FairTrade: Volume versus Premium Pricing

Otaloe-vera-benefitstawa Thanks to Rob Clarke, director of FairTrade Canada, the affiliated licensing and marketing combine for fair trade certified products in Canada, and his excellent team, I got a quick education and a lot of offers for help in advancing ACORN International’s partnership with COMUCAP, the women’s coffee and aloe vera co-op in Honduras.  I also found myself particularly impressed with their maverick sensibilities and eclectic take on a lot of the fair trade issues and operations, which is another way of saying, how wonderful it always is to stumble into folks you few things from paradigms I share, but sometimes don’t find common.

We have been forging a partnership with COMUCAP over the last 18 months, but for the first time, listening to the FairTrade Canada folks, I felt like we might actually get a hand to step up stronger into the marketplace.  To my pleasant surprise they actually saw it as their job to help us sell the co-ops coffee.  Now, that’s music to my ears.

Talking to Clarke it became clear that no small reason might lie in the very organizational structure of FairTrade Canada.  Unlike most of the 20-odd fair trade operations in developed countries, FairTrade Canada is not a registered charity or tax-exempt operation, like what a 501c3 is in the USA, but a plain vanilla non-profit, just like ACORN famously and controversially was.  They have built a sustainable and thriving operation without doing so with government grants and foundation monies, but by increasing the markets for the fair-trade co-ops they serve.  Obviously operating as a trade association, rather than a standard tax-exempt grant seeker creates a more aggressive operation.  Not surprisingly, it turned out Clarke’s background was in global business, rather than in “international development” work, which is largely about donor relationship rather than marketing and client affairs.

The FairTrade Canada philosophy about the business seemed oriented towards the actual producers doing the hard work in the fields.  There are hard strategic decisions about markets involved, but the controversy here, which has tended to make me cynical in dealing with fair-trade products, is that the developed countries are often willing to sacrifice producers’ livelihoods for the sake of market share and volume.  Because of the business model followed by most of the country fair trade operations and their subsidies, there are no penalties – or incentives – for them not to trade a price in the fields for tonnage in the fancy board rooms of the corporate buyers around the world.  Clarke told the old line about preferring to make a million selling a pound, that a $1 selling a million pounds, but more pointedly related the story of his visit to the Mexican priest who was one of the founders of the first fair trade certification organization.  Clarke asked him what he hoped for the future now, and the priest replied that he hoped for the day that Mexican farmers would be able to get their price in the market selling in Mexico and could essentially tell the developed world to screw themselves.  There is no way to understand the fair-trade movement if it does not in fact substantially improve producer livelihoods, and too often the current market-share strategies are simply not delivering on that promise.

The best example of their different orientation might be the way they all sprang at me about the aloe vera being grown by COMUCAP.  It turned out that there are no fair-trade certification standards for the product.  Their eyes lit up at the notion that they had an opportunity to help create the standards organic aloe vera – and, damn, I hope the market!  As we talked Clarke was searching the computer for a Canadian distributor of aloe vera products.

This could be a huge step forward for the COMUCAP and ACORN International partnership.  Composing that email and getting the Spanish right should make a lot of our friends La Paz very happy!  Finding a friends and fellow travelers at FairTradeCanada, made one door-knocking fool excited remembering that the next door you hit, could always be the best.

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