The following article, written by Scott Patterson, Director of Equal Exchange’s Minnesota Regional Office, first appeared in many of our food co-operative partner’s October newsletters.
If you work for a food co-operative, are a member or shopper of one, or quite simply are just plain interested in what a co-operative economy means, I think you’ll be inspired by some of the ideas Scott discusses below. Let us know what you think!
A co-owner of mine recently shared an interesting interaction. A woman came up to her at a co-op event that we were sponsoring and said that she had been a passionate Equal Exchange supporter in our early days, but assumed that after nearly 25 years we had sold out to grow or survive.
Given the current climate of corporate bailouts and the long list of disappointments from Green & Black’s, Tom’s, Burt’s, Kashi, Dagoba, Honest Tea and more, it’s easy to arrive at that conclusion. When we shared that Equal Exchange is a worker-owned co-operative and that, like at her food co-op, the values of transparency and democracy are the rules by which we govern – and, aren’t just pretty words – the landscape shifted.
There is some grey area here; it is, of course, possible for co-ops to be broken, sold or poorly managed. But when done well, the one member, one vote and profit sharing backbone of co-ops protects against greed and promotes ethical entrepreneurialism better than any business model I have seen to date. In the case of Equal Exchange, imagine 91 people who have a genuine financial stake in seeing their work succeed. Our recent jump into bananas exemplifies this spirit.
Last December, the worker-owners at Equal Exchange voted to take on a daunting challenge. The banana industry is totally dominated by Dole, Chiquita and Del Monte. Who in their right mind would try this? But remember we aren’t just talking about one company. The origins and success of Fair Trade coffee can almost exclusively be traced to a powerful chain of cooperators. Picture it: small farmers Û Equal Exchange Û natural foods co-ops around the country Û you.
Together, both with international and local farmers, our collective work is one of creating food chains that stand for our values. The beauty of co-ops and these supply chains is that they are transparent; you can get to know something real about the 80 farmers who are growing your bananas. And with shared ownership and decision making, when you as a shopper support cooperatively owned companies on the shelves of your store, you are sharing your power and creating authentic change.
Traditionally, October’s co-op month has been about celebration and we have many successes to enjoy. At the same time, we have a lot of work ahead. While we’ve seen copycats repackage our work and call it things like “direct trade,” we do need to reinvigorate and step up our game when Frito Lay and Wal-Mart tout their “relationships” with farmers. No wonder most shoppers are skeptical. And the risk is that when we can no longer distinguish between real efforts and marketing, we lose our ability to create true change.
So, how do we move forward together? Well, for Equal Exchange’s part, in addition to jumping into the banana industry, we are committing to doing a better job of sharing both why small-scale farmer organizations are valuable and to letting you all get to know us. I suggest that natural foods co-ops embrace the debate about who owns the companies on your shelves share this with your member-owners and do even more to actively promote cooperatively owned companies.
Don’t get me wrong, I know some of you are here already and we feel extremely well represented. But in addition to local, organic and Fair Trade labeling, let’s identify and be proud of our business models. On the part of shoppers, hang in there! I know you are stretched for time and money but if you’ve read this far you must see value in building these connections! I ask for your amazing, continued loyalty to your co-op and to Equal Exchange, and that you join us in holding our collective feet to the fire. Remember, your grocery store has been an innovator and is able to carry the products you want because it is a co-op! Why not look for more of the same in all the companies your dollars support – and in this way remove the incentive for companies to sell out.
Small Farmers. Big Change. 
HI Scott (Phyllis),
As one ‘just plain interested in what a cooperative economy means’, I am certainly inspired by the ideas of Equal Exchange and what you have presented here!
There seem to be many, many advantages of the co-op business model. I loved your description of how Equal Exchange moved into the banana market and built that powerful collaboration with small farmer producer groups and natural foods co-ops.
I was also particularly interested in two other aspects of your post.
Firstly, you talk about “direct trade” copycats! I am not sure I understand what you mean here? Would you be willing to explain this point further?
Secondly, I agree completely with the significance of transparency as a key driver of ‘fairness’ in the supply chain. I have however heard in other contexts that having a fully transparent supply chain makes traders vulnerable to coercion from competitors. In other words, if all your commercial arrangements are transparent then competitors will look to use that knowledge to their advantage. I don’t know enough about the intricacies of supply chains to make a call on this.
So I was wondering about your perspective on this qualification around transparency and the actual degree/extent of transparency you are advocating in the co-op business model supply chain!
Many thanks for sharing!
Cheers
(Another) Scott
Hi Scott,
Thanks again for your comments and excellent questions. Scott Patterson, who wrote this article, is on his way to Sumatra to visit one of our trading partners, so I’m assuming he won’t be able to respond to your questions.
I can give you my opinions however. : )
Direct trade with our producer partners is an absolutely critical part of our mission and has been since day one when Equal Exchange was founded. One of the reasons why the founders formed the organization was because they had come from the food co-op world and had seen how “dangerously disconnected” U.S. consumers were from their food sources. The founders wanted to establish more direct (and mutually beneficial) relationships with producers and to find ways to bring producers and consumers closer together.
When Equal Exchange helped launch Transfair USA, direct trade became one of the principles of Fair Trade.
In recent years, a number of newer roasters, who do not purchase their coffee under “Fair Trade principles” have tried to position themselves into a new niche which they have coined “Direct Trade”. In essence, what they are doing is going to source, finding the coffee they wish to purchase and buying it from the farmer, by-passing the co-op or other organizational entity that the farmer might belong to, as well as by-passing any Fair Trade mininimum price or credit guidelines.
So, whether it’s Fair Trade or Direct Trade, direct relationships are a critical element of the work. The difference is that Direct Trade ends there, whereas Equal Exchange) goes further: we believe in social movements and in co-operation – individually, small farmers don’t stand a chance – and so, if we can purchase high quality coffee and offer higher than market prices, advance credit, training, and educational exchanges, AND support farmers’ efforts to organize themselves to achieve higher social aims for their businesses and communities…. why would we stop at “Direct Trade”?
In terms of transparency, I’ll try to be brief: you’re right, that for a multitude of reasons, every business clearly needs to carry out its work with some degree of confidentiality. However, a commitment to transparency means that built into our business model is the overall desire to share how we carry out our work – whether that’s our financials, producer partners or retail partners. As a worker-owned co-operative, it also means that internally, business decisions and strategies are shared much more openly and horizontally than in traditional businesses where information is on a “need-to-know” basis.
I hope that clarifies some. Thanks again for all your interest.
Phyllis
HI Phyllis,
Thanks for your response on behalf of Scott…my what interesting travels you all have .
You did a great job on answering my questions and I am now much clearer about the concept of ‘direct trade’ and EqX ‘transparency’
Actually, while some may consider it unrealistic or limiting, I am one of those who advocate for FULL transparency in all business dealings, so I encourage EqX to keep leading the way to further transparency!
Cheers
Scott