Chapter 8 A SHIRT IN THE MARKET

A Cotton Farmer In Kurnool

Swapna, a small farmer in Kurnool, cultivates cotton on her small landholding. Due to the high cost of inputs like fertilizers and pesticides, she borrowed money from a local trader at a high interest rate at the beginning of the cropping season. As a condition, the trader made her agree to sell all her cotton to him. After harvesting, Swapna sold her cotton for `3,000, from which the trader deducted `3,000 for loan repayment and interest, leaving her with nothing. Despite knowing the market price was higher, Swapna couldn't argue due to her dependence on the trader for loans and survival during periods of no work or income.

The Cloth Market Of Erode

Erode, in Tamil Nadu, hosts one of the world's largest bi-weekly cloth markets, attracting merchants and traders from across South India. Merchants supply yarn to weavers in surrounding villages, who then produce cloth at home on looms, often working long hours for low wages. This arrangement, known as the putting-out system, benefits merchants by reducing their costs and managing production, while weavers gain access to yarn and a market but are dependent on merchants who dictate terms and pay low prices.

Putting-Out System– Weavers Producing Cloth At Home

In the putting-out system, merchants provide yarn and orders to weavers, who produce cloth in their homes. While this relieves weavers from the burden of purchasing yarn and selling finished cloth, it makes them heavily dependent on merchants. Merchants hold significant power, dictating production and paying low prices, limiting weavers' knowledge of the final market and their earning potential. Weavers often invest their savings or borrow money at high interest rates for looms, earning a meager monthly income despite working long hours.

Weaver’s Cooperative

Weaver cooperatives offer a solution to reduce dependence on merchants and improve weavers' income. In a cooperative, weavers collectively procure yarn, distribute it, and manage marketing. This reduces the merchant's role and ensures weavers receive a fair price for their cloth. The government supports cooperatives by purchasing cloth at reasonable prices for programs like school uniforms or through stores like Co-optex, providing a more stable livelihood for weavers.

The Garment Exporting Factory Near Delhi

Cotton cloth from Erode is supplied to garment exporting factories near Delhi, where it is made into shirts for export to foreign buyers, primarily from the US and Europe. These foreign buyers exert significant pressure on exporters, demanding the lowest prices, high-quality production, and timely delivery. To meet these demands and maximize profits, garment factories often cut costs by employing workers, mostly women, on a temporary basis and paying them the lowest possible wages.

Payment To Workers (Per Month)

Workers in garment factories receive low wages, with specialized tasks like tailoring fetching the highest pay (around `3,000 per month). Women are often employed in lower-paying jobs like thread cutting, buttoning, ironing, and packaging. These workers are frequently hired on a temporary basis, making them vulnerable to job loss.

The Shirt In The United States

A shirt that costs about `300 to produce (including raw materials, wages, and factory overheads) is sold to a foreign buyer for `300. The garment exporter, after paying `100 for cloth and raw materials, `25 for wages, and `25 for office costs, makes a profit of `150 per shirt. In the US, the same shirt is sold for `1,800 (approximately $26). After deducting the purchase cost (`300), advertising (`400), and storage/display costs (`200), the US businessperson makes a profit of `900 per shirt. This illustrates the vast difference in profit margins along the chain of production and distribution.

Who Are The Gainers In The Market

In the chain from cotton producer to shirt buyer, not everyone benefits equally. The foreign businessperson earns the highest profit per shirt (`900), followed by the garment exporter (`150), while the workers in the garment factory earn very little (`3,000 per month total). Small cotton farmers like Swapna and weavers in Erode also earn meager amounts despite their hard work. The merchants and traders fall in between, earning more than weavers but less than exporters. The gainers are primarily those with capital and power, such as foreign businesspersons, garment exporters, and merchants, while workers, weavers, and small farmers often receive disproportionately low returns for their labor.

Market And Equality

Markets, while providing opportunities for work and trade, do not offer equal opportunities to everyone. The disparity in earnings and purchasing power, evident between weekly market traders and those in shopping complexes, highlights how economic inequality is perpetuated. The poor often depend on the rich and powerful for loans, raw materials, marketing, and employment, leading to exploitation. The chapter suggests that forming cooperatives and ensuring strict adherence to laws are ways to overcome these inequalities and promote fairer market practices, linking economic fairness to the democratic principle of equality.