Monsanto, Bayer, Syngenta exploiting child labour in India, says report/Poor, but pedicured (7/5/2003)

7 May 2003

Monsanto, Bayer, Syngenta exploiting child labour in India, says report/Poor, but pedicured

The very companies which claim to be intent on transforming the lives of the world's poor are, according to a new report, perpetuating child labour in India "in a big way".

The report notes that though they claim they are committed to the highest standards of socially responsible corporate behaviour "their activities in the area of cottonseed business in India are certainly not in tune with their claims ...their business strategies and profit motives encourage the environment which supports the practices of child labour in a big way."
Companies like Monsanto, Bayer and Syngenta are running their cotton seed operations in India with huge profit margins while paying procurment fees so low that they necessitate the employment of child labour - mainly young girls worked for long hours and deprived of education.

Under pressure Syngenta has instituted some measures to try and head off bad publicity over this issue, but the report concludes, "...the activities of MNCs in the area of cottonseed business in India are not certainly in tune with what they claim about their commitment to socially responsible corporate behaviour. Though they are not directly involved in employing children, they have substantial control over the entire production process and the seed farmers who actually employ children for producing seed for these companies."

Two items:
*Monsanto, Bayer, Syngenta exploiting child labour, says report
*Poor, but pedicured: how the World Bank gets it wrong - George Monbiot
Monsanto, Bayer, Syngenta exploiting child labour, says report

A new report by Dr Davuluri Venkateswarlu, commissioned by the INDIA COMMITTEE OF NETHERLANDS*, reveals that multinational companies like Monsanto, Syngenta and Bayer are perpetuating the terrible problem of child labour on cotton seed farms in India.  *http://www.indianet.nl/index_e.html

It should be possible to download the full report as a word document from  http://www.indianet.nl/cotseed.html

If you have difficulty, then it may be possible to obtain copies from the author, Dr Davuluri Venkateswarlu <davuluri_v@yahoo.com>

Davuluri Venkateswarlu, Director, Glocal Research and Consultancy Services, Hyderabad (e.mail davuluri_v@yahoo.com)

Study commissioned by

A new system of employing female children as 'bonded labourers' has come into practice on hybrid cottonseed farms in south India in recent years. Local seed farmers, who cultivate hybrid cottonseeds for national and Multinational Seed Companies, secure the labour of girls by offering loans to their parents in advance of cultivation, compelling the girls to work at the terms set by the employer for the entire season, and, in practice, for several years.  These girls work long days, are paid very little, are deprived of an education and are exposed for long periods to dangerous agricultural chemicals.

...hybrid cottonseed production gave rise to new forms of labour exploitation which involves the employment of female children as bonded labour and large scale exploitation of them. An important feature of hybrid cottonseed production is that it is highly labour intensive and female children are employed in most of its operations.

What distinguishes child labour in cottonseed production from other industries which employ child labour is that it involves relatively large numbers and female child labour constitutes majority of the total labour force.  It is estimated that nearly 450,000 children, in the age group of 6 to 14 years, are employed in cottonseed fields in India, in which Andhra Pradesh alone account for about 247,800 . This figure surpasses the total number of children employed in industries such as carpet, glass bangles, diamond polishing gem polishing and limestone put together in India. Moreover child labour in these industries does not exceed 25%, with a majority of them beings boys.

Though hybrids are used in cotton cultivation all over the country, hybrid seed production is concentrated in South India, particularly in the Telangana and Rayalaseema regions of Andhra Pradesh, which alone account for about 65 % of the seed production in India.

The exploitation of child labour in cottonseed farms is linked to larger market forces. Several large-scale national and multinational seed companies who produce and market the seeds have involved themselves in subtle ways in perpetuating the problem of child labour. The economic relationship behind this abuse is multi-tiered and complex, which masks legal and social responsibility.

Currently there are about 200 seed companies involved in production and marketing of hybrid cottonseeds in India, including several multinational companies (MNCs) like Unilever, Monsanto, Syngenta, Advanta, Bayer and Emergent Genetics.  MNCs are operating their seed business activities through their own subsidiary companies in India or joint ventures and collaborations with local Indian companies. The names of Indian subsidiaries or joint venture companies  of above mentioned MNCs are - Hindustan Lever Limited (for Unilever Plc ),  Syngenta India (for Syngenta AG ) Advanta India (for Advanta BV) Monsanto India and Mahyco  (for Monsanto), Proagro (for Bayer) and Mahendra Hybrid Seeds (for Emergent Genetics). In March 2002 Hindustan Lever Limited (HLL) transferred its seed business to a subsidiary company called `Paras Extra Growth Seeds` and formed a joint venture partnership with Emergent Genetics. HLL sold 74% of its share in Paras Extra Growth Seeds to Emergent Genetics.  

The role of MNCs in cottonseed business has increased significantly in recent years due to various trade liberalization policies introduced by the government after 1991. The recent approval of government of India in April 2002 for introducing BT (Bacillus Thuringiensis ) cotton in Indian market is expected to bring far reaching changes in terms of greater control of MNCs, which have patent rights over genetically modified technology, over  Indian seed industry in near future.

Though all the MNCs mentioned above claim that they are committed to highest standards of socially responsible corporate behaviour their activities in the area of cottonseed business in India are certainly not in tune with their claims. Though they are not directly involved in employing child labour their business strategies and profit motives encourage the environment which supports the practices of child labour in a big way.  The present study is an attempt to examine the linkages between multinational seed companies and local seed producers and role of MNCs in perpetuating the problem of child labour in hybrid cottonseed farms in AP.

...Regarding corporate social responsibility of its company, Syngenta states that 'As an industry leader, Syngenta takes its ethical, social, scientific and environmental responsibilities seriously. The trust and confidence of Syngentaís shareholders, employees and trading partners, as well as of government and regulatory authorities and the communities in which Syngenta operates, will only be earned and sustained if the company acts, and is seen to act, in accordance with the highest standards of fairness, honesty and integrity.'

In a similar way other MNCs i.e Monsanto, Advanta and Bayer also claim that they are committed to socially responsible business practices. Unilever, Syngenta and Bayer are member companies of the global compact, a joint initiative of the United Nations and private business companies started in 2000, aimed at improving the human rights, social standards and environmental protection.

The activities of these MNCs in the area of cottonseed business in India are certainly not in tune with what they claim about their commitment to socially responsible corporate behaviour. Though they are not directly involved in employing children they have substantial control over entire production process and seed farmers who actually employ children for producing seed for these companies. A large number of children, mainly girls in the age of 6-14 years, are working on the farms, which are producing and supplying hybrid cottonseed for these companies

...Though it is the seed organisers who make final agreements with farmers they are not independent to decide about the procurement prices to be paid to farmers. The company fixes the procurement price to be paid to the farmers by the seed organisers well in advance. Seed organisers do not have any control over it.

...There is a huge difference between companies' procurement prices and market prices. ...The market price of Syngenta's cottonseed 'Sandocot 35' is about three and half times the procurement price.  Compared to HLL and Syngenta the market price of Mahyco-Monsanto`s BT.cotton is very high. It sold one Kg of Bt cotton at Rs. 3550.

Though companies have a huge profit margin they do not seems to be making any rational calculation about cost of cultivation while fixing the procurement price to be paid to their seed farmers. With the current procurement prices of companies, seed farmers can not afford to pay better wages to the labourers and still earn a reasonable profit. Unless better wages are paid, it is difficult for the farmers to attract adult labour to work in their fields.  It is estimated that the farmers (using child labour) are currently incurring about Rs 220 for production of one Kg of cottonseeds (see table 7). The procurement price they are getting from companies is about Rs. 290 per Kg of seeds. After meeting the costs farmers get about Rs. 70 as a profit. About 50% of the production cost i.e.  Rs 110, is spent on wages for labourers. As already indicated the wage rates paid to children in cottonseed fields are about 30% less than adult female and 55% less than adult male wages in the market. If farmers have to replace the child labour with adult female labour the cost of labour would increase by 30% and with adult male labour it would increase by 55%.

Seed farmers have stated two main reasons for their preference for child labour: children's wages are much lower than adult wages and they are generally easier to control. Given costs of cultivation and prices they get for their produce seed farmers can not afford to hire adult labour by paying better wages and still earn a reasonable profit.  Accordingly a seed farmer who is producing seed for HLL `Government and non-governmental organisations are saying we should not employ child labour. If we have to employ adult labour we will have to pay double the wages than what we are paying now to children. With prices we get from companies we cannot afford to employ adult labour. Though our costs are increasing every year companies are not coming forward to increase their procurement prices.  In the early 1990s when we paid Rs. 8 per day for each for labourer the procurement price was Rs. 150 per packet (NHH 44 Hybrid). Now we are paying about Rs.20 for labour but the procurement price is only Rs 180 per packet. Our profit margins have come down drastically during last one decade but companies are able to increase their profit margin
Poor, but pedicured
It appears that those at the bottom are getting richer - but sadly the maths just doesn't add up
George Monbiot
Tuesday May 6, 2003
The Guardian

The global economy is working. The rich may be acquiring an ever greater share of the world's wealth, the ecosystem may be collapsing, but - or so we believe - the poor are emerging from poverty. This is portrayed as the ultimate test of the great neo-liberal experiment: if, as the world's resources are privatised and its corporations deregulated, the war against poverty is being won, then the accompanying inequality and destruction can be accounted as little more than collateral damage.

There is only one set of figures which provides a global view of whether the incomes of the poor are rising or falling, and it is cited everywhere. The trend, it suggests, is slow but significant: between 1990 and 1999, the percentage of the world's people living in absolute poverty fell from 29% to 23%. Ugly as some of its characteristics may be, the existing economic model is helping the poor.

The figures are compiled by the World Bank. It claims to know, to within the nearest 10,000, how many of the world's people are living below the international poverty line. The response of those who criticise the way the global economy works is to accept the bank's calculations, but to argue that there are more equitable and less destructive means of achieving the same results. But the figures are without foundation.

A new paper by the economist Sanjay Reddy and the philosopher Thomas Pogge demonstrates that the World Bank's methodology is so flawed that its calculations cannot possibly be correct. Not only does it appear wildly to underestimate the level of global poverty, but the downward trend it purports to show appears to be an artefact of the way in which it has been compiled. The World Bank's figures, against which the success or failure of the entire global economy is measured, are useless.

Most of the world's people do not use US dollars to purchase what they need, and a dollar's worth of currency in one part of the world can buy more than a dollar's worth in another. So to try to discover how many people live on less than the equivalent of $1.08 per day (deemed to be the absolute poverty line), the World Bank employs a method called "purchasing power parity". This measures the amount of goods or services which the equivalent of a dollar can buy in different countries.

The bank's calculations suffer, the paper suggests, from several fatal deficiencies. The most obvious of these is that its estimate of the purchasing power of the poor is based on the measure of their ability to buy any of the goods and services an economy has to offer: not only food, water and shelter but also airline tickets, pedicures and personal fitness training. The problem is that while basic goods are often more expensive in poor nations than they are in rich ones, services tend to be much cheaper, as the wages of the people providing them are lower.

If, for example, one dollar in the US can purchase either the same amount of staple foods that 30 rupees can buy in India, or the equivalent of 3 rupees' worth of services (such as cleaning, driving or hairdressing), then a purchasing power parity calculation which averages out these figures will suggest that someone in possession of 10 rupees in India has the same purchasing power as someone in possession of one dollar in America. But the extremely poor, of course, do not purchase the services of cleaners, drivers or hairdressers. A figure averaged across all the goods and services an economy can provide, rather than just those bought by the poor, makes the people at the bottom of the heap in this example appear to be three times richer than they are.

The bank would derive a far more accurate view of the purchasing power of the poor if it measured only the cost of what they buy, rather than what richer people in the same economies buy. Complete figures do not yet exist, but Reddy's and Pogge's initial calculations, based on the cost of bread and cereals, suggest that the bank's analysis might have underestimated the number of the world's people living in absolute poverty by some 30%-40%.

As the service sector expands in poor nations, the bank's figures will create the impression that the purchasing power of the poor is increasing, whether or not their real economic circumstances have changed. The same false trend is established by a shift to the service sector in rich nations, as one dollar there will then buy a smaller proportion of the total of available goods and services. The relative purchasing power per dollar of the people of poor nations is increased by this measure, even though their absolute cost of living remains unchanged. When house prices boom in New York, the shanty-dwellers of Lusaka appear to get richer.

These statistical artefacts create a downward trend in the poverty figures where no real trend exists. The bank has exacerbated it by recalibrating the international poverty line to reflect the pattern of total global consumption. As the world economy migrates towards the service sector, the poorest people in the poorest nations appear to require less money than they might otherwise have needed to maintain their standard of living.

Perhaps more gravely still, the figures which appear to be so precise that we can tell to within the nearest 10,000 how many of the world's 6 billion people are suffering from extreme poverty are, in reality, based on a mixture of guesswork and wild extrapolation. The first of the bank's two principal surveys measured price levels in only 63 countries. Embarrassingly, China was not among them, and neither that nation nor India figured in the second survey (from which the trend has been established). A set of global poverty figures, presented with six-digit precision, which contains no useful comparative data from the two largest nations on earth, could be described as imaginative.

The bank's statistics, moreover, do not account for changes in inequality. If a nation's total consumption is rising only because the rich have become richer, the figures will not show this: they will suggest, instead, that everyone has prospered. Yet we know that in many countries - especially those in which the privatisation, deregulation and reduction in social spending introduced by the neo-liberal model have been most extensive - the rich are becoming richer at the expense of the poor.

That the key global economic statistic has for so long been derived by means which are patently useless is a telling indication of how little the men who run the world care about the impact of their policies. If they cannot be bothered even to produce a meaningful measure of global poverty, we have no reason to believe their claim that they wish to address it. Development on earth proceeds at present without any reliable means of determining whether or not it is making the poorest people poorer.

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