To: Fair Trade Movement Leaders
Re: Mission Driven Companies working with farmers on fair trade terms, where farmers are organized short of formal co-ops.
I just listened and watched “Should Unorganized Farmers Be Included in Fair Trade?” an FTRN webinar with Rodney North of Equal Exchange and Michael Sheridan of Catholic Relief Services. Rodney makes the case that FT should equal co-ops only and Michael doesn?t advocate particularly strongly otherwise beyond noting that functioning farmer co-ops don?t exist in many regions of the world or in various commodities, and also noting farmers can still be organized even if not in formal co-ops.
The context within which this debate is occurring is of course FTUSA?s announcement that they will allow small holder farmers not organized in formal co-ops as well as plantations to produce certified fair trade coffee and cocoa under revised FTUSA standards. Not to pick on FTUSA although they are the weakest and lamest, as FLO already does this with other non-coffee/cocoa commodities and IMO?s Fair for Life program does as well.
On the plantation issue, I share the opinion of many in the leadership community that while ethically run plantations that provide fair wages and working conditions for workers are admirable, that ?fair trade? at the farming level means doing business first and foremost with smallholder farmers who own their own farms. Note ?hired labor? is still super crucial in fair trade as smallholder farmers employ farm labor, and post-farm processing is all about hired labor that needs to meet fair trade criteria. However at the farming level many in the fair trade community see smallholder/family farm ownership as essential for ?fair trade? farming.
However Rodney also advocates that smallholder/family farmers not organized in co-ops should similarly be excluded from participating in fair trade. For example the graphic noted at 9:33 makes individual fair trade ?farming? (ie. independent ownership of and farming of land to produce goods to sell to willing buyers on fair trade terms), look like a tiny part of the FT equation, with democratically controlled co-op functions of collection, processing and selling being the vast majority. Tyson is noted as the extreme ?sharecropping? example of what can happen without farmer co-ops.
In deference to Rodney, he is talking primarily about coffee where there are already plenty of FT co-ops and oversupply of FT coffee versus demand. I entirely agree with Rodney where there are already well-managed well-functioning co-ops in a given commodity producing a surplus. But Rodney and Michael are also talking about traditional fair trade commodities, coffee and cocoa, where the primary processing and marketing to the West are comparatively simple and may well be managed by a co-op experienced with the respective processing chain while meeting the demands of Western customers. However in the developing world there are numerous situations where co-ops able to supply the desired value-added materials either don?t exist or are dysfunctional (such as communist bureaucratic cronyism not particularly representative of members). Dr. Bronner?s, in search for fair trade supplies of our key ingredients found this to be the case in Sri Lanka for coconut oil, Ghana for palm oil, Com?caac Indian land for jojoba oil, Uttar Pradesh for mint, etc. In such cases, if a mission based company is willing to work directly with independent farmers and local processing partners on fair trade terms, and invest in often complex technically demanding processing infrastructure in order for a fair trade relationship to happen that would not occur otherwise, then that is fair trade. The mission driven company has the responsibility, as demanded by certification programs such as IMO?s Fair for Life, to facilitate the farmers to organize, and resolve with farmers? democratic organizations whether farmers or the company are responsible for collection and transport. Farmers at all times should be free whether or not to sell to the mission driven partner or whoever else.
Mission driven companies that develop and partner with a given project on the ground (i.e. where the project is based) are dedicated to using and marketing those farmer?s products, which is the ultimate prerequisite for the project?s sustainability and realization of the benefits of fair trade. In contrast, even dedicated FT brands may buy ten different kinds of coffee and another ten unrelated FT commodities from different farmer projects. Co-ops in the developing world are generally poorly equipped to effectively market and move value-added fair trade volume for their farmer projects, even for little-processed raw materials. This results in the current situation of many co-ops not realizing long-term market access and thus any significant value-added fair trade sales volume. This failed promise of market access to small-holder coops is one of the problems with existing fair trade rules which IMO?s Fair for Life program in particular addresses, by recognizing the crucial role a mission driven partner can play that focuses day in day out on creating sustainable valued added fair trade sales for a given farmer project. Regardless if that partner is a non-profit or for-profit, the important criteria is not its corporate structure (co-op, non-profit, for-profit), but whether it transparently adheres to and is certified against fair trade criteria in performing its mission. There are corrupt non-profits and fantastic for-profits, the proof is in the pudding. This in particular is what IMO?s Fair for Life program accomplishes: it certifies that mission driven partners are dedicated to fair trade throughout all their product lines and major supply chains, and that fair trade lite fair wash entities such as Nestle cannot earn a fair trade ?halo.?
Definitely this issue is contentious, and the FT movement should debate. We would like to see the movement recognize the crucial role that a mission driven partner company can play in bringing the benefits of fair trade to unorganized farmers in a given region, for example Cannaan Fair Trade?s model in Palestine. However, since we share many of the concerns motivating Rodney?s position, we would like to see the FT movement also constrain the criteria within which the mission driven company operates.
It?s important to distinguish mission driven companies like Canaan Fair Trade, and Dr. Bronner?s subsidiary companies Serendipol in Sri Lanka and Serendipalm in Ghana, that are situated within a producing region and are dedicated to producing and marketing that particular farmer group?s products, from FT brands in the west (including Dr. Bronner?s and Equal Exchange) who are not focused on moving bulk volume to other businesses versus marketing their own diverse fair trade product lines sold at retail. Dr. Bronner?s invests in and sets up independent mission driven companies on the model of Canaan Fair Trade, that sets up post-farm processing facilities in the producing area of a given farmer project, to produce value added oils entirely from the farmers in the project, to market to western buyers including but not exclusive to Dr. Bronner?s. While we appreciate efforts to help set up third world co-ops to handle their own fair trade marketing and selling, more often than not this will not translate into significant volume or sales into value added FT markets. Enshrining the principle that developing world farmers must set up and utilize a co-op to self-market versus freely choosing to partner with a dedicated fair trade mission based company (whether for-profit or non-profit) who does dedicated business with those farmers on fair trade terms, is self-defeating to the FT movement. It limits its growth potential to the traditional FT commodities and frustrates the mission-driven companies who are willing to invest in a rural situation and develop complex supply chains and support community development along with it.
When we made a company priority to source all our major materials from certified fair trade sources, we found only one existing fair trade project– olive oil from Canaan Fair Trade in Palestine (and a much smaller project in Israel working with Arab Israeli producers, Sindyanna). Canaan was already a member of the FTF and fair trade in every sense of word, working in a very difficult region of the world to organize farmers and export olive oil on fair trade terms, succeeding where well-intentioned but poorly run nonprofits had not. We have followed Canaan?s example in working with farmers to set up fair trade projects for our other major raw materials in commodities where none existed previously anywhere in the world. I wrote an article that appeared in For a Better World?s inaugural issue giving a good overview of our history and accomplishments in that regard: http://fairworldproject.org/files/Pages%20from%20Fair_world_publication_17_18.pdf
We agree with Rodney that fair trade should be ?transformative and capacity building?. Our experience with setting up and operating fair trade projects in several countries shows that the organization of the farmers in co-ops is not a sine qua non nor does it guarantee such a transformation. If one wants to leave as much of the value-addition in the producer country as possible, the complex supply chains that must be built for example for the production of coconut oil, palm oil and other food grade commodities, involve stakeholders beyond the small-holder farmers. In addition to farm workers, who even small holders routinely engage for harvesting, weeding, pruning and collecting, a production infrastructure must be established that may involve hundreds of skilled and unskilled workers and must meet quality standards that are expected by the ultimate user in the West. To expect that a preexisting or newly formed co-op can easily rise to the financial, technical and managerial challenges of such an operation is in our experience unrealistic. Nor is it guaranteed that a farmer coop, whose primary interest is after all the representation of the farmers, will be committed to the well-being of the other stakeholders in a complex value chain. Finally, our experience with several small-holder fair trade projects where farmers are organized short of formal co-ops demonstrates that such projects can achieve just the kind of significant transformation Rodney refers to.
Anyway, we understand the concern that Nestle will vertically integrate and capture farmers and turn them into ?sharecroppers? and still be able to call it fair trade. We need to constrain the criteria under which mission driven companies or NGOs operate in partnership with FT projects. However at the same time let?s not ignore the massive fair trade benefits that mission driven companies like Canaan Fair Trade, Serendipol and Serendipalm are realizing for fair trade farmers across the globe in non-traditional FT commodities, or purport to call this less than fair trade.
I look forward to hearing other perspectives and continuing this discussion with the fair trade community at large.