Tuesday, April 24, 2007

Fair Trade Certified: An Interview with Paul Rice of TransFair USA

Why should consumers buy Fair Trade Certified products? What difference does a cup of Fair Trade coffee make? What is Starbucks relationship with Fair Trade? Paul Rice, the founding president and CEO of the Oakland based nonprofit, TransFair USA, answers these questions and others in an interview for the Big Vision Podcast. You can read a transcript of the podcast below.

Paul Rice: TransFair is the only organization here in the United States that certifies Fair Trade products. Fair Trade is this exciting new model for addressing poverty around the world. It basically links consumers, you and me, to third-world families, and through more direct trade helps those families get a fair price for their coffee, their tea, their bananas, whatever it is they produce.

At the heart of Fair Trade is the notion of direct trade, kind of like a farmer's market gone global. Companies participate and get to use the Fair Trade Certified label when they open their books and demonstrate that they bought direct from the farmers and paid a fair price. So, our role at TransFair is to work with the companies to certify their supply chain, to audit their books and to give consumers that guarantee that when you see the Fair Trade Certified label on a product, you know the farmers got a fair deal.

Britt Bravo: Why should people buy Fair Trade products like coffee and chocolate? What difference does it make?

PR: There is a lot of evidence to suggest that consumers are increasingly looking for higher quality products. People are trading up, as it were. One of the most visible signs of that is the boom in the gourmet coffee business over the last 10-15 years with the whole cafe phenomenon, cafes springing up all over the country and people looking for a much higher quality cup of coffee, but also a higher quality experience. That same trend can be seen in all kinds of industries, particularly in food. People are looking for higher quality food, they're looking for healthier food, and they're looking for a more pleasurable experience around food.

Well, it just so happens that there's a direct correlation between the quality of a cup of coffee, or the quality of a banana, or some other piece of fruit, and the amount of money that the farmer actually gets paid for that harvest. As you might guess, if prices are low, farmers have to cut corners on quality. If farmers, on the other hand, get a decent price, then they can invest more in the quality of the final product.

So, there's actually an alignment of interest there between your and my desires as consumers for higher quality products, and the return to the grower. Fair Trade is all about ensuring that that grower gets a fair price. Not only to produce high-quality products, but also to keep their kids in school, to put food on the table, to protect the land, and to protect the forests around the farms.

That, I would argue, is the other big benefit for consumers of Fair Trade. One is being able to get a high-quality product, and two is to know when you buy a Fair Trade product that you're also helping other families around the world. Helping families keep their kids in school, helping them farm in a sustainable manner. I think there is now lots of evidence to suggest that American consumers are increasingly aware of the world's problems. They're aware that poverty around the world is not diminishing, they're aware that environment degradation is a looming problem. Climate change is on people's minds.

Most consumers in the United States, most people don't really have the time to think about those problems a lot. They don't have time to write letters to the editor, or go demonstrate against something they don't like. Hell, people in this country don't even have time to vote. But if we can find effortless ways for people to make a difference, what we found is that actually people want to help. People want to be on the right side of history.

Everyone goes to the store. Half the country drinks coffee, the other half drinks tea. 90% of Americans eat bananas, so if we can find ways for people to make the act of eating a banana an act of virtue, an act of helping the planet, then I think we've stumbled on a really powerful way to save people and planet before it's too late. That's what Fair Trade is all about, it's putting power back in the hands of the people so that through something as simple and mundane as a cup of coffee, you can reach halfway across the world and touch the lives of a family.

BB: Can you share a story of how a family's life has been changed for the better by Fair Trade?

PR: I was in Brazil a few months ago, and in this village in Brazil there are about eighty or ninety families that are all very small coffee growers. And when we say small in the coffee world, we're talking about one or two acres. I mean, really small. Of course, because their farms are small and because historically they've gotten a really low price from the local coffee buyers, called coyotes in Latin America, these farmers are all poor. And in those communities high school is a luxury, so the local school in the local community typically goes through sixth grade. Then, if you want to go on to middle school and high school, you have to go to the nearest town.

Well, in the case of this village, called Po├žo Fundo, the nearest high school is fifteen miles away. That means to go to high school you need bus money, you need uniform money, you need book money. It's about three hundred dollars a year to send a kid to high school in this region of Brazil. Now, three hundred bucks a year doesn't sound like a lot of money, right? It sounds pretty cheap to you and me. Three hundred dollars a year is a huge barrier for kids in this community, and kids all over the developing world.

That three hundred bucks stands like a wall blocking out generation after generation of young people from a better future. So, this community got organized. They formed a co-op about ten years ago, they got Fair Trade Certified four years ago, and they started selling to the US market in 2003. One of the first things the co-op did that first year was they set up a scholarship program with the extra income from Fair Trade for kids to go on to high school.

When I was there last fall, I met a young woman named Paola Pereira who was the first woman in the history of this community to graduate from high school, thanks to the help from this scholarship fund. She's now in college, so she's broken another historic barrier. She's the first person in the history of this entire area to go on to college. Again, on scholarship from the co-op thanks to your and my purchases of Fair Trade coffee up here.

So there's a direct link between what you and I choose to buy on a day-to-day basis and the ability of kids around the world to dream of a better future.

That's a very, very, very powerful notion and we find consumers around the country awakening to the easiness and power of reaching out through something as easy as a cup of Fair Trade coffee, and those stories...every time I "travel to origin" as we call it, every time I travel to Latin America, to Asia, to Africa, to visit farming communities, I see those stories of hope, of change, of progress through education, through health programs, through housing improvements, and through the quality of the product, which at the end of the day is what makes Fair Trade win-win. Seeing those farmers re-invest in their production, in their quality, and making it a better product for you and me as a consumer.

BB: What are the challenges of your work?

PR: We live in a society where everyone is suffering from information overload. We're bombarded by messages in this country and so for a small, non-profit organization like ours... our budget this year is $10 million... so when Nike launches a new line of sneakers they spend $300 million in the first year on advertising and promotion, so you can imagine for a small underfunded non-profit like ours how difficult the challenge is of raising consumer awareness across the country around Fair Trade.

So yes, awareness around Fair Trade is growing, but it's growing slowly basically because the resources are still insufficient to tackle the job in a major national way. So our response to that challenge is really to reach out through grassroots groups, through the media and through the Internet to try and spread the word in a more grassroots approach. And what we're finding is, we're reaching consumers, just not as fast as we would like.

BB: What brought you to this work?

PR: I got interested in issues of hunger and poverty when I was in college, and was particularly interested in rural poverty in the developing world, and started studying ways to approach that, alternative ways to approach that. And a book that had a lot of influence on me early on was Frances Moore Lappe's book, Food First, which basically concludes that hunger and poverty around the developing world are not a function of overpopulation and not enough food production, but rather are the result of a poor distribution of resources.

And so if we helped small farmers and the rural poor get access to land and credit and training and other resources, and get access to markets, they in fact could grow their own way out of poverty as it were. So that was for me a revolutionary concept, and at the tender age of 20 I started looking abroad for places where I could go and work in agricultural development and be a part of an alternative approach to poverty.

So I went to Nicaragua and spent a summer working on some farms, this was in 1982, Nicaragua was in the midst of a revolution in which they were giving land to the poor, and helping poor people organize co-operatives as a way of building a community framework for development and for sustainability. And I found that very exciting, and so I went back after I finished college thinking I would stay in Nicaragua and work with farmers for a year and get my field experience and then figure out what I wanted to do with my life. Instead, I stayed for eleven years and lived in Nicaragua through the Contra War and worked with farmers and with co-ops during that time.

Which was a very exciting time but also a very difficult time because of the war, and that led me to start, toward the end of my time there, to start Nicaragua's first coffee export co-op, which I led for four years, and we started selling to Fair Trade buyers in Europe. Fair Trade has been around in Europe for a long time, and there are a few pioneering companies here in the US that have been doing Fair Trade on their own for the last twenty years, but there was no over-arching labeling initiative or certification initiative that could take that effort to scale.

And so after eleven years in Nicaragua, I realized that markets didn't have to be the enemy, that in fact markets could be an incredibly powerful force for liberating the poor and that Fair Trade was a really interesting, innovative, powerful model for approaching that, and that if I stayed in Nicaragua I could continue to impact the lives of 10,000 families, but that if I came back to the States and tried to replicate what the Europeans had done with Fair Trade, and put Fair Trade on the map in a much bigger way in the United States, that maybe I could impact the lives of 10 million farmers.

So I moved back and went to business school and got some tools and then launched TransFair a few years later.

BB: Can you talk a little bit about Starbucks and Fair Trade?

PR: Right now TransFair is working with over 500 companies around the country just here in the US on a whole variety of Fair Trade products. Coffee of course is the biggest and most important one, but we're also working with companies that sell tea and bananas and rice and sugar and chocolate and a whole bunch of other products. Coffee is still number one and in coffee we've been fortunate enough to be able to forge relationships with a number of the leaders in the industry.

Companies like Starbucks, Dunkin' Donuts and Procter & Gamble which owns the Folgers line. They're not doing Fair Trade on the Folgers line, but they're doing it on another line called Millstone, but Procter & Gamble is engaged. Costco recently converted all of their private label coffee to Fair Trade, so the mainstreaming of Fair Trade, if you will, in the last couple of years is for us a real sign of progress. Because obviously that means much more volume is being certified and much more money is going back to poor farmers in Latin America, Asia and Africa as a result, and that, at the end of the day, is what we're all about.

We're about trying to get as many farmers as we can into this model so that they too can get a better fair price for their products and improve their living standards as a result.

So we're very proud of the fact that consumers have stepped up and have bought Fair Trade and that in turn has pulled more and more companies into the fold, because, let's get real, big companies don't jump into Fair Trade out of the goodness of their hearts. They jump into Fair Trade because there's a market for it, because they see an opportunity. That's actually a good thing, right? Fair Trade, at the end of the day, is not charity. We're not asking companies to take a dollar out of their pockets and send it south to those poor farmers down in Latin America, because out of the pity of their hearts, they want to do something nice for them. No that's not what it's all about.

Charity is noble and there is a place for charity. We're trying to build something different, something much more innovative. We're trying to build a different way of doing business. A way of doing business that allows a company to be profitable, while they do good in the world. Why do those two have to be a contradiction? Why can't we align the interests of companies and farmers and consumers, such that everyone wins by doing the right thing? That's the dream, that's the promise of Fair Trade. Building that alignment of interest so that those three stakeholder groups can stand together, and thrive together.

So in the case of big companies, like Starbucks, for example, we've made a good start. But it's only a start. If you look at what Starbucks is doing, I think there's a lot to be impressed by. Starbucks has become one of the top volume sellers of Fair Trade coffee in the country. So arguably, through the Fair Trade coffee that they offer in their stores, which is called Cafe Estima, they're impacting the lives of tens of thousands of farmers in Latin America and in Africa, at a time when those farmers really need our help.

On the other hand, Starbucks reported last year that Fair Trade represented only 4% of their total volume. Some people think that all of Starbuck's coffee is Fair Trade. That is not true, only 4%, by Starbucks own reports, is Fair Trade certified. And you can log onto Starbucks' website and get more details on their Fair Trade program and also their other programs. Starbucks is involved in a number of other initiatives aimed at helping farmers. So I think from Starbucks' perspective, they are doing a lot. From the perspective of the Fair Trade activist community, I think that there's a strong feeling that Starbucks could and should do more. Obviously, our goal here at TransFair is to be an enabler and a partner in that effort by Starbucks and other companies to do more.

We feel that there's a lot of room for growth, and in fact Starbucks and Dunkin' Donuts and all these big companies that we work with, year after year, they are growing in terms of the Fair Trade volume that they're moving. So there's great progress there. Sometimes the activists feel like it's not fast enough and sometimes we share that frustration. The realities for big business are different than for smaller businesses. What we find is that the smaller businesses that we work with can often convert larger portions of their overall volume to Fair Trade in a couple of years. For big companies that's more challenging. It takes longer to re-tool supply chains. It takes longer for bigger companies to identify the right producers, that can produce both quality and volume and that are stable, reliable business partners.

So TransFair's approach is to be patient and to be supportive of that process; to really embrace the opportunity to work with big companies in order to have a larger impact in the world. We don't want to ever be accused of being a greenwasher. That's the flip side of it. That's obviously the interesting risk and challenge of working with really big companies that are maybe only doing relatively small portions of their overall volume on Fair Trade terms. Are we being used? Is the Fair Trade label being used as a greenwashing tool?

So, we're mindful of that. We're aware of that. The way we manage that risk is by setting very clear expectations up front with the companies that we work with around setting a balance between the volume of Fair Trade that they move, and the volume of PR and promotion that they put out around that. So there needs to be a balance. It wouldn't work for a company to do a very tiny volume of Fair Trade and then go out and do lots and lots of PR and media work to make it appear as though they're doing much more than they actually are. There needs to be a balance there. There needs to be a fair representation in the media work around Fair Trade and what that means for the company.

Frankly, I think if you look at the companies that we work with--companies like Costco, Dunkin' Donuts, Starbucks, Procter and Gamble, Green Mountain, another great company we work with, those companies tend to be very careful about the PR that they put out around Fair Trade and tend to have their own interest in there being a link there. They don't want to oversell it and be accused of being dishonest. They're looking to build their own credibility and integrity in this space and I think the companies are pretty savvy. They understand that if they tooted their horn too loudly, relative to what they're actually doing that could come back to bite them in the ass in the end.

I'm actually really happy with the level of promotion and publicity of the big companies that we work with, relative to their efforts and their results. Needless to say, that's something that we at TransFair are always mindful of, and always looking to monitor. Because we want, at the end of the day, for consumers to see Fair Trade and all of the companies doing Fair Trade as a very credible model that has high integrity and that really delivers real results. That reports appropriately relative to the results that we're having.

For me, one the key ingredients of Fair Trade being able to successfully engage with large companies is the fact that Fair Trade has a movement. If you look at other labeling initiatives, one of the big differences between us and them is that Fair Trade isn't just a market. There's actually a grassroots movement all over the country of incredibly passionate, smart, committed people. Students, people in churches, people in environmental groups who have embraced Fair Trade as a positive model of change. For so long, the activist community in this country has focused on what we don't like - on the problems of globalization, on the problems of environmental degradation, on the problems of poverty, and the role of business in that problem, but without really having a powerful, compelling workable model of positive change. And so as a result, I think Fair Trade has really come to complement all of the great organizing work and activist work that the activist community historically has done, because it gives us now something positive and viable to point people towards once they get that there are problems in the world.

And as we engage with bigger and bigger companies that in some cases have arguably pretty checkered pasts in terms of their business practices, it is the watchfulness of the activist community that I think encourages those companies to engage and to delivery. Without an activist community, without a Fair Trade movement, I don't think many of the companies that are today doing Fair Trade would be doing it.

And so I feel that the role of activists and of engaged conscious consumers is really key to the success of the model at the end of the day. Not only in going out and buying Fair Trade products, but also in encouraging companies to move down the path toward greater sustainability over time.

BB: How can listeners get involved with TransFair?

PR: Check out our web site. There is a Where to Buy button there which allows you to plug in your ZIP code and find out the stores nearest to you that sell Fair Trade products. That's first and foremost what we would love every American consumer to do: vote with your dollars.

I mean we'd love for you to do a lot more than that, but if you only did that, if you only voted with your dollars, if you only asked for Fair Trade and looked for Fair Trade every time you went to a cafe, or restaurant, or a store, your voice would be heard, because guess what? Business 101: Listen to your customer. Companies listen, and it doesn't take millions of consumers saying, "We want Fair Trade coffee" to get a company to turn.

Actually it takes a relatively small number of consumers asking for it at the grocery store, or buying it at the grocery store, or the cafe, for companies to say, "Hey that Fair Trade line is really working," or, "Hey we need a bigger Fair Trade line, there's demand for this," So our voice as consumers is heard, and the impact is felt.

I recently had a conversation with John Mackey who is the CEO and Founder of Whole Foods Markets. They have not done a lot of Fair Trade historically, and now are about to move in a big way into Fair Trade. And John said very clearly to me, one of the big reasons why they have changed their position is because the customers that come into their stores kept asking for Fair Trade products.

So our voice makes a difference, and one of the biggest ways that people can help is simply by buying Fair Trade products and asking for them.

Beyond that, there are lots and lots of ways to get involved. We've seen students, for example, take on the project of getting Fair Trade coffee into their dining halls. We've seen churches get Fair Trade coffee into coffee hour, or bring Fair Trade products into the church through wholesale arrangements with different Fair Trade providers, and then use that us a fundraiser and as an educational device.

We've seen other grassroots groups, community groups, environmental groups, engage around Fair Trade, get the word out through their newsletters, and help to educate and raise awareness, provide links to their web sites, promote Fair Trade products through creative partnerships.

Here's an example: the National Wildlife Federation recently launched a Fair Trade, organic, shade grown coffee as a way to educate its members around that strong link between environmental conservation, and the livelihood of the people who live in and around the forest because you can't save the trees, if you don't also try and save the people who live under the trees. That's new school environmentalism, but leading environmental groups like Sierra Club, like National Wildlife Federation, they are making those links and actually promoting Fair Trade coffee as a way to promote their environmental agenda.

So lots of ways to get involved by spreading the word, and what we find is in the absence of a multi-hundred million dollar advertising budget, word of mouth, and people spreading the word through their connections, their networks, and their communities is actually not only an effective way to build the market, build awareness for Fair Trade and help more farmers in the process, but in some ways it's probably more effective than seeing an ad on TV because when we hear something from someone that we know and trust, we tend to listen to it more than seeing something on TV, because people are skeptical about stuff they see on TV obviously, so spread the word, that's how you can help.

BB: What advice do you have for someone who wants to start their own non-profit, or is a budding social entrepreneur?

PR: The old approaches to the world's problems aren't working very well. We need creative, innovative, bold new approaches, and Fair Trade is one of those, but it's certainly not a panacea or a solution to all the world's problems.

So my advice to people who want to change the world and who might have an inclination to do something on their own is, forgive the cliche, but think outside of the box, think of a new approach, think of a way that harnesses the power of markets, if possible, to the task of environmental sustainability and social justice.

I think now is the time for us all collectively to think broadly and creatively about new approaches and to challenge a lot of our old assumptions, and a lot of our old idealogical blinders, if you will, and to come up with new alliances and new strategies for change.

For more information about TransFair USA go to www.transfairusa.org

Britt Bravo also blogs at Have Fun * Do Good, NetSquared and BlogHer.

Transcription by CastingWords


  1. Interesting post. A guy can learn about business and Internet Marketing with this interview. There's a lot of interesting points that can help a guy improve his business in this post.

  2. I wish there were fair trade stores in the US, like there are in Europe. I used to do consulting for a Dutch company, and every time I went to Amsterdam I came home with a suitcase full of food and gift items from the wonderful fair trade store there. Here in the US I have difficulty tracking down some of those items, and in particular the amazing honeys from Mexico and Africa. I hope as this movement progresses, there will be more dedicated outlets for fair trade goods.

  3. For those of you who are interested in the issue of Fair trade, there is a powerful documentary out called “Black Gold,” that documents the lives of Ethiopian coffee farmers and clearly demonstrates why all of us should be asking for Fair Trade coffee. The film was recently released in the theater but is now available to the public on DVD via California Newsreel. You can read more about the documentary or pick up a copy of it here at http://newsreel.org/

  4. Anonymous1:13 PM

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    Marissa / Ten Thousand Villages


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