The ingredients for prepackaged snack foods on the Haitian market are entirely imported, of low quality and low nutritional value. Their growing role as a main source of food for lower-income Haitians, especially school children, is a threat to the health of the population. And there is little anyone can do about it. Or perhaps I should say, there is little anyone has tried to do about it.
The market is monopolized by a small number of elite local business people. Cost alone makes it almost impossible for a foreign entity to compete with them. These national producers and pseudo-producers all either import the very cheapest ready-made snack foods and put their own label on them, or they import the very cheapest ingredients and then make, package and distribute the snack in Haiti. But this is only part what makes it nearly impossible for a foreign company or even a Haitian company that wants to be socially responsible to compete with those who already dominate the field.
The industry is de facto unregulated. The government has laws and claims to enforce them but there is zero enforcement. Thus the Haitian businesses are protected from foreign competition by the veneer of government legislation and by their knowledge of, and connections inside what is essentially an informal and closed social system. The Haitian businesses in place also have a distinct economic advantage over any outside competitor that ‘plays by the rules’ because we can conclude from reported tariffs collected at the ports that they pay either no taxes or substantially less than would be legally mandated.
Competing with these entities may be nearly impossible, but if someone cares enough about Haitian children and the future of Haiti to try, there are prospective points of entry that an international social enterprise entering the market can use to its advantage. I conclude this article with a description of some of them.
Note that the research came from two consultancies I conducted, one for the American Peanut Council and one for Meds and Foods for Kids. During the work I conducted a review of the literature, interviewed Haitian business people and custom officials, visited the Haitian government’s only food testing laboratory–essentially a defunct operation–as well as several of the biggest snack producers in Haiti, and MCI (Ministry of Commerce and Industry).
Government vs. Merchant Elite: Who Controls of the Market
Government Regulations, Standards and Quality Control
The incursion described above of low quality manufactured ready-to-eat foods and beverages on the Haitian popular market has occurred in the context of weak government and the de facto absence of controls and consumer protection.
Oversight of production and processing of foods and quality control falls under the auspices of the Ministry of Commerce. In Avis CI/0009 dated February 2010, the ministry reaffirmed that,
Alimentary products should be healthy, appropriately packaged and risk free, meaning processed, prepared and conserved in hygienic conditions. They should also be accurately labeled with the following information,
- Name of food type
- List of all the food ingredients by order of decreasing proportion
- Name and address of the manufacturer, conditioner, and distributor
- Date of manufacture
- Date of expiration
- Lot number
In November 2012, with support from EU, MINUSTAH, the German Institution for Standardization, UNIDO, and the government of Brazil, and more $5 million Euros, MIC officially inaugurated the Haitian Bureau of Standards (Bureau Haïtien de Normalisation or BHN). The BHN’s tasks were to devise and implement standards for production and trade in the country, to train inspectors in applying the standards and enforcing compliance with labeling, quality certification, and international product standardization. In addition to governing the local market, the MIC assured the public that “made in Haiti” would “soon be definitely recognized in the international market.” The undertaking was backed up by a new “Metrology Laboratory” where products could be tested for compliance with hygiene safety standards.
There are some problems with the claims. Although the Ministry of Commerce boasts a “brigade of inspectors that strictly applies these laws and punishes non-conformance,” observations on the ground and from interviews with government officials confirms that in 2014-2015,
- BHN, the laboratory, and the Ministry do very little. To quote an official at the Direction de Controle de Qualite des Produits, “so long as a product doesn’t kill someone it can be imported and sold on the local market.” [1]
- Factory samples of locally made products tested are those brought in by the producers themselves, i.e. they can bring whatever they want to be tested as a sample
- Despite the laws: labeling, controls, and inspection are, de facto, non-existent, meaning that respecting the laws above puts manufacturers at a competitive disadvantage relative to non-compliant rivals
- Enforcement is, need I add, non-existent. Nor are there courts and lawyers competent to deal with adjudicating relevant cases
- Neither MARNDR nor MIC were able or willing to provide the consultant with a single document that defines the law (the document cited above came from a secretary acting independently of the Ministry)
- Most of the Haitian government websites are, to put it bluntly, facades with nothing behind them, no data, no downloadable documents. Click a hyperlink or downloadable document and in the vast majority of cases one gets nothing except perhaps a “site under construction.’ Associated service provider sites offer little data as well, other than typically contacts to lawyers or agents with the offer of facilitating access to the market for fees
- MIC staff referred the consultant to the “Director” who knew nothing but recommended a lawyer, saying, ‘he [the lawyer] knows’
- According to distributors (see contact list) there are zero controls on patents or use of copyrighted advertisements.
- No inspection labels exist, despite laws mandating them
- When we visited three local peanut producers, having gotten their contact information from jars of peanut butter in supermarkets, we arrived at impoverished households, located in slums, and where there was clearly zero phytosanitary controls. During the ensuing discussions it was quite clear that it never occurred to any of them that they could be inspected by a government official
- Imported eggs, meat and breads available in the top Port-au-Prince Supermarkets have no expiration dates
- One distributor/informant interviewed during the course of the research proudly proclaimed that, “Haiti has more laws governing distribution than the US ….” It is difficult to verify whether this is true, since they are neither applied nor published and no one at MCI knew anything about the laws. But the most important point that the businessman was making is that those laws that are applied are there to protect big business—such as his own. There are no active consumer laws. In short, it is a paradise for unethical and locally connected business owners, but a prospective quagmire for foreign entities that might try to enter the market and play by the rules (if they can find them), as well as a latent nightmare for consumers who may fall sick from products.
Elite, Imports, Corruption, Political Instability and the Stacked Deck
In the absence of government regulations seen above, any endeavors to import must consider the competitive advantage of those already importing and in control of the customs houses and ports. Figure 32 on the following page uses edible oil imports to illustrate the problems with corruption and favoritism, and elite control of customs houses. Haiti produces no edible oil and, as seen earlier, the population is on the margin of survival regarding edible oil consumption. Biologically, the Haitian population cannot survive with significantly less oil than is imported in the maximum years seen in Section 5. Yet, with the lone exception of the year 2002—more than 2 times higher than the two years around it—we see that the official tally of oil imports fell far below this threshold. This is most likely a reflection of the impact of tax evasion by oil importers that fluctuates with the major political events of the time. For example, changes in recorded imports surrounding the fall of the Aristide government in 2004 have been attributed by some observers to increased imports following the imposition of an aid embargo, and by organized resistance from importers who were being compelled to pay taxes.
In summary, important points that can be drawn from what we know about the importers and distributors are that,
- At least some and perhaps most of the highest tier importers pay little to no taxes (as suggested by the data and according to informants interviewed during the course of the present research), so it is almost impossible to compete with them ( i.e. their profit margins are less than the taxes that a legitimate importer would pay).
- Corruption at the customs houses means that even if they did pay taxes, other importers face significant and often inscrutable and unpredictable obstacles.
- Some elite local processors and packagers may not conform to international standards or laws and instead use inferior products, mislabel, pirate internationally copyrighted packaging, and make false claims regarding nutritional content. They also understand local culture and values meaning they can do all this in such a way as to take maximum advantage in advertising and managing consumer taste and packaging preferences
Summing up these factors, the owner of one of the largest importing agencies in Haiti explained to the consultant, in private, that “these guys could not survive in a competitive market.” The point being that a distributor who tried to conform to international and Haitian laws and standards would be driven out of business by rivals who evaded taxes and otherwise gamed the system. The primary conclusion that flows from the situation described here is that any social enterprise hoping to reach the popular market with good, nutritious snack foods may arguably have to work within the existing system, and hence with established distributors of bad snack foods.
Getting past the Elite Merchants
There are three ways to get around the elite national enterprises that dominant the market and to get through the labyrinth of informal government obstacles that gate keep:
1) partner with one of the local distributors,
2) leverage the role of international social enterprise that has humanitarian goals– such as getting nutrition food to hungry children (RUFTs for example)—using appeals to and contacts within embassies, high levels of the Haitian government, the UN, and NGOs to level the playing field,
3) both partner with one of the local distributors and leverage the status of social enterprise.
4) shame the producers of bad snack food into providing better quality, fortified snacks
The success of either strategy depends on publicity.
Publicity
Popular Class Haitians are highly sensitive to suggestion and rumor and, very importantly, the population tends to respond to information in an unified, integrated and reactive manner. The extremity of the point was highlighted in 1998 eclipse when warnings on the radio not to look at the sun during the eclipse became a veritable panic. On the day of the eclipse one would have been hard pressed to find a dog in the streets. Virtually the entire 2.5 million population of Port-au-Prince barricaded themselves in their homes for the entire day. Many stuffed papers and sheets in all the cracks to prevent any sunlight from entering the home. At least 5 people died from suffocation because they so thoroughly sealed their homes they cut off the oxygen supply.
Some advertisers have managed to take advantage of this tendency for rumor and herd mentality During the 1980s and 1990s, in the collective mind of popular class Haiti, malt beverages became a “fortified” food. The campaign was so effective that malta ranked 27 in the Most Nutritious Food Survey conducted during the course of the research, several notches above Akamil—the fortified bean and grain formula introduced by international nutritionists and NGOs during the 1960s. Energy drinks have also managed to get themselves a place in the top thirty most fortified foods category, albeit a countervailing rumor has convinced a large minority of the population that Energy Drinks will eventually maim or kill the user and they are taboo to women because of they are believed to have aphrodi
siacal qualities that might lead a woman to do things she will regret or that would soil her reputation. The heavily sweetened and unfortified Dominican wine, Campeon, (Champion) is another example. Featuring a weight-lifter on the label, is has, with no advertising whatsoever, become equated with vitality and athleticism. Plain salted crackers became a common meal substitute for children because they are “salt food” similar to the balanced mid-day meal.
The belief that such foods are nutritious—especially vis-a-vis popular class Haiti’s sophisticated understanding of nutrition seen in this post–can be conceptualized as a dangerous shift in food consumption patterns and comprehension. The trend is concurrent with urbanization and a greater demand for foods that ship and store well and with long shelf life, particularly important in Haiti where electric service and hence refrigeration is undependable and, in the best of areas, seldom available for more than eight hours per day. These factors create a situation ripe for exploitation by unscrupulous marketers.
But the gullibility can work to the advantage of any socially conscious marketing campaign. By emphasizing the importance of nutrition, the nutritional value of snacks such as RUFTs, a responsible marketing campaign can raise the level of awareness and—without directly mentioning other brands–call attention to the low quality ingredients in other products. In this way they can start their own folk beliefs, but one with substance and verifiable. By actually getting nutritious snack foods onto the market we can reinforce the campaign, providing people with a bona fide alternative to low quality snack foods.
Getting to the Market
Similarly, there are relationships inherent in the Haitian informal vs formal markets that offer significant opportunities to get nutritious snack foods onto the popular market. Specifically, the population of Haiti is radically market and entrepreneurial oriented, as much as 50% of all adults are engaged in some type of trade. There are ways to maximize the interest in trade, scarcity of credit, and links before formal and informal sector merchants what could be utilized to assure widespread distribution of higher quality snack foods.
Among 632 respondents to a random, person on the street Consumer Survey carried out in 2013, we found that fully 29% of all respondents had at least one person in their home who was selling snacks who had sold them within the past 12 months. In 87% of those households, the vendor was a woman; in 12% of the households the vendor was a man, and in 2% there were vendors of both genders (the total exceeds 100% due to rounding). The most common snacks sold were cookies (46%), crackers (30%), and peanut butter (13%), while only 1% primarily sold popcorn. Thus, while there is only a weak formal distribution system in Haiti—as seen in the precious chapter– the informal distribution system is so pervasive that 1/3rd of all households are involved in redistribution. The reason for the extent of involvement in the snack trade has to do with the sheer numbers of people who are poor and dependent on petty trade. As seen at the outset of this report, 70% of the population hovers around the margin of extreme poverty. The vast majority conduct their daily routines—production, work, trade, and purchases—in the informal economy. But the formal economy impinges on their lives. It is the source of at least half of all food stuffs. And when it comes to trade and distribution there is an interchange between actors in the formal and informal market economies that offers a point of entry for savvy minded distributors, especially those with an eye on working with the poor.
Plugging into the ‘Dueling Economies’
The formal economy is the most important entry point for manufactured products but there is a relationship between the two that should not be overlooked and could provide a valuable tool to make the informal economy work to the advantage of any marketer interested in breaking into the Haitian snack food market, particularly social enterprises that would hope to provide snacks of greater nutritional value than what is currently provided.
The main actor in the formal economy is the komesan, the redistributor of mostly imported goods. By virtue of his/her link to the formal economy, the komesan has greater capital than the key actors in the informal economy, and often has access to a line of low-interest or even interest-free credit. The key actor in the informal economy is the sara, and because she is in the informal economy she can only access credit at exorbitant rates, as high as 23% per month. Even in the humanitarian aid-funded credit union sector she must pay 3% to 6% per month.
Thus the komesan is able to exploit the sara by virtue of her desperation for credit. The komesan sell their imported staples, cookies, and crackers to the madan sara on credit. The woman has 21 to 30 days to pay for the goods. If she sells it at retail market prices she stands to earn about 20% profit, over the period of one month. If she can sell it all. Because boutik and many other women also get the foods on credit and sell imported flour, rice, sugar, cookies and crackers out of their homes, the products sell slowly.
So rather than wait and make a small profit, the madan sara dumps the imported foods at below market prices so that she can get the cash and trade in domestic produce, an endeavor in which she can earn more money, faster. The aggregate impact of what she has done is to subsidize agro-industrial imports from developed countries (imports that were already subsidized in the countries of origin). In other words, she is undermining her own local economy. And once again, the reason she does it is that she is desperate for market capital.
The point here is while it seems an almost Machiavellian—but best understood as systemic and incidental–it should not go unnoticed that sellers of high nutrition RUTFs produced with local produce may find it justifiable—even prudent and in the best interest of both malnourished children and local producers—to exploit this arrangement by offering madan sara RUTFs on credit and letting them sell it as they see fit.
NOTES
[1] “depi pwodwi ya pap touye moun yo ka enpote’l jan yo vle sou mache ya”
