Why is Equal Exchange for co-ops and against plantations in the Fair Trade system?

Glad you asked. Simply put, we believe it's the right thing to do.

Now, for the long version. Unlike plantations, co-ops are democratically organized enterprises. This is especially important in communities and countries with otherwise weak or non-existent democratic traditions and entrenched political and economic elites. Buying from plantations, even ones that sincerely do right by their workers, largely reinforces long-standing power dynamics. (Admittedly, credit should be given to those few plantation owners who choose to recognize unions in countries where unions are otherwise heavily suppressed.)

Too often, the large players in the global coffee trade not only decline to buy from co-ops, they sometimes actively undermine co-ops. For example, one technique we have seen in Ecuador is for the larger commercial processors and/or exporters to temporarily raise the prices they pay small coffee farmers so high that the local coffee farmer co-operatives cannot compete. Unable to buy and export coffee, the co-ops go out of business. In subsequent harvest seasons, with the co-ops now defunct, the processors can reassert their control and dramatically drop the prices they pay farmers.

But can co-ops keep up with demand?

Small-scale farmer co-ops, in both developing and developed nations, already operate successfully in almost every imaginable agricultural sector. And, looking more broadly at the viability of the co-op model, all the world's co-ops combined are larger than the Fortune 500 companies combined.

In many agricultural sectors, small farmers represent the majority of production (coffee, cocoa, wine, many tree crops like pecans, apples and pears). In other sectors, global production is a mix of small farmers and larger farms, plantations and estates (tea, bananas, sugar, rice, cotton). In either situation, Fair Trade represents a smaller portion on the consumption side of the market than do small farmers on the production side. For example, Fair Trade sales = <1% of the global tea market, while small farmers represent 50% of global tea production, therefore small farmers could easily meet the world's demand for Fair Trade tea.

A common refrain from one large coffee corporation in particular is that "co-ops cannot supply all the coffee we need," and that they therefore must buy from plantations out of necessity. Even in cases where this might be true, at the moment it does not follow that a large importer cannot leverage its buying power over time to help the co-op sector scale up, and to then steadily increase the company's purchases from that growing supply of co-op-produced coffee, tea, flowers, etc.

In fact, large corporations are masters at this kind of long-term supply chain thinking - when they want to be. If they decide they need X, and know they will need more and more X in the years to come, and that there is too little supply today, they will do whatever it takes to increase the supply. Companies will enter into multi-year contracts, complete with favorable financing and technical assistance to help their suppliers grow to meet future expected demands.

We and other dedicated Fair Trade importers have worked in this manner with farmer co-ops for years. This is one reason why the small coffee farmer co-op sector has scaled up so very impressively over the last 20 years. And that has not necessarily represented more coffee being grown (and therefore theoretically contributing to an excess in global supply), but rather it means that coffee is being re-routed and is reaching the market via a different path, namely through cooperatives and Fair Trade importers like Equal Exchange, instead of coming to market via coyotes and conventional traders.

It is this kind of support for co-ops that we are asking for from both the large corporations and from the Fair Trade certifiers. And this is why it is reasonable, and not at all a quixotic notion, to ask that they turn away from the quick fix of certifying plantations in pursuit of rapidly pumping up the supply of Fair Trade agricultural products.

What about co-ops in the cocoa industry?

Thankfully, in the cocoa/chocolate category Fair Trade certification is still limited to small farmer co-ops. About 90% of the world's cocoa is grown by about two million small-scale farmers, most of them concentrated in West Africa. (See the Dept. of Labor commissioned study by Tulane University's Payson Center.) While today a relatively small portion of them are members of Fair Trade registered co-ops, many others are in non-registered co-ops (and therefore possibly just one step away from Fair Trade eligibility) or could join existing Fair Trade co-ops, or could be organized in co-ops, etc. Interestingly, in Utz Certified's efforts to create a cocoa supply chain free of forced child labor, one of their first steps was to declare that they would only work with farmer co-ops, because it was quickly apparent to them that it was the only practical approach to creating a more ethical supply chain.

And tea?

Despite the high-profile of tea estates in the tea industry, over half the world's tea is actually grown by small-scale farmers. At Equal Exchange, we think tea farmers should be able to make a living as tea growers working their own land - and unlike most in the Fair Trade market – we're trying to make that possible. If we can then these men and women will be much less likely to lose their farms and be forced one day to work someone's land as a plantation laborer.

In the rooibos tea market, about 98% of production comes from large-scale South African plantations that were established during the colonial and apartheid eras, and which pushed the original black African farmers off the best rooibos land. But rather than challenging the structure of the rooibos market Fair Trade certifiers have instead chosen to accept it as a given and therefore certify some of these large plantations so they may sell to the Fair Trade market. In fact, almost all of the Fair Trade tea sold in the U.S. is plantation tea.

At Equal Exchange we could have said "alright, we'll just work with the best of a bad situation" and bought this plantation tea. But we didn't find that as motivating as seeking out the two co-operatives of small-scale Khoi San farmers who represent that dwindling 2% of rooibos production. In the context of a country like South Africa that is still struggling to overcome the legacy of Apartheid we believe working with the Khoi San represents the real heart of what Fair Trade is about. Today these two co-operatives are making great strides and have even bought their own tea packaging operation.

Consequently we don't believe all this a well-meaning but ultimately marginal effort. Rather, it feels like the best way to leverage our - for now - relatively small buying power for the greatest effect. There's no reason why other Fair Trade importers in all kinds of agricultural categories cannot similarly maximize their impact, support small-farmer co-operatives, and help grow the overall farmer co-op sector so that it can consistently supply all of the Fair Trade consumer markets, just as it does now in coffee, cocoa and sugar.

Where can I learn more about the co-op difference?

Our Small Farmers. Big Change. blog, is a good start. We're going into some depth about the small and why we're so focused on supporting them.