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209. Bill Fishbein against FT4All

Bill Fishbein, co-founder of Coffee Kids and founder of the Coffee Trust, published two comments in response to my recent post on FTUSA’s Fair Trade for All vision that were too good not to run as posts unto themselves.  In the first, which appears below, he argues against FT4All in a long and passionate comment with some very memorable turns-of-phrase, including this metaphor:

Fair Trade was created to go against the wind, not with the wind…Going into the wind is hard. It cannot be done directly or you capsize. The only way to go against the wind is to tack, side to side. The movement is slow, arduous and requires patience and perseverance. But it’s in the right direction. If you turn around and go with the wind, boy can you fly. The only problem is, you’re going the wrong way.

Comment by Bill Fishbein, originally published on the CRS Coffeelands Blog on 10 October 2011.

What struck me about your interview with Paul Rice was Paul’s comment that it’s about business. Fair Trade was a social experiment created to turn business around, not go along with it. Fair Trade was created to go against the wind, not with the wind.

What continues to amaze me is how spectacularly successful Paul has been at the business of developing a brand image for Fair Trade. More than any other model, Fair Trade has become like Coke or Frigidaire, synonymous in the marketplace with sustainability in the coffee trade.

Fair Trade is indeed a benefit for small-scale coffee farmers. However, that benefit pales in comparison to the benefit Fair Trade has become for coffee merchants. And, the sad reality is that despite a generation of fair trade, poverty remains commonplace at origin. That’s the true story to be told to consumers.

Consumers interested in changing the world with their purchases have been easy prey for coffee merchants whose sound bite merchandising demeans the complexities at origin and suggests that all consumers have to do is buy fair trade coffee and their job is done.

Buying fair trade coffee may be an important part of a solution toward reducing poverty at origin. But, it is surely not the only thing that has to be done. There are numerous organizations equally doing their part in addressing complex issues at origin. Fair trade is one of them. Besides that, fair trade has a long way to go to improve itself.

Look, Fair Trade has 3 basic component parts, each of which could be of great value to farmers. 1) It has been cooperative-based, until now, anyway, 2) Pre-financing, and 3) the floor price.

By itself, the cooperative may be the most important part of the fair trade model. It offers strength in unity. The difference for a farmer to be a member of a cooperative or to be on his or her own is enormous. Still, for the most part, coffee farmers don’t know what it means to be a member of a cooperative. Farmers are not fully aware of their responsibilities. Nor are they fully aware of the power they have as members, the ability to rise in the ranks, vote for more dimensions of development for their families and communities. A significant investment could have been made in educating and training cooperative members in what it means to be a member of a coop. Sure, that may have slowed down sales, but it would have improved the model.

Additionally, over the last generation, a serious investment could have been made in management training. Coop managers have to compete with the smartest, brightest minds in the world. Literacy programs, financial and otherwise, could have been invested in on a wholesale level. Some of that has been done, but a serious effort to strengthen management over 25 years would have had an enormous impact. A long-term effort could have been made toward these and other issues and serious gains could have been made in these areas to strengthen the cooperative, one of, possibly the most important components of fair trade. It may have come at a cost of sales, but sales to what end?

The public could have been made aware of these efforts and brought along for the ride. Consumers could have begun to understand the complexities of life at origin instead of treated like cattle coming to the fair trade trough to save the coffee world with their purchases.

Pre-financing offers farmers cash in advance of the harvest so they have sufficient capital to invest the year’s crop. Without pre-financing, farmers are limited in how much they can produce and the quality of their production. While pre-financing remains a part of the fair trade model, it lags well behind.

And of course, the floor price, to ensure that farmers never have to accept a ridiculously low price for their coffee, a condition that has occurred all too often in the past. This is the part of fair trade that gets the most attention, maybe because consumers can understand it the easiest.

But, it never was suppose to be easy. Awakening consumers, educating consumers, struggling in the marketplace is the work that needs to be done. Pandering to consumers may sell product, but it does nothing to make consumers more aware of the complexities behind every cup and the deep poverty that continues to thrive at origin.

Besides, at today’s prices, the fair trade floor price is all but meaningless. And, when coffee prices are low, while the fair trade price may be better than the C price, since 1988, the floor price has so eroded to inflation its value is 47% less today than it was in 1988. (The fair trade floor price of $1.31/lb in 1988 is worth $ 0.70/lb today. The sad reality is that even that floor price is a better guarantee against today’s prices dropping to $ 0.50/lb, which we all know is a distinct possibility as we have seen it in the past.)

I’ll throw in another component, collaboration with independent, grass roots development organizations whose objectives are to improve quality of life at origin, not sales.

This may appear like an attack on fair trade. Nothing could be further from the truth. Fair trade remains a major factor in the effort to work toward sustainability at origin. However, gains toward sustainability will only take root when more attention is paid to strengthening fair trade’s integrity before increasing sales. This is no easy path. But, like I said, it was never suppose to be easy.

Look, this is the USA, where hamburger sales are measured in the billions. Once you’ve turned and idea into name recognition, and once that name recognition is turned into a brand image, you can sell anything here. Paul achieved spectacular success at turning the idea of fair trade into a brand, now Fair Trade USA, and that brand has become synonymous with sustainability at the origin of coffee’s supply chain.

If it were true, it would be an equally spectacular accomplishment. But, it’s not. Poverty is prevalent at origin and will be until fair trade improves the integrity of its mission, and until development organizations can learn to work together instead of compete with each other. And, oh yes, when the business model is turned on its ear because consumers can no longer be treated be pansies because they understand the complexities at origin, and the value of a pound of coffee would necessarily have to be expressed in more dimensions than dollars and cents.

From my perspective, it is far more important to improve the integrity of the fair trade model than to multiply supermarket sales. Fair trade is supposed to benefit farmers first. Fair trade was not created to give mega-corporate-coffee roasters another way to increase sales.

Merchants have the extraordinary opportunity to participate in changing the way business is done and work toward a better world. But, surely that’s going against the prevailing business winds, not with them.

Going into the wind is hard. It cannot be done directly or you capsize. The only way to go against the wind is to tack, side to side. The movement is slow, arduous and requires patience and perseverance. But it’s in the right direction. If you turn around and go with the wind, boy can you fly. The only problem is, you’re going the wrong way.

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