I spent most of the last weekend at a workshop organized by this not-for-profit called Khamir somewhere near Bhuj in Kutch. It was a rather small-scale festival they had organized called the Desert Art and Music Festival (though the fees were anything but small scale, setting each participant back by seven and a half kilorupees). The art on display were crafts local to the Kutch region, and we were given hands-on training in various crafts by artisans that worked with Khamir. The music, sadly, wasn’t Kutchi, as two rather large bands had been imported from Rajasthan (from Bikaner and Jaisalmer) and local musicians only played the opening acts.
I’m not entirely convinced by Khamir’s business model. Ok that may not be an accurate statement since strictly speaking Khamir isn’t a business, but to put it in another way, I’m not convinced that Khamir’s contribution to the ecosystem of handicraft artisans in Kutch is entirely positive. It may not be possible to make a convincing economic argument right now, but my sense is that they are distorting the market for handicrafts.
Actually it may not even be their fault. In a rare conversation on economics with one of the artisans, I found that it is actually easier to start a not-for-profit than a for-profit. This artisan wanted to train youth in his village and surrounding areas, and had found that there was considerable demand abroad for what he made. When I asked him why he didn’t set up a for-profit company instead, the answer was that it was next to impossible for him to get a bank loan for one such venture. But he had found some means by which he had tied up a rather large no-questions-asked donation from the Government of Gujarat.
Coming back to Khamir, they are in the business (ok it’s impossible for me to think in a non-business sense) of promoting the crafts of Kutch. They have a number of “studios” where local artisans, who have been given raw material, work and they sell the products in their own local shop and also in the US and Canada. Apart from this, they procure stuff from other local artisans and sell it on. In that sense, they are just like any other middlemen – except that they are not for profit.
If you ask why this is a problem, I point you to the Indian airline industry. When one player in the market doesn’t have a strict profit motive (like Air India), they can work on wafer thin (or even negative) margins, a level at which their for-profit competitors cannot really compete. Sooner or later, the for-profit competitors get driven out of business (like Kingfisher Airlines, for example), and soon the market itself has disappeared!
While Khamir itself might be too small (their campus suggests they are rather well funded, but their scale of operations doesn’t seem commensurate), the fact that it is easier to get funding for not-for-profit than to start a for-profit business in this space (as the artisan alluded) raises the sceptre that there could soon be more such not-for-profit middlemen in this business, which might make a real dent in the business of Kutchi crafts.
The story of intermediation in this market is also interesting and deserves to be sold. Both the artisans we spoke to said they don’t prefer to do business with large for-profit middlemen such as FabIndia or Mother Earth since the latter demand a high degree of standardization, which is tough to achieve in a hand-craft environment. Rather than face high rejection rates at such middlemen, the artisans instead find it more profitable to peddle their wares at sundry craft exhibitions all over India, where they are more likely to sell their stuff, though with a higher risk in terms of profits and considerable hardship in terms of travel and sales.
The thing with handicrafts is that the market is rather fragmented and it is only really large-scale players such as FabIndia or Mother Earth who have cracked the model in terms of effective intermediation (the large scale is necessary given the fragmentation of the market). The “illiquidity” in the market means that inventory costs can get rather high, and thus a considerable retail margin needs to be allowed for to enable effective intermediation. In the face of this, organizations such as Khamir who “work to give as much money as possible to artisans” can get rather distortionary.
Two minutes was watching a weaver work at the Khamir facility drove me nuts (it was such a laborious process I wasn’t able to take it any longer). So there is this wooden piece that has to be tossed from one side of the loom to the other each time a thread is passed (and the thread has to be practically hammered in to the rest of the cloth) so even a full day of work by a skilled artisan can only produce a few meters of cloth. Watching the hand loom weavers work even made me wonder if promotion of such arts only serves to keep people poor.
So the problem is that handloom weaving is a rather laborious process, and extremely inefficient economically. The same kind of cloth when produced by a machine results in significantly lower cost, and by that logic, handloom weaving being an ineffective process should probably go extinct. While premium branding for handloom in certain circles has ensured higher prices that could possibly compensate the weavers, it is not unfathomable that machines will be soon able to make (if not already) cloth in a texture similar to what is produced by hand looms.
For someone with a short attention span and ADHD and for someone who is a computer programmer, it was unfathomable that people do a rather laborious task repeatedly through the course of the day, and over several days, to earn their living. We asked an artisan why he continued to make cloth by hand, and he replied that the handloom tag helped him earn a better margin. When I suggested to him that greater volumes would make up for the lesser margins that powered looms would offer, he talked about certain intricate designs that according to him only hand loom could create. I could only think of one thing at that moment – the CNC Lathe.
I find the entire ecosystem disturbing. That it is easier to find funding for a not-for-profit venture than for for-profit. That these funds are being used to keep alive trades that have no business to do business (given their inefficiencies). That these efforts put the artisans into a false lull that there actually exists demand for their produce, and at a level that can compensate for their inefficient processes. Which prevents creative destruction, and holds back innovation. And leads to the not-for-profits painting a rather romanticized picture of poverty and traditional rural crafts to get more funding. The cycle continues.
Given that the festival did not have sponsors, I would assume that a significant portion of the fee I paid would have gone into paying the musicians. For that level of fee, I expected a rather small and intimate concert. Instead what I got was two public concerts (where the general public got to watch for free) where there were more speeches than there was music, and one of which started so late into the night that I drifted off.
In the world of not-for-profits, I suspect that “value for money” is perhaps a dirty phrase.
Hey Karthik,
Apart from analytical viewpoint you brought out, it seems you had a nice time out there, and overall it was a gr8 experience!
Just thought to share my two cents on this:
– business model may be debatable, but this is quite a prevalent model in most such scenarios. The “creators” are traditional, local/ tribal folks, who do not have any business skills. The only skill they have is that skill… like the handloom guy, that is what he knows, and has served his life towards this!
– I saw the same concept in Shantiniketan,Bengal; where outside the university (quite an economically backward area without electricity etc.) there is this artisan’s village who make leather, textile, bamboo products – all hand made – the only sales forum they have is this cooperative shop and such middlemen. They have no reach to the market in general. Obviously, without electricity, there is no concept of automation.
– Automation kills their skills. Most of these artists are quite old. Their next generations have moved to urban locales. They are not doing it for money, but to spend their lives doing what they know best.
– As a society, it is (may be) the prerogative of the local govt. to showcase the skills and the tradition.
– The tradition/culture has to be “romanticized” to give it a special/ larger than life picture.
– FabIndia, Mother Earth are doing good for them, but the scale and impact is questionable. Another orgn. promoting this is Khadi Gramodyog, but as you pointed out rightly, it also suffers from its NGO – non-business mindset!
– Funding is also at a very superficial level. There is no funding for this village in bengal i mentioned earlier.
A different study and personal experience points out that the better funded NGOs are excellent marketing organizations, however, their commitment/contribution to the actual needy is questionable.
– usage of and value of money, as you rightly pointed out, is an extremely exploited and misunderstood term.
The tradition/culture has to be “romanticized” to give it a special/ larger than life picture.
Why is it necessary to give a larger than life picture? What is so larger than life about tradition/culture?
I saw the same concept in Shantiniketan,Bengal; where outside the university (quite an economically backward area without electricity etc.) there is this artisan’s village who make leather, textile, bamboo products – all hand made – the only sales forum they have is this cooperative shop and such middlemen. They have no reach to the market in general. Obviously, without electricity, there is no concept of automation
This is Gujarat, so electricity is not a problem! While some aspects of their skill might be superior to machine made stuff, I think they should try and use mechanization where it doesn’t affect quality, so as to improve their output.
NGOs would do better to help them mechanize/improve rather than sustaining their inefficient crafts
Hi Karthik,
Sorry to hear that you went away from Khamir with so much angst! Everyone is entited to their opinions and so we respect yours. But it’s only an opinion, an impression that you have carried away without caring to discuss it with us in a spirit of openness, debate or inquiry. It is disappointing that in all the time that you were here you didn’t think it important to interact on any of these relevant concerns with the Khamir team yet went ahead to put it in a public domain. Blogging, like anything else carries a responsibility. This discussion might have been more valid if you had checked the facts before posting.
The festival was an invitation to participate and experience certain realities that exist in our country. It was an opportunity to open one’s mind and heart and respect other forms of skills and knowledge. It was an attempt to break the barriers of intellect, class, caste and country. It didn’t work for you. That’s perfectly ok. Perhaps you are not yet ready for it.
And out of all sincerity, since you were so unhappy with what we had to offer, we would be happy to return the money you have paid to participate in the festival. Well, hope you at least enjoyed the food 🙂
Best, Khamir Team
As a long-time blogger (I’ve been writing for nine years now), I consider it my duty and responsibility to indulge in discussions and interviewing people before forming my opinion about this. Which is why I spent considerable amount of time talking to the artisans working at Khamir, and a large part of this post is based on their inputs.
I think this response by you is self-explanatory in terms of why I didn’t indulge in free-flowing discussions during my time there – it is very likely that I would have faced an emotional pitch from you (like your comment here) rather than a rational discussion based on economic principles.
As for your offer to refund my fee, thanks but no thanks. My attendance at the festival is a done deal and there is no point in undoing it. Moreover, I don’t think refund of my fee will in any way change my opinion towards the organization or its economic model or the festival.
Yes, the food was great, especially the dinner at Bhujodi.
Khamir team,
I think your comment would be better served if you rebut his arguments or engage in a discussion on process improvement. My experience in corporate or non-profit environments have informed me that customer/social media feedback is valuable. You should acknowledge the fact that Karthik took the time to write about his experience.
You cannot invalidate that experience by acting in a petulant manner.
Hi Arun,
We would have loved to engage with Karthik when we had the opportunity to do so. We believe that he has brought up relevant points. However he has chosen to present them as judgements that he has already made based on discussions he had with a couple of artisans – and we have no choice but to go with his interpretation of what they meant since he did not think it important to get other views or involve us in the discussion. The festival may not have worked for him, that’s completely understandable. But to debate on the viability or relevance of the craft sector needs a more informed understanding of its historical, political, social and economic context. We are happy to engage with anyone who’s interested. But we don’t wish to get into a statement vs counter statement kind of argument.
Karthik, just for the record, your money did not go towards funding the musicians, they were sponsored by Shemaroo and therefore accessible to people who love their music. Your money went towards food, logistics and paying the artisan teachers for the workshops.
“Automation kills their skills. Most of these artists are quite old. Their next generations have moved to urban locales. They are not doing it for money, but to spend their lives doing what they know best.”
But this is a very luddite approach. We would not use the same arguments for cobblers, typists, slide-rule users, coal-stoves, sword-makers and such. Progress and productivity implies that certain functions become redundant and new skills have to be learned.
My fundamental argument with NGOs who misplace ‘compassion’ and keep professions that should be redundant going on with public funds. This is what Frederic Bastiat wrote a tract upon; What is seen and not seen. Such resources could be better utilized in training the same workers on other, more valuable 21st century skills that could involve handicrafts.
While there are solid criticisms of Khamir here (such as an unsatisfactory organization of the concert), Arun and Karthik, perhaps you should focus a bit on the commercial middlemen here. Fabindia (an organization that I respect in general) and Mother Earth are demanding a too rigid demand for standardization, which is not the right approach for handicrafts. These middlemen could market properly to consumers and in fact, other businessman have succesfully marketed non-standard pieces and convinced consumers of their premium value.
The other issue is that the point of a not-for-profit is to cater to non-market based priorities (saying that a non-profit should focus on the market is asking a non-business association to organize in a way that you prefer for the normative reasons *you* consider superior, which don’t appear to objectively superior. There are commercial middleman for that, and for whatever reason, they cannot hack it with these artisans).
Karthik presents no evidence that these people do not want to use their traditional approach (he regards it as tedious, which is again besides the point) and Arun, I see no evidence that they do want to be trained any differently. Your point about public funds is a valid one, nonetheless. But other than that I see no reason why a self-dependent non-profit should focus on the priorities you both consider superior. Frankly, these middlemen would probably be happiest if Fabindia and Mother Earth had a way to market their wares better. Then, they would have a chance of capital accumulation and investment. Other than that, Karthik seems to be bunching together the government’s misguided funding policies with Khamir’s mission. A fundamental tenet of democracy is freedom of association and a non-market focused non-profit is a perfectly defensible way of preserving certain artisinal traditions. I don’t understand why your (“such resources could be better utilized…” or “value for money…”) utilitarian concerns are superior to Khamir’s or the local artisan’s aesthetic or cultural concerns. More than Khamir, the biggest problems here seem to be a lack of affordable credit for artisans; the inability of large Indian retailers to market handicrafts (or work with these artisans to build a product line that fairly allocates the risk of production to these artisans); and misguided governmental spending policies.
I agree with you on your point wrt FabIndia – it is impractical to demand machine-level standardization from handicrafts.
Yes, from my interviews with these artisans, I know that they don’t want to mechanize or be trained differently. What organizations such as Khamir are doing is that they are giving a false sense of hope in terms of the size of market for these products and are keeping far more artisans in this market than is probably economically necessary.
As for marketing, there is an economic problem here – the market for handicrafts is too thinly spread and hence can’t be serviced without middlemen getting a hefty cut.
And I agree that misguided governmental spending policies are the biggest problem.
Wimpy,
I dont have a lot of experience with this kind of stuff but recently Neha (my wife) has started a business trying to market Indian handicraft in HK (and for the record its a for-profit organization) and a few interesting points are quite obvious…
(a) Handicraft by definition would be handmade…a process which would be inferior in terms of efficiency, again by definition, to an automated one. However that does not take away from the fact that hand made stuff create a sense of exclusivity which is not about texture, quality or utility but more about the “snob value”. Afterall, hand stitched suits are in much higher demand and cost a LOT more compared to a mass produced ones and this is even after adjusting for customization (which obviously commands a premium pricing).
(b) Efficieny of the process is not everything when it comes to this business. Neha was in discussion with this artisan in Manipur who made black pottery (https://www.facebook.com/media/set/?set=a.379600592093035.95182.208444365875326&type=3). The distinguising feature of this kind of pottery is that its made without the use of potter’s wheel which makes the process long, ardous and the finished product is not as “perfect” as one made from the more efficient process but that exactly is the product’s USP and believe it or not, people like to buy the stuff.
(c) Some of these “businesses which should not be in business” are skills which have been passed down from generation to generation and would be considered heritage. Swiss watchmakers have been handcrafting their pieces for centuries and their limited edition sell like hot cakes and some French winemakres still get young girls to trample over grapes to create fine wine…
While I do not have a problem with anything you wrote, one specific remark “these efforts put the artisans into a false lull that there actually exists demand for their produce..” was completely senseless as there is a clear market for these products and with a little bit of research you can see that some of the ecom firms focussing on handicrafts are doing roaring business…
1. The artisans I spoke to told us the same thing – that handicrafts command a premium. Yes, I get my formal clothes stitched, too, though the premium I pay is purely for fit.
I’m reminded of the Marxist “Labour theory of value” where the value of a good is based on how much labour went into producing it. Aside from that I don’t think anything explains why handicrafts should command a premium.
2. Handicrafts I agree are niche products. However, I don’t think they currently command enough of a premium to keep in business as many artisans are in business now.
I think there does exist opportunity of doing business in distributing handicrafts, and hopefully your wife will do good business in that! It’s all about cracking the model where enough premium buzz is created so that the artisans can be compensated properly.
Interesting post – a few thoughts. When there is a market failure, and it appears that there is one here – too few middlemen, bad terms etc., one needs a subsidy in order to overcome it and that is where non-profits have a role to play. Secondly, maybe solutions that meet the needs of the rural/poor have longer incubation periods than otherwise? How long has it taken Amazon to make a profit or even say Pepsi in Africa and India? And given the long gestation period, maybe one needs a more patient form of capital? Thirdly, in these cases and given what I have said previously, maybe revenue is more important than profit because chasing profit will mean giving up on these segments and I do not know if they have alternate choices they can make. In such cases, my trouble with chasing profit, rather than say impact, is that you’ll desert markets that cannot pay and to me, that is inequitable and an injustice. Also, welcome to the Social Entrepreneurship debate. 🙂
I’m not sure there is a market failure. I only think it’s a market with high transaction costs, since the market for handicrafts is spread out too thin. In that sense, I do see potential for a well-designed for-profit business to market handicrafts effectively.
And in the absence of market failure, I think funding organizations that distort the (not-failed) markets does encourage market failure and could make the industry less sustainable than if it is left to for-profit businesspeople
I don’t know Karhtik. So many elements of it are present – information asymmetries, lack of competition (of buyers, in this case) – I’d make the case that it is a market failure of some sort. Either way, your point of distorting the market is well made but in this case, I think it is the market itself that has failed the artisans.
Interesting taking on the NGO Business in India. Though I must admit I appreciate Fabindia and MOther Earth for all that they have done for the traditional businesses, I am slightly disconcerned if the same is politicised. We would want openesss with out it being taken away by some vested people. Which I see with the speeches that were there.
But Kartik you have a point of view, and are free to express it in a public forum mind you. Khamir team accept this and move on.
Kunal
+1 to Namrata’s excellent comment.
I am amazed that you spend so much time criticizing people and organizations (artisans, NGOs and so on) who are simply doing what they are individually incentivized to do. Where is your critique of the levels of govt. funding here? What would be the libertarian thing to do?
On NGOs themselves, I think the fact remains that NGO-types are either a. truly conscientious, b. highly status-seeking (joining an NGO remains a highly efficient way to gain status), or c. both. But then again, isn’t everyone?
(As an aside, the Kingfisher/AI comparison is not a good one, and you probably know it)
yeah my apologies for the KF-AI analogy. It was downright lousy.
Ok I guess I missed my main point in the post – yes I guess Khamir is doing what it is to maximize its own motives given the situation out there (regulatory, financial, etc.). My attack is towards governments and NGO-funders who fund market distorting initiatives.
What would be the libertarian thing to do? The taxpayer’s money should not be used to fund business or non-businesses which don’t have significant positive externalities. So yeah, cutting government funding to such initiatives, getting rid of Section 80G tax breaks and getting rid of the compulsory CSR bit from the new company law… And much more I guess..
What is wrong with private donors giving money to non-profits?
If Bill Gates, for example, decides that he wants to save these artisans and their craft, he can fund a company to do exactly whatever Khamir is doing. He can take huge losses and achieve his social objective.
Or in other words, if we eradicate malaria because of a generous private donor with a non-profit objective whose actions “distort markets” (in this case, pharma), is this wrong?
Who decides if “malaria” is a better objective than “saving artisans”?
http://www.washingtonpost.com/business/technology/tech-telecom-giants-take-sides-as-fcc-proposes-large-public-wifi-networks/2013/02/03/eb27d3e0-698b-11e2-ada3-d86a4806d5ee_story.html?hpid=z1
Another “data point” for RG’s philosophical question. I don’t have an answer to the philosophical question, but I would be interested in that discussion.
Oh btw…that article on washingtonpost I hear was total crap. Nothing of that sort is happening. There has been some vague proposal of sorts for over 10 years but there was no reason to write about it now as if it were happening.
After going through the comments, I would like to give an example that Prof. Michael Sandel gives in one of his talks. He is a political philosopher, and he has written a book on what money can’t buy*.
It is possible to hire a professional to write a wedding toast for your friend at his/her wedding. The professional ask for personal information, and then writes a really beautiful custom-made toast. Even if is very moving, I am sure the friend would really be sad to hear that that that toast was somehow not “original.” He would have preferred an original mediocre toast over a moving toast written by someone else. I guess the market for handicraft item lies somewhere here. Though inefficient, there is a sense of “human touch” to it that people want to identify with, and they are willing to pay for it.
[*] He takes a course of Justice, and it is all on youtube (http://www.justiceharvard.org/). It’s a very nice course.
i sat through one lecture on “Natural Justice” from a course on Political Philosophy by BSubs. Completely gave up on the entire field after that!
So are you trying to hint here that money can’t buy handicrafts?
No, I am not saying money can’t buy handicrafts. I was just providing an alternative example where utility and efficiency are not the only factors by which people value things. People value products based on not just utility, but many other factors too. Handicraft items, though expensive and inefficiently made, are valued by people just because they have been made a certain way.
Also … I am not sure how BSubs taught the course or what its contents are. But from a CS/Math perspective, defining fairness, morality and justice is a pretty challenging job. Ensuring that there are no contradictions in you logic and articulating the thoughts are much harder than they seem.
High-value skill is the ability to generate original, fresh, new designs.
Low-value skill is the ability to weave with hand.
People who romanticize traditional crafts place too much emphasis on the low-value skill.
Same for music. Being able to repeat a Thyagaraja Keerthana is a low-value skill. Ability to create one’s one music is a high-value skill.
Naren, are you saying that hand weavers (and other traditional craftsmen) cannot/do not create original, fresh, new designs? If you are, it is a very foolish thing to say.
The very fact that you refer to them as hand-weavers & NOT designers strengthens my point!
If they were better designers, you’d be referring to them as traditional designers, not as “hand” something.
Skimpy – I knit as a hobby and belong to an amazing social networking site called ravelry.com which has a discussion board. One of the commonest questions that comes up is how much to charge for your knitting if you want to sell your products. In the US – minimum labor is about $8 an hour. Even assuming that an artisan craft like knitting is only worth minimum wages, a typical sweater for an average knitter takes 20 – 30 hours. Yarn retails from as low as $1 a skein to some that is over $100 with the average price point about $8. An adult sweater takes about 1500 yds of yarn and at a minimum you are looking at $30 in yarn. Ignoring other aspects of the business a hand knit sweater should cost $200 for the producer. I can buy a sweater at Walmart labeled cashmere for $10 on sale!
Commercial suppliers have economies of scale and bargaining power that artisans can never have. But there is a huge interest (ok not overly huge but some) in the market place for hand made one of a kind item. As long as the market place supports it and there is a demand – the supply is justified. This would explain the success of a website such as etsy.com – as a customer I am buying a more expensive and inefficient product because it meets my value set and its imperfections make it unique and hence perfect for the customer buying these products. Most of the purchases of this nature is aspirational after all. All this to say – the handicraft movement however inefficient it might seem to logical thinking is at the end of the day a case of supply meeting demand. “Fair Trade” is the new luxe.
It is a very disconcerting notion however that organizations have to resort to being a non-profit to get funding. Who is regulating this funding? What about the transparency of operations? Are the artisans truly seeing the benefits of having a center represent them or would they be better off fending for themselves etc – very valid questions.
And take up knitting for your ADD – I know it seems repetitive and boring when you are watching someone do it. But two simple stitches create an array of possibilities and you feel quite powerful when you realize you are creating a fabric and a garment at the same time that did not exist before. And repetitive movement brings about Zen like not much else can 😉
This is possibly a naive perspective nonetheless I shall hazard an opinion.
Allowing funding for non profit organizations in this domain can bring the prices down like you have deduced, but is it not conceivable that there may be various benefits. For example, you were there for a workshop, while you may not have been too pleased with the experience, but there may have been many who went back happy and with a bagful of handicrafts. What i’m getting at is, a not-for profit will serve to promote. You seem to be imagining a situation where the entire handicraft scene will dominated by not for profits thus killing the ‘Kingfishers’ in the long run. How about envisaging an ecospace where the non profits function sort of like advertising agencies, which will eventually allow the “Kingfishers’ to flourish (I’m assuming here that at some stage it will get easier for the artisans to obtain funding).