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2. The Pacific Export Growers Partnership (PGEP) is an innovative initiative aimed at developing a fair trade supply network from the Pacific Islands to the international market. The initiative was developed by African Pacific, an ethical trading and supply chain management company based in Australia, and FairMatch Support, an organization based in The Netherlands with a strong track record in the development and support of innovative sustainable value chains from developing countries to the European market. Pacific co-founders are John Saki (Guadalcanal Origin Trade) from the Solomon Islands, Sakiasi Veitogavi (Naco Chambers/CETEL/Bula Organics) from Fiji, Pius Mimpi (Middle Ramu Cooperative Societies) from PNG and Ursula Rakova from Bougainville. The first years implementation phase of the PGEP is currently funded by ICCO a Dutch inter-church organisation for development cooperation which focuses on access to basic social services, fair economic development and promotion of peace and democracy.African PacificFairMatch SupportICCO 2

3. To provide an alternative market structure to the existing exploitative practices through transparent and sustainable partnerships between the growers and the Traders of the Pacific Region 3

4. PGEP links 15 000 growers in the Pacific Region into the international market by developing commercial trading platforms and building alliances that ignite action across the Pacific Region in which all partners are committed to each others success. The PGEP is already a functional trading platform. On average 20% of the FOB price is spent on in country administrative and logistic‘s expenses, with 80% of the value being paid directly to growers. The aim of the PGEP is to be a self sustaining trading network by 2012, provided funding can be found to continue to support the initiative and the capacity of the PGEP members. 4

5. Components 5 There are two components to the PGEP – an upstream and downstream component. The upstream component is production, processing and export of Pacific commodities within the Pacific Islands (initially coconut oil and cocoa, later carbon credits and others). Production is either done by individual growers or by growers organized in groups. Some of these groups already exist – others have to be developed. Under the PGEP, producers (or groups) sell their produce to local business centres which carry out primary processing tasks, such as pressing of virgin coconut oil and fermenting and drying of cocoa. The processed product is then be exported by a licensed exporter, who may also be the business centre. The downstream part of the PGEP connects Pacific Island producers to the world market and a transparent business support infrastructure. Training, business support, regular market information and knowledge to producers and producer groups is provided, enabling producers to play a more strategic role, take on a stronger negotiating position and make informed decisions within this challenging business environment. An open source information system- either web-based or mobile phone based - is anticipated to play a key role in this process. This information system is used to exchange information on prices, orders, volume, best practices, etc allowing growers to validate information they are receiving (e.g. price quotations) and allowing for monitoring of the actual behaviour of actors in the supply network. Where needed, local business centres can develop local solutions for linking growers to the information system. In the longer term, it is anticipated that PGEP could be used for other Pacific Island commodities.

7. 1.1Rationale The reasoning behind the development of the AP/PGEP model The overall aim of PGEP is to create an alternative for the existing dominant market structures on the Islands, strengthen the position of local producers and bring more export revenue to the Islands, thereby increasing the returns for farmers and processors. PGEP is a transparent and sustainable network of companies and other organisations that work together towards a shared goal. The partnership will be opened to other companies that want to trade commodities from the Pacific Islands, as long as they share the goal and accept the basic principles that guide the methodology and predict valid development outcomes. PGEP can be used for any commodity that is produced on the islands and the logistical system developed might be an example for other areas where co-operative structures are no solution but involvement of producers is wanted. Value-adding through the marketing of ’Pacific Story” brands as well as organic and fair trade certification are being developed. Discussions are already well underway with the Fair Trade Association of Australia and New Zealand regarding certification and cooperative approaches. The PGEP Information system allows producers to validate whether the price offered is fair and provide the possibility to bargain collectively (locally, nationally, regionally) through the system. As information becomes increasingly available, greater efficiencies in the supply chain are also expected and producers’ capacity to use the system to their advantage will be built. 7

8. 1.2 Current trading practices in the Pacific Traders are living on their positioning of knowledge which creates serious inefficiencies. Producers are being squeezed all over the world, and especially in a lot of developing countries. They are working on a survival level and as such do not reinvest in their commodities, thereby creating huge inefficiencies in the system. Current trading systems are unreliable It’s a destructive system in which only a couple of actors are setting the game. There is a limited understanding of the supply chain. ie growers, processors. Economic activities currently existing in the Pacific Islands are mostly controlled by monopolists or dominant business structures. Due to the scattered locations of the growers and small units of production, a traditional Fairtrade supply chain with cooperatives cannot be implemented efficiently. 8

9. 1.3 Key elements The aim of the PGEP is to develop a supply network from a number of Pacific countries to the international market i.e to create a new trading system that would change the way communities/landowners/growers manage their resources and trade their products. The PGEP has two platforms – a commercial / trading platform and a social infrastructure platform. The PGEP has an upstream and a downstream component.  Upstream is located on a number of Pacific countries and consists of production, processing and export of Pacific commodities done by individual growers and by growers organised in groups.  Downstream reaches out to the world market and done through marketing the Nui brand where 2% of Nui sales is paid to the Nui Foundation. Funds from the foundation will be used to support the growers and for community based projects on the islands. It is a business model not a control model (certification/development model) that is about economic development and measurable improvement in the livelihoods of communities It’s a paradigm shift from current trade. The aim is to make the whole supply chain transparent, linking farmers up to exporters, up to processors, up to final buyers. If you give farmers access to reliable outlets, then at that moment they will become more interested in their own production system, and by doing that they will reinvest and the quality and quantity will increase, and by doing that everybody can make a serious living out of it. Specialty markets are required to start a system 9

10. 3.1 Team leaders Are the core element of the model. Team leaders from each country are identified as traders Demonstrated Leadership qualities in each country in the Pacific Must be vigilant about transparency Represent the regions interest 3.2 The Growers The key benefactor/partner in the model Have limited knowledge of the supply chain and how the market works Require assistance to gain information To be empowered to access a secure market, negotiate better prices through an improved bargaining position and to access valuable information on markets and best practices. 3.3 Transparency and the Supply Chain  Transactions are critical and the profit of a transaction dictates the outcome of that transaction – he who owns the profit of a transaction dictates that transaction and the next transaction. The energy to grow the system comes out of the transaction.  The transaction is a distribution centre of the supply chain, the local economy is enabled because a lot of people are transacting and being paid. Triangular model of supply chain is still developed.  There are lots of interwoven relationships and lots of multiple transactions that are interlinked with each other, and all the symbiotic relationships that are extremely complex and diverse make the system stable and robust.  All information must be available to everybody in the supply chain.  The supply chain must work as a collaborative process involving all stakeholders.  Labour is valued and is critical for long term sustainability and equity. 10

11. 1. Assessment and planning phase (current 12 month phase): The objective of the assessment and planning phase is to build the foundation for the implementation of the PGEP. This includes country specific analysis of trade bottlenecks and solutions to overcome them; a conceptual design of PGEP Information system as well as for the PGEP and; the development of the implementation phase and identification of potential donors. 2. Implementation phase: During this phase, it is anticipated that the focus will be on capacity building of growers (especially in business skills and use of the PGEP information system), development of grower groups, set-up of local information sharing mechanism, and selection and/or set-up of a local processor or exporter. At a central level, the PGEP information system will be developed and rolled-out including training of users. 3. Support phase: After the implementation phase, it is anticipated that supply chains should be able to function adequately but there may be need for some support (information system, development of new products) and the monitoring of development outcomes. 11

12. 12 1.Unprecedented right to foreign corporations 2. Global government tax free incentives will undermine local business setups 3. Restricted foreing investment. 4.Undermining of traditional right to land

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