206. Where there is no co-op

Fair Trade USA set off a swirl of controversy with its recent decision to open the U.S. market for Fair Trade Certified coffee to estates.  Lost in the furor was the fact that Fair Trade for All won’t just open the door to estates.  It will also create new opportunities for unorganized farmers — a measure that has the potential to expand the benefits of Fair Trade to smallholders in places where cooperatives have not thrived.

WHERE THERE IS NO DOCTOR COOPERATIVE

In the late 1960s and early 1970s, a group of health activists in a small village in Mexico gradually compiled a notebook of local treatments for the ills that ailed its inhabitants.  In 1977, a California foundation published the collected notebooks under the title “Where There is No Doctor.”  In the intervening 30 years, the book has become an indispensable (and often dog-eared) companion to Peace Corps volunteers and other folks like me who have spent extended periods of time in remote areas in developing countries where, as the title suggests, there is no doctor.

With the growing demand for specialty coffee, increased competition at origin and fears of a looming supply crunch, coffee buyers are beginning to expand their search for sustainable smallholder coffee — a search that has taken them “off the cooperative grid” to new origins where there are no cooperatives.  Over the past year, several buyers of sustainable smallholder coffee have asked me separately to help them think through the question of how they might source smallholder coffee in these origins that meets their standards for quality, traceability and sustainability.  Their search for alternative mechanisms to link smallholder farmers to markets is not a betrayal of the cooperative system, since there are no robust local cooperative structures in these origins.  Instead, it is a potential complement to the cooperative model.  What coffee buyers are looking for is a coffee sourcing version of the village health guide: “Where There is No Cooperative.”

THE COOPERATIVE MODEL IS NOT UNIVERSAL

Thriving cooperatives can be found in coffee-growing communities throughout Africa, Asia and Latin America.  But the success of the cooperative model is not universal.  There are plenty of coffee-producing countries in which cooperatives fail to thrive.  Participation in the Fair Trade system seems to suggest as much, in terms of both the total number and distribution of cooperatives in the Fair Trade system.  There are only 322 FTC coops worldwide — a modest number considering that more than 20 million families owe their livelihoods to coffee farming.

Colombia alone has more Fair Trade Certified coffee cooperatives than all of Africa.  So does Mexico.  And Peru.  For Latin America as a whole, the number of FTC coffee coops is almost 5 times the number for all of Africa and Asia combined.  

If participation in the FTC coffee market is any indication of the global health of the cooperative model, it seems safe to say that while coffee cooperatives may be thriving in parts of Latin America, they are ailing elsewhere.

WHY COOPERATIVES FAIL TO THRIVE

• Value.  Organizing cooperatives is hard work.  Managing them democratically can get messy.  And overcoming the structural disadvantages of smallholder farmers is challenging for even the best-run cooperatives.  Cooperative organizations must deliver clear value to their members to justify all the effort involved in forming and managing cooperative enterprises.  Coops don’t always meet this threshold, especially in environments that are competitive (lots of channels to market) and hyperconnected (less reliance on farmer organizations for access to information).

• Coffee sector governance.  In some cases, coffee boards or national-level coffee marketing organizations link farmers to markets by law, tradition or both.  Even when they are free to organize themselves into cooperatives, poor smallholder farmers may prefer the security and services offered by national-level coffee organizations to the risks associated with independent organization.

• Conflict and revolutionary politics.  In some parts of the coffeelands, organization can be perceived as a threat to the interests of armed actors.  I vividly recall traveling with a Peruvian coffee coop leader years ago during a speaking tour of Catholic parishes and universities in the Philadelphia area.  I was translating for him during his presentations, in which he would characterize as “very difficult” the period during which he assumed the leadership of his cooperative.  I would take “translator’s license” at this point in his presentation to provide context for audiences who didn’t understand what it meant to do grassroots organizing in the mountains of Peru during the 1980s: “very difficult” meant that hundreds of cooperative members resigned after the Shining Path systematically assassinated the cooperative’s leadership, and that as a young man he took the reins of the cooperative and worked patiently, courageously to bring fearful farmers back into the fold and rebuild the organization.

• Culture.  Academics and researchers hate the attribution of observed behaviors to culture, which they consider to be less-than-rigorous — the default for explaining all behaviors that can’t be measurably linked to other, more concrete motivations.  But the notably disparity in the prevalence of cooperative organization among smallholder coffee farmers across countries — and even across regions within the same country — suggests that there are cultural factors at play.  One example is the stigma that has attached itself to community organization after revolutionary processes swept through so many coffee-producing countries during the second half of the 20th century.  In these countries, cooperative organization can still be perceived as a radical act or a sign of a specific political affiliation.

FINDING PRO-POOR ALTERNATIVES

The absence of formal cooperatives in a particular coffee origin does not necessarily mean that farmers are not willing to work hard to foster the development of their communities or get a fair shake in the marketplace.  The decision not to organize may be as logical in one context as the decision to organize is in another.

Fair Trade USA’s decision to open the U.S. market for Fair Trade Certified coffee to unorganized farmers reflects the conviction expressed by CEO Paul Rice during our recent meeting:  “Fair Trade of the past was amazing.  And absolutely not scalable.”  The decision comes as coffee buyers are searching for alternative mechanisms to link smallholder farmers to market in ways that are consistent with prevailing industry standards for quality, traceability and sustainability.  Fair Trade USA’s detractors may see this coincidence as more evidence of its market orientation.

As a development organization we remain focused in the field on understanding how alternative paths to market may create opportunities for the millions of hard-working smallholder farmers not currently well-served by cooperatives.  These farmers have a socio-economic profile similar to those currently organized in cooperatives in the FTC marketplace.  They need and deserve the benefits that FTC delivers just as much as members of smallholder cooperatives.  In fact, the circumstances that have hindered their organization may make them even more vulnerable.