Thinking about Praful’s recent blog contribution made me realize that while it is true that Gujarat's salt workers face poor opportunities for alternative jobs, the problem runs deeper than that, coming back ultimately to whether basic service delivery and the investment climate work for poor people or not.
If Bhavnaben's children are being pulled from school (or are not learning much at school, the same thing), the probability that they will end up in their parents’ footsteps runs painfully high. Without assets that can be monetized in tough times, there is nothing to fall back on except the labor of family members. The Indian 10th Five-Year Plan started a Namak Mazdoor Awas Yojna (namak is salt in Hindi) to provide subsidized land and housing for salt workers. But the conditions under which the Salt Commissioner of India (under the Commerce and Industry Ministry) regulates the allocation of land appear to be rigid and complex, the beneficiaries have no voice, and as happens often, a well-intentioned scheme becomes vulnerable to patronage and clientelism.
This is a bit surprising given that salt is actually not a bad industry to be in if the harsh working conditions can be cut out, seasonality reduced, and fair trade brought in. Salt is not likely to go out of fashion any time soon--the word salary comes from the Latin for salt--and even though per capita personal consumption may be coming down, salt remains the largest mineral feedstock for the world chemical industry. India is the world's third largest producer of salt, Gujarat accounts for more than 70 percent of India's salt production, and nationally the small-scale sector (less than 10 acres) accounts for 40 percent of production. Work in the salt pens of the small scale sector is seasonal, but this makes it ideal for the safety net features of something like the National Rural Employment Guarantee Act. I don't think Surendranagar was one of the districts in the first phase of the NREGA, but it should be in place soon.
I suspect there is also a market failure in access to working capital and marketing (salt workers apparently get a small fraction of the market price of salt). This creates a poverty trap. This is what was happening in the dairy sector in India before Verghese Kurien saw the problem and started Operation Flood. The rest is history--today India is the world’s largest producer of milk.
Some social entrepreneurs want to do something like Operation Flood for Gujarat’s salt workers. Tata Chemicals is one of India's largest corporate producers/sellers of salt (presumably using advanced, multi-stage evaporation in salt refineries). It’s possible that they can be persuaded to do something on a fair trade or CSR basis with the salt workers of Gujarat. A combination of the formal private sector and social entrepreneurship based in some form of cooperative, group effort can bring real change to Gujarat’s salt-workers such as Bhavnaben’s family--the veritable salt of the earth.
Mariam Claeson
Wed, 12/26/2007 - 04:40 Two distinct but related issues are being run together here- the possibility of Fair Trade production, and the possibility of the salt producers forming cooperatives in order to carry out some of the functions in the value chain that are otherwise done by organizations intermediate between the producers and the big buyers. Fair Trade schemes usually have some kind of set price, a requirement that marketing is done through a CBO of some kind, and some system for ensuring that some of the price premium generated is disbursed to the CBO. Although organizations such as FLO would prefer it to be otherwise, this type of set-up is quite consistent with the CBOs doing very few value-adding activities. Given the mention of Operation Flood, I think that what is intended is the assimilation of down-stream value-chain functions into cooperatives or federations of cooperatives. Then the question is not Tata's willingness to engage in CSR, but the ability of the Cooperative(s) to be able to produce salt in volume and quantity that suits their needs (or the needs of some other buyer), and whether the additional value added will be sufficient to finance both the costs of so doing and an increase in producer prices. If the answer to both of these questions is 'yes' then it it needs to be determined whether and how the community will manage these activities.
Fri, 12/21/2007 - 21:24 The salt extraction business in Gujarat is definitely a market failure. Now it needs to be seen how the government and private sector can forge a workable consensus on getting the market in the right direction, i.e. sustainable salt market which helps the poor and downtrodden!