Part II: Reflections from the South, by Santiago Paz, Co-Manager, Cepicafe
The following is an English translation of a video interview with Santiago Paz which first appeared on Progreso Network on June 21, 2011
I was hoping to initiate a discussion, a reflection on what is happening with coffee—and not just with coffee; but with fair trade in general. Coffee has been and continues to be the leading fair trade product and whatever happens with coffee will, in one way or another, mark the future of fair trade. And we are very concerned about what is happening currently. You all know that in the 1990s, around the world and especially in Peru, a process was undertaken to reactivate co-operatives and producer organizations.
Fair trade provided us with an advantage; allowed us to be more competitive and this in turn enabled us to develop our organizations. We have seen significant coffee sales and we have been able to diversify. We have diversified with regards to the financial market and with regards to the local market.
For some time now we have entered a third phase of fair trade. The first phase of fair trade was motivated by the solidarity of consumers that purchased coffee because of their social commitment. Sometimes the product was not high quality, but these consumers continued to buy as a result of their social commitment. That was the first phase of fair trade.
Then we moved into the second phase, which required another level of professionalism. This was an important step forward in which fair trade products became synonymous with quality—superior to the coffee offered by the conventional market. That is when fair trade became a reality.
But now, FLO’s [The Fair Trade Labeling Organization’s] incentives and promotion is creating a vision which only considers the importance of gaining market share. The hypothesis is that if we lower prices, and if we lower the standards, we can gain a greater share of the market. Initiatives such as FLO have established a methodology. For example, we have to multiply the number of producers by five and we have to increase volume in five or ten years. We have to gain a greater share of the market. I think that this optimism and this vision that is limited to gaining additional market shares have brought us into a new phase and we think that this phase presents a serious threat to our organizations.
On the consumer end, transnational companies are now included in fair trade. And for us as well, there are also large companies participating. We will probably not be able to compete with these companies so I think that now is the time to define the path. What is the path? What is the future of fair trade? If fair trade continues to follow a vision exclusively tied to growth and sales and the marketplace, we believe that this is the wrong way to go. The impact and advances that have been achieved are at stake.
I believe that extraordinary achievements have been made in Peru. We think that fair trade should return to its origins and that the focal point or primary orientation of fair trade should continue to be the organizations; the small producers. Unfortunately, these decisions are not currently being made in the best interest of the producers; they are taking into account the interests of large companies. We propose a return to our origins and suggest that the producer organizations should be the focal point. We also think that fair trade in and of itself is not the end goal. We believe that in addition to operating companies that buy and sell in a professional and efficient manner and compete in the international market, we should also act as organizations.
Examples [of these producer organizations] include Cepicafe, Cocla, and Escobaza . We have become protagonists and politicians; we play an important role in the economy; and we believe that fair trade should use its influence to impact regional decisions made by other institutions, by international aid, and by local, regional and national government. I think that this is the role that we play currently and that this is what fair trade should be supporting.
And again, well done!
We import coffee finished from South Africa. We believe it is important to self-police our sources rather than subscribe to Fair Trade as it is seen to have deteriorated as your article suggests. So we believe that “value added” should mainly be where produced, where African employment takes place – there is too much “value added” in the distribution system in USA already.
So we have picked our coffee farm which grows, cleans, roasts and packs roasted beans on the farm and has African employees, near an area which can also grow coffee in local tribal lands, employing new farmers as this initiative materializes. That’s our simple system!
[…] Nochtans, dit is een heuchelijke dag voor al wie fairtradegezind is. Eindelijk komen misschien de argumenten ten gronde naar boven, waarom een overheid beter voor pakweg… […]
Interesting thoughts. I myself find it inevitbale that as Fairtrade / FLO gets larger that it will have a tougher time keeping up with “the small guys” – I do however not see that as a big disadvantage, as Fairtrade / FLO have made a very good job of getting mass marked breakthrough. I think massmarked is an important step that does alot of good around the world – even if it certainly isn’t perfekt.
I think one solution to the problem that is described in this post is either a new brand / certificate that is more niched towards smaller cooperatives or farms, or a subbrand of Fairtrade / FLO that takes into account more of the concerns from smaller coops / farms. A subbrand that is more “original to its roots”, but that still leaves the main Fairtrade / FLO brand to keep on growing.
I have written some reflections about this here: http://www.fairtradeship.se/2011/07/hander-i-fairtradevarlden-vaxtverk-inom-fairtrade/
It is in swedish though, but there is a translate function on the website.
MULTI-LATERAL BARTER SOLUTION
There is a compound solution to trade between coffee producers such as AfricaZia mentioned and other commodities. Basically, we revert to bilateral, trilateral or multi-lateral barter of our respective goods. Here’s a possible example.
Assume I (Jim Miller) want to import wine from France from Vignoble Grain de Raisin Sauvage (Wild Grape Vineyard) run by George Guizot. George wants to import roasted coffee beans from AfricaZia. AfricaZia wants to import from Jim packaged Silverfin fish which needs no refrigeration. Coffee in France brings more revenue to AfricaZia than it would if sold in the USA or on the world market. Silverfin is a high protein fish with Omega III fatty acids. I can mark-up George’s fine French wine and recover costs and profits for my shipment of Silverfin to AfricaZia. Both I and George want to help relieve the extreme poverty in the area growing coffee in AfricaZia’s area. So, I trade (at cost) a container load of Silverfin for wine, but send the container to AfricaZia’s location, where it is both distributed to the villages in the coffee growing area and some sold for local cash.
Jim gets XXX cases of George’s fine French wines, based on George’s costs including transport to a major port of entry, such as New Orleans. George gets paid in roasted coffee beans priced at the closest major port of entry to George’s location. Small differences can be made-up in Dollars or Francs.
This same approach can include a wide variety of goods which travel short distances and thus remain “local” by having multi-party trades, based on prices at the nearest major port of entry or major trading center to the “buyer”. Jim’s profit on the French wine would be taxed in the U.S. George’s profit, if any, on the coffee beans would be taxed in France. AfricaZia’s “profit” would be taxed by the state or national authority. If AfricaZia’s company which receives the fish is a tax exempt charity, the profit may not be taxed.
You can learn more about Asian carp (aka Silverfin) by visiting Carp Catchers Cooperative at: http://carpcatchersco-op.wetpaint.com .
Jim Miller
jimmiller5417@gmail.com
July 19, 2011