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You may have read a blog I posted recently discussing some of the problems with the Fairtrade system; this drew directly on a Financial Times article detailing the ways coffee growers in Peru pass their products off as Fairtrade while circumventing the rules. Soon after, the Fairtrade Foundation wrote back with a defense of the system and principles by which farmers are certified and monitored.

The press release answers the FT reporter’s charges that these Peruvian farmers make below the legal minimum wage, arguing that they in fact earn more than what uncertified growers in the region pay their employees despite selling only a fraction of their full crop.

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The BOP business news from India brings readers updates on three firms whose names ought to ring a bell - Arvind, Hindustan Lever, and ITC. All three were featured in "The Fortune at the Bottom of the Pyramid" and have been the subject of case studies, speeches, articles, and much more. And now, thanks to the Indian business press, we hear about their continuing push down market.

First there's an update on Arvind Mills, the company behind Ruf & Tuf jeans and other BOP-friendly consumer products. In Prahalad and Hart's original s+b article, they describe how the company moved strategically into a new market:

Arvind Mills has introduced an entirely new delivery system for blue jeans. Arvind, the world’s fifth-largest denim manufacturer, found Indian domestic denim sales limited. At $40 to $60 a pair, the jeans were not affordable to the masses, and the existing distribution system reached only a few towns and villages. So Arvind introduced Ruf & Tuf jeans, a ready-to-make kit of jeans components (denim, zipper, rivets, and a patch) priced at about $6. Kits were distributed through a network of thousands of local taoilors, many in small rural towns and villages, whose self-interest motivated them to market the kits extensively. Ruf & Tuf jeans are now the largest-selling jeans in India, easily surpassing Levi’s and other brands from the U.S. and Europe.

Now Arvind has entered into a joint venture with the U.S.-based VF Corporation in order to better market VF’s branded apparel to India. In my opinion, VF probably wants to bring Arvind on board because they’ve demonstrated success in reaching the BOP. VF doesn’t want to miss out on the market, but they aren’t sure how to reach it. A perfect reason to partner.

The second update is about Hindustan Lever Limited (HLL), whose Project Shakti sets up small enterprises selling health and hygiene products. The company recently announced its expansion plans:

To support Project Shakti, we are now launching value-added services in rural belts. With Shakti Vanis, we are educating villagers on health and hygiene. Also, we are running campaigns on ORS (Oral Rehydration Solutions) in villages. As part of the strategy, HLL has tied up with [the] Scojo Foundation to offer spectacles to villagers at low price points... With this, Project Shakti will be operational across all states in India. The company also plans to cover 500,000 villages with 100,000 Shakti Ammas (women entrepreneurs) in the next two years.

Finally, ITC announced plans to further expand its eChoupal system. Through the Choupals (meeting place in Hindi), rural farmers learn management techniques, order fertilizer and other supplies less expensively, check market prices, and sell products online. As a result, earnings have increased up to 20 percent. Like Hindustan Lever, ITC plans to further expand:

ITC Ltd is also planning to set up 50 Choupal Sagars (rural super stores) by the end of this fiscal year. This is in addition to the existing network of 5200 choupals in 31,000 villages that serve 3.5 million farmers.

Blogging to wrap up a lazy Sunday evening on a beautiful Labor Day weekend (post Ernesto that is).  Lotus Quimica- this week's featured company is an interesting case- they also tackle the water issues I touched on earlier in the week, although at first I was a bit aprehensive about their solution.

See, Brazil has a fairly intense dry season in which the available water in lakes and reservoirs can drop dramatically, leaving those that rely on these sources in a perilous situation.  The founder of Lotus, a chemist, actually discovered a product that reduces evaporation from these bodies of water by 50%.  This works via hydrophillic and hydrophobic properties of the chemical Lotus produces.

At first glance, it seems somewhat questionable- interfering with a natural process in such a way.  Lotus' founder, Marcos Gugliotti, understood that many potential clients would share the same concern, so he has gone to lengths to receive government approval- Brazil's International Institute of Ecology has said that the powder is non-toxic and does not significantly affect the natural cycle. 

This seems almost too good to be true- a safe, chemical solution to water shortages due to high temperatures, but Lotus seems to have a promising product.  To learn more about this innovative company, read the profile based on Kelly Desy's interview.  And if you're in the DC area, I hope you stayed drier than I did when Ernesto passed through...

Everyone agrees that microfinance is the coolest thing since sliced bread.  That’s why in the last two months we’ve seen it covered by the Financial Times, Reuters, The Globalist, The New York Times, The Economist, The LA Times, Business Week, CNN, and The Times of London.  And in all likelihood there are other articles still hovering beneath our radar. 

I must confess that at first I was excited to see the mainstream media weighing in on development issues affecting the base of the economic pyramid.  I held the opinion that microfinance articles—no matter how repetitive and formulaic—attract publicity to an important cause that draws less attention than Paris Hilton’s latest sexcapade.  But I’ve changed my mind.

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