Category Archives: Fair Trade

A Smorgasbord of Hoopla

certified-stampWhether you are a farmer, manufacturer, exporter, retailer or consumer you have undoubtedly been faced at some point with a decision regarding the many different ethical or environmental certifications.  The growth of certification has followed the growth in centralized distribution and global trade of products.  As the sheer number and variety of products available to consumer multiply, companies and consumer advocacy groups are using an ever increasing number of certifications – and their requisite symbols – as tools to differentiate products on the shelf and, through their intended implementation, affect positive changes in the lives and environments of the producers.

Historically certifications have been driven by consumer groups searching for a product that meets certain standards of production.  Supply follows demand – so once there is a demand created, producers need to be found who will opt to comply with the standards, either for ethical or economic reasons.

Individual certifications exist within a global socio-economic context that is rapidly changing.  Movements that begin with a specific cause and have grown rapidly find it increasingly difficult – or costly – to maintain their initial standards.  As an intermediary between links in a potentially lengthy supply chain, certifications need to maintain minutely detailed rules and records.  Even defining what you wish to enforce or promote may take years!  As any ecologist will tell you, rapid growth is unstable, and as certain certifications gain popularity (and profitability) standards are adjusted, fees are hiked, and consequently new certifications arise as central groups of consumer or producer advocates fraction in their attempt to maintain their original values in a new socio-economic context.

supermarket-aisle-grocery-store-shopping-cart-Favim.com-475341Many of the current debates around certifications focus on the labels of finished products, and the dilemma of the well-intended shopper faced with a befuddling array of different symbols at the grocery store.  How can they know which product has the best impact on the world? But the increased number of certifications presents producers with even more difficult decisions – often costly and risky.  The cost – both in time and money – for different certifications needs to be weighed by each producer against the potential market.  Sometimes this means a double risk – first if you are certified whether you will make the associated costs back through the difference in sales, and once you have promised a certificated product to a client, whether your production will meet the certification rigors.  Depending on whether your market is international, national, or direct to your consumer your choices for certification vary.  Not certifying at all is sometimes the best economic option – which is why a rise or fall in certifications doesn’t accurately represent an actual rise or fall in certain farming or trading practices.

In response to changing standards in widely recognized certifications such as organic and fair trade, peer-based alternatives and producer driven initiatives such as the Certified Naturally Grown and the new Simbolo de los Pequeños Productores are arising. In a market historically driven by consumer advocates rather than producers themselves, these certifications may be conduits for  empowering change. However, the growing list of certifications that producers are faced with begs the question, are certifications still the best means for enacting social, environmental and economic change through trade?

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Coffee Rust and Industry Responsibility

It remains to be seen exactly what the impact that the coffee rust fungus will have on the Latin American coffee industry for the 2012-2013 harvest, but estimations have been made of damages up to 40% and millions of US dollars in losses.  Coffee rust is the fungus Hemileia vastatrix that infects the leaves of coffee plants, creating yellow spots on the surface of the leaves with rust-colored spores on the bottom.  The fungus causes leaves to drop prematurely, leaving bare branches.  Spores spread through water contact, infecting new leaves through splashing rain or dew dripping down the leaves and wind that carries the spores from one plantation to another.  Reproduction is accelerated by high temperatures, with the life-cycle of the fungus ranging from 10 to 30 days.

Latin America has been plagued with coffee rust in the past.  The fungus first appeared in Brazil in 1970, and quickly spread through South and Latin America.  Today it is established in nearly every coffee growing region of the world.  Although there is no one factor that the current epidemic in Guatemala, El Salvador, Honduras and Nicaragua can be attributed to, excessive rains and poor cultural management certainly play a role.  The quality of crop management can drastically reduce the impact that coffee rust has on a harvest, through the annual employment of good agricultural practices such as renovation of older plants, pruning, proper shade management, and adequate fertilization.  Many studies – as well as our direct experience – have shown that there is a direct relationship between the social organization of farmers, the quality of technical advice they receive, and their management practices.  In order to support coffee farmers and maintain a healthy and sustainable coffee market in the future, the industry needs to address this epidemic in a holistic way, by recommending technical changes in agricultural practices as well as tailoring business practices to strengthen economic and social relationships within the production chain.

Addressing Climate Change – Epidemics such as this in every agricultural crop are exacerbated by extreme climate conditions, such as excessive rainfall, constant high temperatures, and storms with high velocity winds.  Buyers can support farmers who provide raw agricultural materials by supporting initiatives to reduce the environmental and economic impact of climate change, such as reforestation projects, and regional initiatives to increase biodiversity and food security.

Long Term Contracts – working together with organized producer groups to sign long-term contracts gives farmers the opportunity to look for additional long-term financing locally or internationally that can help them finance crop renovations and implement better management practices, reducing their vulnerability to both epidemics and economic changes over the long-term.  It also creates an incentive for purchasers to support farmers with short-term solutions for issues like the rust epidemic that may vary from year to year.

Play an Active Roll in Creating Feedback Loops – purchasers can play a central role in connecting isolated producer groups and facilitate information exchanges to spread the adoption of innovative responses to diseases and pests.  successful structural innovations such as different financing arrangements or changes in the base organization can also have a direct impact on management practices, and regional or even international exchanges between producer organizations can help younger or faltering organizations evaluate the best possible strategies to address their specific needs.  Facilitating information exchange within producer groups strengthens the industry as whole while offering the most potential benefit to the more isolated and disempowered producer groups.

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.

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.

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.