A conversation with Fair Trade USA’s Paul Rice
October is officially Fair Trade Month, and Fair Trade USA founder and CEO Paul Rice is both optimistic and realistic about the impact of Fair Trade certified products for lifting farmers and producers in poor, developing nations out of poverty.
The concept of Fair Trade began in the 1940’s as disparate organizations of shopkeepers and churches in Europe reached out to help impoverished communities to gain access to their wares – mostly handicrafts in the beginning. In the 60’s, sugar was adopted into Fair Trade markets. With the creation in the 80’s of Max Havalaar – a name based on a fictional character from a famous Dutch novel – coffee-pickers achieved representation in Fair Trade markets and the concept began to “get it legs” and quickly expand.
When Rice first learned of the Fair Trade model in 1990, he spent eleven years in the mountains of Nicaragua working to help farmers develop co-ops through development aid programs. It was a sobering lesson.
“After one failed development project after another,” says Rice, “I finally came to the conclusion that development aid really doesn’t do much to empower small farmers to rise out of poverty based on their own efforts.”
Hope, pride, and dignity
Rice was inspired by the efforts of the “crazy Europeans” who called themselves Fair Traders and were willing to pay a higher price for coffee, cocoa, and other products. In 1990, he organized the first Fair Trade coffee co-op and spent the next four years organizing 3000 farmers throughout northern Nicaragua. As small one- and two-acre farmers, the producers were “totally at the mercy of the local middlemen, the money-lenders, and other commercial entities,” says Rice. But by banding together as a Fair Trade co-op “we were able to create economies of scale. We bought our own processing mill, starting adding value to the product and exporting it direct. That in turn allowed a much higher revenue stream back to those villages”
At that time the local market was buying coffee at ten cents a pound. Fair Traders, on the other hand, paid one dollar a pound. The impact was swift and significant. Farmers were able to stay on their land, kids stayed in school and went on to high school college, wells were dug bringing fresh water into some villages for the first time, farmers began converting to organic.
“They were doing a lot of things that otherwise they might have looked to government or NGO’s to try and come in and solve for them,” Rice says, “and so obviously by doing it themselves there’s this incredibly powerful, invisible dividend of hope and pride and dignity that comes through an empowerment model of change.”
Moving the market
Motivated by the impact of the Fair Trade model, Rice founded Fair Trade USA in October of 1998. Combined with organizations like Fair Trade International, the global reach of Fair Trade certified products includes tea, coffee, sugar, chocolate, cocoa, herbs, spices, honey, wine, flowers, grain, and rubber.
Sales of Fair Trade certified products grew in the US by 63 percent last quarter from the previous quarter, reflecting a rapid acceptance of Fair Trade by mainstream retailers and growing awareness by consumers. Fair Trade products represent 800 brands sold in at least 100,000 retail outlets for total sales of $1.5 billion.
Says Rice, “The challenge for us all now is how we can evolve the Fair Trade model in order to make it bigger, more scalable and to have greater impact on hard working farmers and farm workers around the world. And so toward that end we’ve recently launched Fair Trade for All, which is our effort to evolve and innovate the Fair Trade model in order to make it more scalable. ‘Innovation for impact’ is really the way we’re thinking about it.
What that means concretely is we’re forming a series of new partnerships with fantastic NGO’s and other organizations that can help us accomplish this mission. The partnership with Scientific Certification Systems is to bring a new certification expertise into the Fair Trade world. We’re also working with a number of NGO’s and funders to make sure that co-ops and other Fair Trade producers have access to capital, have access to training and technical assistance. So we’re really broadening the scope of Fair Trade both in terms of who we’re benefiting and in terms of the various programs to deliver more impact to more farmers around the world.
Fair Trade is part of a much bigger market phenomenon that has a couple of different aspects to it. The first is that we see globalization evolving and we see companies evolving in their approach to supply chains. So in the past you might have reasonably characterized globalization as a ‘race to the bottom’ …increasingly today companies are awakening to the importance of sustainable supply chains for their own profitability.
Commodities are moving from being nameless, faceless price-driven elements of the business model to increasingly being very much a part of a company’s vision of long-term success. Companies are looking for transparent, sustainable supply chains and Fair Trade is one way to help them do that.
The other trend that I would point out is the increasing awareness by American consumers that our lifestyles and our product choices have an impact on the world. I think consumers increasingly want to know where their stuff came from.
The macro trend we would define as ‘conscious consumers awakening to where their food comes from and wanting to know more. Fair Trade hits that trend square on. Our desire is to evolve the fair trade model so it’s a better ‘surfboard’ that can ride these waves and really deliver more impact to farmers and ecosystems around the world as a result.”
When asked what he expects of the Fair Trade movement in 10 years time, Rice sees it as becoming increasingly mainstream, something that American across the nation know about and look for. With the perception by most people of Fair Trade products as high quality, Rice envisions a win-win marketplace that will become the “new normal as we look to the future.”
Rice’s early experience with the top-down charity approach of alleviating poverty shows that the best intentions are no better than the actions and results they bring about. The Fair Trade framework creates real improvement in the lives of farmers, their families, and the villages, towns, and ecosystems in which they live. If there ever was a clear model of the triple bottom line, look no further than Fair Trade certified products. That bottle of iced tea or bar of chocolate can change lives.