If many little people
In many little places
Do many little deeds
They can change the face of the Earth
-African Proverb-
A Cocoa Cooperative Discovers Fair Trade
In the Dominican Republic in the late 1970s, four wealthy families controlled all of the cocoa exports on the island. Ultimately all of the cocoa grown on the island flowed through intermediaries controlled by these families. Their cocoa estates drew labor from smaller neighboring family-owned farms. Rather than tend to their small plots, these farmers would leave their crops to travel and work the estates for a few pesos a day to provide the basic necessities for their families. In the early 1980s, the German government granted aid money to work with groups of small farmers to improve the quality of the cocoa harvest. When the program's funding ran out several of the farmers sought to keep the program running by organizing into cooperatives. They called their nascent venture the National Confederation of Dominican Cocoa Producers (CONACADO). Each farmer contributed their harvests and their resources in an attempt to become a legitimate force in the Dominican cocoa industry. Seeking their first international customer, CONACADO looked overseas to Germany and found a gourmet chocolatier interested in importing their cocoa. Fine quality chocolate is made of fermented cocoa beans. They packed up their first order, and finding their supply often fell short, they topped the shipping container off with unfermented beans. Upon discovering this, the Germans discontinued their business relationship. Disheartened, but having learned an important lesson about quality and consistency, the farmers set out to find new clientele and began their steep climb toward building a successful international business.
One of their first insights came in the mid 1980s when they learned of the burgeoning organics market. The estate owners scoffed at the coop's interest in organic cultivation because they knew that it meant scores more hours of labor. It would involve hand weeding between their trees and investing much more energy into nourishing and tending their crop. In spite of the dissuasion and heckling from the large plantation owners, the cooperative opted to pursue organic certification, becoming the first organic certified cocoa producer on the island. Within a year, their risky investment paid off royally. Soon orders came pouring in from all over Western Europe for their certified organic specialty cocoa.
Ever attuned to the pulse of the international market, the leaders of CONACADO soon learned of a trading system and certification that would pay a premium price and facilitate more direct access to consumers: Fair Trade. Fair Trade was an effort on the behalf of consumers in the North and producers in the South that gave small-scale farmers direct access to international markets. CONACADO decided to obtain Fair Trade certification and received it in 1995. For a number of years, however, they were frustrated that they couldn't sell their all of their harvest under Fair Trade terms because of low demand. But, growing recognition in Europe and the United States of the benefits that Fair Trade brings to small farmers has increased consumption of Fair Trade products. Today, ten percent of CONACADO's total harvest is sold under Fair Trade terms.
What began as a small group of individuals determined to improve their situation and take ownership of their working lives has today become a 9000-member cooperative and the world's largest exporter of organic cacao. From the ten percent of their harvest that was sold under Fair Trade terms in 2004, CONACADO reaped over $200,000 in above market premiums. They have used these Fair Trade premiums to drill wells in remote villages which previously had little access to potable water, to pay for school supplies and uniforms for students whose parents cannot afford them, to bring health clinics to remote villages to provide basic medical care for members of the cooperative and the community, and to make investments into the infrastructure and technology needed to grow higher quality cacao. Just imagine what they could do if 100 percent of their harvest were sold on Fair Trade terms.
The Benefits of Fair Trade
CONACADO is just one success story of a small group of farmers committed to taking ownership of their lives. Although there are many others, most small farmers remain trapped in a different kind of business relationship. A good example is coffee; one of the world's most heavily traded commodities. Coffee is big business, and many people other than the coffee farmers stand to gain. Before you've even tasted your morning brew, a cast of middlemen - known to Latin American farmers as "coyotes" - have come between the farmers and you. Fine coffees often come from small farms owned by impoverished farmers living in isolated mountain communities. These farmers rely on the coyotes to buy and transport their coffee. The farmers have almost no bargaining power and little market information, and are at a disadvantage when negotiating the price with the coyote. Sometimes, with the coffee already harvested, the farmer is forced to accept a price that doesn't even cover the cost of growing the coffee. Once the coffee leaves the farmer it journeys through the coffee chain, traded from one middleman to the next until it ends up being sold on the global commodities market.
The price a pound of coffee can fetch on the world commodities market can vary 
widely, depending on speculation, supply and the weather. This price has been known to fluctuate wildly, but the last few years have been especially brutal, going as low as $0.42 per pound. From 2000 to 2004, the industry was been in a state of crisis, with the price of coffee consistently lower than the costs farmers incur to harvest their coffee. Many farmers, buckling under insurmountable debt and meager incomes, have had to abandon their farms to seek work in the overcrowded cities. Selling their harvest through a Fair Trade certified channel assures farmers a guaranteed minimum price that will meet the cost of production, even when market prices are too low to maintain basic living standards. Currently, Fair Trade certification ensures a minimum price of $1.26 - and in the case that market prices go above this, there is a premium added to the prevailing market price. Fair Trade then provides both a higher and more stable income for farmers. This additional income is often used by producer cooperatives to provide essential social services and provides capital to reinvest into their farming operations.
Fair Trade is a way of doing business that places people, not profits, at the center of international commerce. For many small-scale farmers around the world trapped in cyclic debt and poverty, it is an empowering alternative. It refuses the conventional thinking that coffee is simply a commodity to be purchased at the end of a long chain of intermediaries. Instead, Fair Trade organizations cut out the middlemen and buy directly from the farmers, paying a fair price with a guaranteed minimum - regardless of the price in the commodities market.
One of the most important benefits of the Fair Trade system is the collective empowerment and capacity building that comes with organizing into a cooperative. The one person/one vote democratic organization of the cooperative enables each farmer a voice in the decision-making process. When acting alone, each farmer's harvest is sold through many price-gauging intermediaries; participation in a cooperative enables farmers to keep a much greater percentage of the actual revenue from their harvest. Profits from the sale of products are distributed in accordance with the democratic vision and process of the cooperative. As membership grows it becomes clear that farmers can be confident in the cooperative's ability to sell their coffee at a premium price. Together small farmers can have better bargaining power with international buyers. The entry of a cooperative into the Fair Trade market further reinforces the credibility of the organization.
In addition to giving farmers greater control over their product, Fair Trade also gives access to affordable pre-harvest financing. For most small farmers, getting a loan is next to impossible. Most large credit institutions do not service small family farmers in many countries, and so they are forced to seek credit from local money lenders often at exorbitant interest rates. Fair Trade recognizes the importance of affordable credit and requires all importers to offer access to up to 60% of the harvest value as an affordable line of credit to co-ops. Access to pre-harvest financing is essential for cooperatives, which would otherwise face cash flow problems. Traditionally, cooperatives wait to pay their members until they have received payment at export. Too often, local coyotes have cash in hand and can pay farmers upfront, albeit at a much lower price. Pre-harvest financing extends a lifeline to cooperatives, enabling them to retain the loyalty of their members while offering premium prices.
While Fair Trade gives farmers control of their products in an international market, it also benefits farmers in aspects outside their businesses. Fair Trade premiums enable cooperatives to provide members and surrounding communities with vital social services, including building local infrastructure and providing health care and educational services. Participation in the co-op is also a way to avoid separating families. Because farmers are able to achieve a price for their harvest that covers the cost of production, it is less likely that loved ones have to leave the rural areas in search of work in the cities. As a co-op member, small family farms have a fighting chance of staying on their land.
Finally, Fair Trade promotes environmental sustainability. Though organic certification is not required, there is a fifteen cent premium per pound on top of the Fair Trade price to co-ops that cultivate organic crops. Many choose to obtain the certification. In fact, in the United States, about 85% of all Fair Trade coffee sold is certified organic. Whether or not they obtain organic certification, under the Fair Trade guidelines, farmers are encouraged to cultivate their crops in a way that cares for the environment.
The Power of the Consumer Harnessed
Fair Trade coffee was introduced in the USA by Equal Exchange, a workerowned business based in Massachusetts. Equal Exchange was the first North American coffee company to voluntarily adopt the international Fair Trade standards and to promote them to other coffee companies as well as the general public. Its mission is to "build long-term trade partnerships that are economically just and environmentally sound, to foster mutually beneficial relations between farmers and consumers and to demonstrate through our success the viability of worker-owned cooperatives and Fair Trade."1 Over the past 19 years, Equal Exchange has grown from a small worker-owned cooperative with 3 co-owners to one that imports over 3 million pounds of Fair Trade beans annually with 61 worker-owners who participate in the democratic governance of the company. During this time, other companies have begun to participate in the Fair Trade model. Today, over 300 companies sell fairly traded products in the U.S.
One such company is Seattle-based Pura Vida Coffee.2 Founders John Sage and Chris Dearnley met in 1987 at Harvard Business School. Believing that the principles of capitalism could be applied to create a "funding engine" to support humanitarian programs, they created Pura Vida. 100% of their coffee is Fair Trade certified, and the company uses all its resources to benefit at-risk children living in coffee-growing countries.
"We want to give consumers the opportunity to ‘create good' with their purchases without sacrificing quality" said John Sage, CEO of Pura Vida. "Not only are all of our coffees certified Fair Trade and organic, customers resonate with our mission to help children around the world." As awareness of Fair Trade grows, companies like Pura Vida are able to attract more consumers to see business as an engine for good, rather than greed.
You and I have the power to create a more socially and economically just world by being responsible consumers. "Consumers have phenomenal power in this society and have just barely begun to use it" says Rink Dickinson, cofounder and President of Equal Exchange. We can promote our vision for the world we want to live in through the choices we make as consumers. We can vote for the globalization of a human economy - one that values our connectedness and joint advancement over individual desires for profit. Small-scale farmers, those that produce the coffee we enjoy, the fruits we feed our families, and the crafts and chocolate we gift to loved ones, are at the mercy of the slightest economic downturn or climatic change. Our actions, as much individual as collective, contribute to international imbalances. As consumers, we have the power to change this.
Fair Trade offers each of us practical and empowering opportunities for activism. We can start with buying Fair Trade products and telling others - our friends, families, neighbors, and coworkers - about Fair Trade and convincing them to make the switch. One conversation at a time you will be part of a growing movement of informed consumers that are changing the marketplace.
We can also ask local retail businesses to carry Fair Trade products. Oxfam America3 recently led a supermarket day of action, with hundreds of volunteers canvassing supermarket chains and educating shoppers about Fair Trade. Following up on this consumer activism, several New England chains increased their offering of fairly traded products. We can also encourage conventional coffee companies to share their more than ample profit margin equitably with farmers. A recent letter campaign to Sara Lee Corporation instigated the introduction of their Fair Trade Certified Prebica Whole Planet blend. When a retailer or coffee roaster makes the decision to carry fairly traded products, the best thing that we can do is to support them by purchasing those products and making our appreciation known to store managers and CEOs. We can also support companies who are fully committed to Fair Trade, such as Equal Exchange and Pura Vida, so that the success of these companies can inspire others into changing "business as usual" so that Fair Trade becomes the rule and not the exception.
We can realize our own power as social activists to make change through collective action, joining together to increase our impact. You can tell others about Fair Trade. As we create awareness, we help build market demand for fairly traded products. We can act locally for justice in the global economy. Every day we make choices as consumers. Now, because of Fair Trade, our choices can be part of the solution to the problem, part of the process of making economic justice a reality. If you believe in these values, vote with your pocketbook: support Fair Trade!
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Julia Knott lives in Boston, MA and works with Equal Exchange as an Events Coordinator. A graduate of Seattle University with a major in French and Economics, Julia had the opportunity to serve in Ghana, Senegal, and Mexico. Julia hopes to pursue a career in social enterprise and sees tremendous potential in Fair Trade as a vehicle towards social and economic justice. To contact the author please email her at jknott@equalexchange.com
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1 www.equalexchange.com
2 www.puravidacoffee.com
3 www.oxfamamerica.org
