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321. Observations on the FT4All pilot

This week, CRS is issuing a series of observations based on our experience in Colombia with the first Fair Trade Certification pilot with independent smallholder farmers, and recommendations for the future of Fair Trade for All.  From our perspective, the pilot has been the source of some encouragement as an approach to smallholder organization where cooperatives have not thrived.  It has validated some of the concerns we identified back in April in our public comment on FTUSA’s draft certification standard for independent smallholder farmers.  It has led us to reflect more on who is best positioned to catalyze processes of smallholder empowerment.  And it has generated at least one important cautionary tale for future pilot projects.

FOSTERING FARMER ORGANIZATION AND MARKET ACCESS.

The pilot succeeded in improving farmer organization for the market and initiating collective processes to identify and address community needs – nothing to sneeze at in the part of Colombia where the project is working, where farmers have historically been reluctant to organize.  There are more than 35,000 smallholder coffee farmers in Nariño, but only one Fair Trade Certified cooperative, whose membership includes less than 1 percent of the region’s farmers.

Farmer organization.
Smallholder farmers with limited experience marketing their coffee collectively made strides toward more effective organization for the marketplace under the pilot.  Through trainings organized by the pilot project, six existing organizations and three new ones built basic social infrastructure, including the structures they need to manage their commercial relations with Market Access Partner and administer Fair Trade premiums.  For many of the participating farmers, this work was undertaken with a wholly new outlook on trading relationships.  Farmers I met with had ably assimilated and eagerly embraced the concepts of transparency and dialogue — principles that are central to Fair Trade but have been lacking in many of their trading relationships to date.

Community development planning.
In eight communities, farmers participating in the pilot led community-wide efforts to identify and prioritize the leading challenges to sustainable community development in consultation with other members of their communities.  On the basis of these needs assessment processes, farmers created a local development plan that will put Fair Trade premiums at the service of farmer-led local development processes.  In a region where most local development projects are implemented by Colombia’s National Coffee Growers Federation, this kind of local, farmer-led community development initiative is rare, indeed.

Positioned for premiums.
By the end of October, 281 of the 350 farmers participating in the pilot we supported were certified.  Collectively, they sold two containers of coffee certified under the pilots to the Market Access Partner.  The coffee is not yet contracted, but if it is sold on Fair Trade Certified terms, it will position emerging Fair Trade Committees to reinvest $14,919 in social premiums as part of first-ever farmer-led community development projects in participating communities.

CONFIRMING CONCERNS ABOUT THE APPROACH.

Our experience in Colombia suggests that some of the concerns we raised in our public comment on FTUSA’s draft independent smallholder standard back in April were valid.

Assessing impact.
In our public comment, we wrote:

To date, no compelling plan has been presented for independent assessment of the impact of independent smallholder pilot projects.

Unfortunately, this observation holds as true today as it did when we wrote it nearly six months ago.

When we decided to provide financial support for the second phase of the pilot, we looked to the first Fair Trade pilot project for guidance on building a monitoring and evaluation system.  We had our own ideas about what we should measure, but wanted to use the first pilot’s M+E approach as a point of departure in our own work.  That system consisted of four open-ended questions focused on capturing in participants’ own words the changes brought about by the pilot.  In our monitoring and evaluation work, we use the Most Significant Change methodology that informs these questions, but only as a complement to other rigorous quantitative assessments and not as a stand-alone tool.  In the second phase of the project, we worked with the Market Access Partner and project co-funder to incorporate more quantitative indicators, but we were not able to put in place the kind of monitoring and evaluation system we would require for our own projects.  In sum, we believe there is still a lot of work to be done to put in place the kind of measurement system needed for a credible assessment of the impacts of FT4All.

Market Access Partners — How much can they do?
We also expressed concern back in April about both the amount of responsibility assumed by Market Access Partners and the sources of their funding:

We are struck by the amount of investment required of the Market Access Partners…The model may create a structural dependency on grant-based funding to bring smallholders into compliance with the Standard.

There was little evidence in the Colombia pilot that the Market Access Partner could support the level of investment required to provide high-quality, ongoing support to Registered Producers and their organizations over the full six-year period referred to in FTUSA’s independent smallholder standard.  When external funding for the second phase of the project ran out and the Market Access Partner was unable to attract additional funding, it was unable to retain the staff members who helped it to implement the pilot.

On the basis of our experience in Colombia, it is hard to imagine how the FT4All approach in its current iteration can be sustainably funded in the absence of sizeable and sustained external subsidies.

WHO IS BEST POSITIONED TO CATALYZE FARMER EMPOWERMENT?

Our experience with the pilot in Colombia led us to some deeper reflection about the ideal attributes of the kinds of organizations that will perform this function in the Fair Trade supply chain.

Market Access Partners — What makes for a good one?
FTUSA’s independent smallholder standard makes clear that many different kinds of organizations can serve as Market Access Partners, including NGOs.  But it also makes clear that the Market Access Partner needs to have the ability to export coffee — a requirement that narrows the field of candidates considerably.  Since the primary requirement for eligibility is coffee exporting experience, it seems that Market Access Partners will frequently be commercial coffee exporters.  While that may satisfy the “market access” role of Market Access Partner, it says less about the social aspect of its role: the willingness and ability to foster the long-term processes of farmer organization and empowerment that are at the heart of the standard’s proposal for social development.

I know some dynamic young coffee exporters with a strong social impulse, but farmer organization and empowerment are not generally among the core competencies of commercial coffee exporters.  In fact, there may be a structural tension between genuine farmer empowerment and the role of a traditional coffee exporter.  The most “empowered” cooperatives I have encountered in Central America export their own coffee; assuming this function has been an important milestone in their development and a source of considerable added value.  It has also meant less business for exporters.  As we think about the future of FT4All, we wonder whether this tension will limit the empowerment potential of the model for independent smallholder farmers.

A CAUTIONARY TALE.

Commercial independence.
The FTUSA independent smallholder standard establishes unambiguously that the Market Access Partner cannot create a quid pro quo arrangement with Registered Producers – farmers cannot be compelled to sell their product to the Market Access Partner as a condition of the support the Market Access Partner provides:

The registration agreement between the Market Access Partner and the registered smallholders does not restrict any registered producer from selling to other buyers.  The purchase of certified products is not dependent on the purchase of non-certified products.  (TR-AG-6, italics mine)

In Nariño, however, the document that producers signed as part of the project registration process included ambiguous language that was  perceived by many participating farmers as an obligation to sell their coffee to the Market Access Partner.  The document did not, in fact, obligate participating farmers to sell their coffee to the Market Access Partner.  But the language used in the document was less clear than it might have been, creating needless confusion that had real consequences for some farmers.

At harvest time, farmers were offered higher prices by another buyer, but were not sure whether the language in their registration documents permitted them to sell their coffee to someone other than the Market Access Partner.  In the end, for fear of violating the terms of the registration document, some farmers sold their coffee to the Market Access Partner at a price lower than they might have gotten from another buyer on the local market.

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This post is the second in a three-part series on The Future of Fair Trade for All.

<< Previous: The Future of Fair Trade for All.

Next: Recommendations for the future of FT4All. >>

4 Comments

  • Matt Earley says:

    Hi Mike,

    Thanks for your post and for the insights. On the face of it, it seems like there are some positives from the pilot, some unknowns, and some potential negatives.

    The most glaring issue to me, based on what you wrote, is the “market access partner” involvement and investment in the producer organizations. It is difficult for me to believe that the MAPs would invest in farmers and their processes if there is no guarantee that they will benefit from their “investments”. That would explain the “fuzziness” in the language of what was expected come harvest time. And therein lies the tension between “investment” and the “empowerment” of farmers to independently make their own deals and construct their best relationships with the buyers they feel called to work with.

    I see that you are are planning another post or two– so this may be getting ahead of things– but I am curious to hear a summary of your thoughts about whether, based on your experience, FT For All is a net positive for farmers and for Fair Trade. I’m looking forward to reading more!

    • Chris London says:

      That’s a great point Matt: investment is not empowerment, it can only potentially be an aid to empowerment. What this leads to, to my mind, is the corollary that market access itself is not empowerment, again it is only potentially an aid. I think the rhetoric of certification is in fact the opposite, that all farmers need is access and the rest will follow. Perhaps this case can be a vehicle to strip away the marketing hyperbole and have a real debate about the actual role that certification plays, .

      • Chris London says:

        I’d like to correct myself: I did not mean to say that certification as such is only about market access, rather that the rhetoric that cert has fallen into tends in that direction, and so giving short shrift to the non-market/non-monetary values (social well being, sustaining biodiversity, etc) that the different cert regimes were created to sustain and, hopefully, expand. Playing with a metaphor: market access is the horse, so to speak, but the point is not the horse but the cart within which the humans are sitting. What distresses me is that in giving primacy to access (which the ft4all gambit is ultimately about), the horse is getting unhitched and allowed to head off on its own. Someone else is going to end up with it, the humans it was pulling along getting left in the dust.

    • Michael Sheridan says:

      Matt:

      Always great to hear from you. Thanks for your characteristically thoughtful and balanced comment here.

      I alluded in my post to a potential source of tension in the FT4All standard for independent smallholder farmers; you offered in your comment a plausible explanation as to why the relationship between farmers and the Market Access Partners might be so fraught. Based on our experience in Colombia, I would say that yours is a fair assessment.

      The Market Access Partner is mindful of all the resources (financial and human; cash and time) it is devoting to the Fair Trade pilot. It hopes that its investment will generate a financial return. It hopes that after all its investment in participating farmers, they don’t choose to “side-sell” their coffee to another buyer. This is, as you rightly point out, a very reasonable impulse, especially in a competitive environment. Who wants to make investments in the field the benefit their competitors?

      Two things strike me about this scenario. First, it perfectly describes a perennial challenge faced by smallholder cooperatives, which make significant investments in productivity, coffee quality, infrastructure, social organization, etc., only to struggle to win the business of their members in the face of stiff competition from private buyers. Coops rarely collect ALL the coffee their members grow, meaning they effectively subsidize their competitors to some extent.

      Second, and more germane to this discussion, is the idea of structural tension in the FTUSA standard – a tension that may be mitigated but can’t be eliminated entirely because it is baked into the DNA of the process. And it isn’t just that the Market Access Partner wants to recover its investments in the process; it is that there are so many investments to make. The standard for independent smallholder farmers puts forth a long list of requirements for farmers to meet over the course of six years. For many of these, it assigns responsibility to the Market Access Partner, or obligates the MAP to assume the costs of fulfilling certain requirements if participating farmers can’t achieve them on their own during the time allowed. By increasing the investment burden on Market Access Partners, the standard may unwittingly increase the incentive for restricting the marketing options available to participating farmers – something, as we have suggested, that violates both the spirit and letter of the standard.

      Things do not need to be so stark, of course. If Market Access Partners embed the Fair Trade Certification pilot services in a business model that generates other sources of value for farmers – extension services, dialogue and transparency, access to credit and other services, etc. – they may have less incentive to recuperate their investments by restricting the options available to participating farmers.

      Michael

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