the standard rate of growth]. Research by the Population Council puts the average household size in Africa at over 5 people. The application of this average implies that about 500 million of the last billion in extreme poverty will rise above poverty through the positioning method being widely applied in the most remote regions of Sub-Saharan Africa.
Donovan: How does Intellectual Property create power for poor producers?
Layton: If consumers are demanding a branded product, the owner of the brand has absolute power to decide which distribution companies and retailers will be authorized to sell products under that brand. That power can be enforced in all countries that recognize ownership of the trademark for the brand.
Donovan: You have chosen to work with groups who live in extreme isolation from international markets, including female collectives of Shea Butter producers — what has been the impact?
Layton: Millions of African producers suffer the severe economic consequences of extreme isolation from ports, and therefore, from consumer markets in the developed world.
There are 15 landlocked countries in Africa, with a total population of over 300 million. About another 200 million live too far from export ports to be able to make a living from commodity exports.
We have been working with the Nilotica Shea producers in East Africa since 2009. These women share a 1000-year-old tradition of harvesting Shea nuts across the Shea belt that runs from the West Equatoria State of South Sudan to northeastern Uganda. The remotest area that these Shea producers work in is over 1600 miles, and no are less than 900 miles, from Mombasa.
It can cost an East African producer of high quality Shea butter more to transport her butter to the port than the current commodity price paid at the port, meaning that she will not make a profit. In recent years, most exporters have dropped Shea as unprofitable at these commodity prices.
The distinct superiority of Nilotica Shea as an ingredient in advanced design cosmetics means the product can be positioned under a new brand owned by the producers. Just as a corporation producing this special product would aim to capture 30% of the retail price, we have enabled tWomen’s Owned Nilotica Shea (WONS) to own the new smart brand and sell directly to retail consumers.
The plan for expanding the take up rate of the positioning method combines two key elements — widespread education for producers and new financing.
This blogpost was written by Ron Layton and Terry Donovan, Senior Consultant for Global Media and Communications at Ashoka, the world’s largest network of social entrepreneurs. Ron Layton was elected as an Ashoka Fellow in 2004. Find out more about his work on the Light Years IP website: www.lightyearsip.net
