It’s All About Cheap, Savar Bangladesh vs. Canadian Agriculture

Phil BD 2013     It is been 8 days since thousands of people felt the ceilings coming down on top of them in Savar, Bangladesh.  To describe the horror of that is difficult.  In fact, safely ensconced on our farms, that seems a world away.  To me though it is much different.  I have been to Savar, Bangladesh, at least 3 times and I’ve been in several garment factories in the Dhaka area.  I passed the last one in January 2013 as I drove to the airport.  They are huge buildings full of people yearning for a bit of the global pie.

So far there are at least 437 people dead from the collapse of the garment factory with 2437 survivors.  So, you can just imagine. This garment industry in Bangladesh is huge.  It is not as big as the agricultural economy in Bangladesh, but it does create so much foreign exchange.  Much of this clothing goes into the high-end markets in Europe with some of it ending up in North America.  You can visit any Wal-Mart and you will see the made in Bangladesh label.  I know that I try to buy all my clothes with the made in Bangladesh label.  It’s personal for me.  I’ve seen the empty stomachs. If I don’t buy those clothes, people go hungry.

It’s all about cheap!  You’ve heard the argument before especially in an agricultural sense.  In the Savar Bangladesh case, you have an insatiable demand for cheap clothing coming to one of the cheapest places to produce it in the world, Bangladesh.  In Bangladesh there is an insatiable supply of labor looking for a way to raise themselves out of poverty.  It’s not always pretty, but the end result is rising incomes in the country.  Garments not only raise people out of poverty, but they eliminate many of the empty stomachs we are so used to seeing there.  In Bangladesh now, poverty has noticeably declined.  I saw firsthand in January 2013.

Still, it’s about cheap.  The garment industry is essentially in Bangladesh because they can get quality there at very cheap prices.  In 2009 when I was there, I toured many garment factories.  Now, there are 30 million more people than there was 4 years ago but incomes are rising and poverty is decreasing.  When I visited those garment factories in 2009, the young women didn’t even look up when I walked among them.  They were so busy and intent on producing as many garments as they could.  They simply were competing against everybody else in the world and it was their way out.  Everybody there was one abject step from poverty.  The tragedy of last week and previous tragedies of which there have been many is a sorry example of how things can go wrong.

When I left Bangladesh 4 months ago, the scene at the airport is always Uber chaotic.  This time was no different.  Lining up, I was surrounded by Bangladeshis but also foreigners talking about garments being produced.  They were headed back to Europe, through Dubai.  It’s certainly a happening place when it comes to producing garments.

I bring this up this week because it’s personal to me but it also serves as a symbol of what drives our economic system.  Free markets are always ruthless for lower costs and maximizing revenue.  That’s called efficiency.  Every day on my twitter feed I have people try to get my opinion about our Canadian supply managed agricultural sector.  It’s always about getting the milk and poultry cheaper and how our agricultural system cannot be maintained.  How long will government subsidize this industry?  I hear that all the time.  Of course underlying all of that is the flawed notion that if we did not have our Canadian supply management system, we’d have this wonderful cheap milk and poultry panacea where consumers would sing the Hallelujah chorus.

In other words, it’s like some of our agricultural critics would like to take very successful parts of Canadian agriculture and drive it over to Savar Bangladesh.  It’s like cheap is some type of brass ring you grab for victory.  The older I get, the more I don’t get that.

Of course, many of you have never heard of Savar Bangladesh before this past week.  I get that.  Its only one example of many others throughout the world where people are producing items so cheaply it makes economic sense.  If the building is crumbling, I guess that’s a cost of doing business.   In agriculture, there is surely a large camp that believes in the same thing.  However, in Canada as well as other nations, some agricultural sectors reflect our traditions and our domestic market needs.  Somewhere, in the rear view mirror, somebody didn’t believe in cheap and thank goodness for that.

I often say it’s all about the agricultural economics.  I believe that.  However, that doesn’t mean there isn’t room for good regulation, whether that’s in Bangladesh or in our Canadian agricultural markets.  The drive for cheap will surely not die.  However, getting there in my mind is wide open to interpretation.