Maximizing the Positive Impact of Trade

A country visit fulfills many purposes. More horizontal communication (in many parts of the world access to digital media is limited), the ability to give direct quality feedback, and giving producers a chance to share local food and culture are just a few.

Earlier this month, the Social Business Network made a special trip with ETICO and a coffee roaster from the states to visit a small group of coffee growers in El Salvador.  The cooperative that drew us there is called La Concordia, and is made up of only 19 families who cooperatively farm 70 acres of shade grown organic coffee – land that was given to them during the agricultural reformation in the early 1980’s.

The struggles that small groups of organized farmers face are numerous.  Over the years, this particular group has worked with several initiatives to try to export their coffee, but changes in the membership of organizations, the cooperative and export laws of El Salvador, and low yields have come in the way.  The farmers struggle to cover their costs of production and organic certification by selling as much as possible to other cooperatives and growers who export, and the rest on the local market.

Although these challenges may have seemed insurmountable, especially after so many years of false hope and failed attempts, the solution may simply lie in bringing as many links of the chain together, face to face, with a common positive intention.  With some preparation, members of the La Concordia cooperative sat down at a table with a nearby cooperative that processes and exports, an importer, a roaster from the US, and the Social Business Network.  After touring the farm, sharing the histories of our organizations and eating a home cooked meal together, it only took a few hours to piece together a plan where each member of the chain pitches in to make the logistics for export to work – an understanding that may have been impossible to reach over email or from a long distance.

Coffee farmers look for export markets because of market security (ideally forging long-term relationships with individual purchasers), higher prices and substantial sales volumes.  If the cooperative can meet the volume and quality demands of the export market, this may be an opportunity for a company in the US to have a huge impact on the lives of this small group of farmers. For businesses looking to maximize their social and environmental impact through the purchase of raw materials however, working with such small, inexperienced groups have additional costs and risks.  Business mechanisms like stipulating funds for social and environmental projects within the cost of the product can efficiently establish transparency, ensure corporate responsibility and help maximize impact.  But a whole additional level of value in trust and understanding can be reached through a well organized trip to the field with the right players, and finding the right people  on the ground who can facilitate good, culturally appropriate communication.

Read a reflection of the trip by Rachel Lindsay (Social Business Network’s Communications and Sustainability Director) on her blog.  

Supporting Farmers Affected by Climate Change through Better Business

This past June OXFAM published a discussion paper entitled: “Climate Change Risks and Supply Chain Responsibility“.  The paper explores the role that trade businesses can and should play in supporting the primary producers of raw products in adapting to the effects of climate change.  The paper highlights three case studies and uses them to formulate a list of positive actions that companies can take to help small producers and strengthen supply chains in the face of increasingly drastic weather patterns and natural disasters.  The three examples used are Starbucks and coffee production in Colombia, Marks & Spencer and cotton production in Pakistan, and The Body Shop and sesame production in Nicaragua.  Although each study contains a concrete example of recent climatic changes that have directly affected at least one season’s production, only the case study of The Body Shop included direct input from individual producers.  In fact, many of the actions suggested by OXFAM are drawn from the example of organized sesame farmers in Achuapa, Nicaragua.  The five actions identified in the report are:

• Raise awareness and understanding of adaptation within the business
• Ask producers about current climate trends and impacts
• Build longer-term and more stable relationships with suppliers
• Support community development and environmental sustainability
• Work through existing institutions, including governments

Within these five actions, several specific suggestions are drawn directly from the example of cooperatively produced sesame in Nicaragua – such as working with cooperatives of producers, supporting reforestation and diversification efforts, and raising awareness about the often unseen and unpaid contribution of women in the production chain.  In reviewing the case studies highlighten in the paper, the SBN can add two additional characteristics of the Body Shop’s sesame supply chain that are examples of resilience in the face of climate change and increasing risk in production:

Small Producer Land Ownership: The case example of the cotton industry in Pakistan discusses the devastating impast of flooding in 2010 and 2011, which destroyed nearly 20% of the national harvest and affected 20 million people.  The paper explains that the financial burden of the flooding disproportionately affected small-scale farmers because a high percentage of them rent land from large land owners.  After the damage these tenant farmers forced to uphold their rent despite a destroyed crop, assume all the work of clearing and restoring the lands, and are most likely exempt from any government assistant money that is handed out to landowners only.

In Nicaragua, the land reformation that came as a result of the Sandinista Revolution in 1979 has resulted in a high rate of land ownership among small farmers.  The short term financial burden of destructive climatic events are still felt and assumed by producers, however the long-term advantages of land ownership include incentives for reforestation, better soil and water management, access to government assistance, and stability of production yields and quality.  Business supply chains could express support for national and local policies that help small scale producers gain access to land and mortgages, and help link farmers with sources of financing to facilitate land purchases.

Small-scale Producer Control of the Supply Chain: Although OXFAM’s paper recognizes the fact that the Nicaraguan sesame farmers were able to mitigate the financial impact of harvest loss because they provided oil rather than raw product, the ability for businesses to support organized farmers in gaining control of the supply chain is missing from the list of possible actions companies can take.  The example of sesame oil sales to the Body Shop shows that while both yeild and quality in the producer cooperative were negatively affected by heavy rains in 2010 and 2011, the negative financial impact to the region was mitigated by the cooperatives ability to purchase sesame from affiliated producer cooperatives and honor their sales contract with the Body Shop.  Companies who wish to build longer-term and more stable relationships with their suppliers can directly support organized small-scale farmers with financing and technical support to help them gain control of the supply chain, resulting in more resilient producer communities and a more consistent product.

A business out of doing your business?

There are many reasons why the United Nations created a World Toilet Day (October 19th).  Most of them are pretty straightforward – bringing awareness to the simple disease prevention, environmental, and social benefits of having a sanitary private place to do your business.  Some of the benefits are surprising – such as having a direct positive correlation with girls attending school.  We can all understand how a toilet can raise our quality of life.  But when the Bill Gates foundation announced a “Reinvent the Toilet” competition with one of the requirements being that the toilets need to cost no more than a nickel a day to operate, several of the new designs proposed the unthinkable – making profit from waste.  Some business from your private business concepts: make fertilizer, generate electricity, and even farm high-protein grubs for animal feed!

Recognizing the role of Women in Fair Trade

In developing countries around the world, women work to support their families in ways they aren’t paid for – even if that work contributes to a product that in the end produces income for their families.  ETICO, the Ethical Trading Company based in Nicaragua and the UK have been working with their oversee clients and Nicaraguan producer cooperatives to find creative ways of recognizing women’s contributions to the production chain.  You can read more about it here, in a recent write up by Cooperatives United.

 

Up and Running

Welcome to the Social Business Network, a global network of effective change-makers.  This site is a website as well as a discussion board, where we can share our ideas for innovative, collaborative, and cooperative solutions for global development.   The initial themes we are highlighting are cooperative businesses, fair trade, ALBA,recognizing the unpaid work of women in production chains, renewable energy, and sustainable agriculture.