The Trade Hub – Connecting Small Producers in the South to the North

– A Forest-Industry-Market Approach to Fight Poverty

 

 

The small producers in the South need a qualified and long-term oriented support to bypass the different obstacles and get a more direct access to the market in the North.

Poorest of the poor – the Forest People

1.4 billion of the human population live in extreme poverty under subsistence conditions. Of these, over 1 billion are surrounded by and dependent on forests for their survival. Through years of experience SSC Forestry can conclude that there exists hardly any sharing of values to the poorest of the poor – the forest people.

Poor people typically receive about 1% of the (already low) local value of the logs.  Corruption on various levels creates a situation which makes it impossible for the forest people to manage the forest, to process the raw material and to get access to a market that is willing to pay a fair price for the goods.

No access to market – no business

One of the problems facing many forest certification projects is that certification is the sole objective. Without proper links to and backing from a market interested in buying the certified products, the projects collapse.

The Curacautin project is an exception where SSC Forestry in cooperation with Kährs has forged a direct connection across the divide. This enables the forest people in Curacautin to sell FSC-Fairtrade certified timber directly to Kährs, who process the material into an exclusive flooring product, to be marketed around the world.

The Trade Hub – a direct business connection

The basic idea of “The Trade Hub” is to function as the connection point between the small producers in the South and buyers in the North who want to buy certified forest products at a fair price – thus creating a win-win situation with cost-efficient and transparent supply chains today almost impossible to build. The Trade Hub will help to overcome the technical, logistical and financial obstacles facing the small producers in the South when entering the international market.

 

Chain of Custody – a proof of sustainable delivery

It will also be a vital part of Chain of Custody, guaranteeing a quality-level of the products and that they all have been produced according to FSC-Fairtrade- and other comparable standards and agreements, or within an aid program run by NGO’s, who might see and understand the necessity of a sustainable business model to make aid projects more than just an aid, but rather a tool for empowerment for these producers and their families.

The Trade Hub will enable small producers in the South to sell not only timber but other forest based products as well, that are relevant for export. The Trade Hub will make it possible for these small producers to work their way out of poverty with the help of a sustainable business model.

A south-North integration concept

With the Curacautin Case, SSC Forestry has proven that the concept of “South – North” integration is technically and financially feasible for small producers in the South and at the same time creating profit possibilities in the North. However, many questions remain to be addressed, such as financing, technical format and finding producers as well as buyers that may benefit of the Trade Hub, before this new concept can be fully implemented.

Small producers in Indonesia are today seen as a possible first project that may be used as a pilot project in setting up the Trade Hub.

Furthermore, the Trade Hub offers an interesting possibility as a platform for academic research projects connected to the kind of set-up the Hub creates in regards to trade and organization within an NGO – Business context for instance.

 

Our ambition is to guarantee that the Trade Hub as a sustainable business model will become a reliable and strong proposition for all involved and therefor may survive and grow over time, offering new possibilities as the project evolves.

Written by: Robert Seyfert, Creative Dialog Platforms and Klas Bengtsson, SSC Forestry