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254. CRS comment on FTUSA’s Independent Smallholder Standard

Today we sent Fair Trade USA some comments on its proposed Independent Smallholder Standard.  The comments include contributions from CRS experts in the areas of Fair Trade, coffee, agriculture, smallholder trade, environmental sustainability and labor rights.  They were drafted in a spirit of constructive criticism, and in the hope of improving the Standard and its impacts on smallholder coffee farmers.

The full CRS document is available here.  In my introduction to the document below, I explain why

…we greeted the FT4All vision with a mix of concern for its potential to undermine the well-being of smallholder cooperatives already Fair Trade Certified, and optimism for its potential to create new market opportunities for smallholder farmers that have not been served by cooperatives and remain excluded from the Fair Trade marketplace.

CRS has been working at origin since 2003 to help smallholder coffee farmers build market relationships that are fair and sustainable.  Support for direct, Fair Trade relationships – both certified and uncertified – has been an important part of that work from the outset.  In some cases, this has meant helping form new cooperatives among farmers who sought and earned Fair Trade Certification.  In other cases, it has meant helping existing cooperatives achieve certification.  And in others, it has involved additional investments in Fair Trade Certified cooperatives to help them compete more effectively in specialty coffee markets.

ACORDAR, an ongoing value-chain project in Nicaragua, and CAFE Livelihoods, a recently completed four-country coffee value chain project in Mexico and Central America, are two leading examples of how our project support and Fair Trade Certification combined to expand market opportunities for hard-working smallholder farmers.  Both projects involved partnerships with smallholder cooperatives with relatively high levels of capacity.

But in other parts of the world, smallholder farmers are not as well or widely served by cooperatives.  Consider this excerpt from a report on a CRS project in Ethiopia funded by the Gates Foundation:

Smallholder development projects tend to work through organized cooperatives.  In the case of Ethiopian beans, however, most farmers must sell through informal trade channels because farmer cooperative management is weak, and because cooperatives have insufficient capital to buy the crop. In Africa, and in much of the developing world, poor farmers similarly do not have access to effective cooperatives.

Our experience has shown us that in some cases, investments to improve cooperative management or expand access to trade finance can help coops overcome barriers to competitiveness like those mentioned here.  In some cases, however, cooperatives simply fail to thrive.  The reasons may vary.  The bottom line, however, is that coops don’t work when farmers perceive the costs of formal organization – either in terms of cash contributions, time, risk in contexts where organization is a politically freighted endeavor, etc. – exceed the expected value – as measured by increased incomes, access to services, information and markets, etc.

In these contexts, CRS often finds itself working with smallholder farmers to co-create alternative forms of organization for the marketplace.  The report cited above goes on to describe the project’s efforts to organize smallholder bean farmers in Ethiopia into “virtual cooperatives” – farmer organizations with a lighter footprint and lower organizational burden than formal associations or cooperatives that still deliver tangible benefits to smallholder farmers.

This can be lonely work.  Many private-sector firms are interested in expanding their smallholder sourcing operations – Walmart has famously committed to source $1 billion in food from 1 million smallholder farmers by 2015 – but few are willing to assume the costs and risks associated with the innovations in smallholder organization necessary to help achieve such scale.

Against this backdrop, we greeted the FT4All vision with a mix of concern for its potential to undermine the well-being of smallholder cooperatives already Fair Trade Certified, and optimism for its potential to create new market opportunities for smallholder farmers that have not been served by cooperatives and remain excluded from the Fair Trade marketplace.  With the draft Independent Smallholder Standard in hand, we are able to more accurately assess its likely impacts.


  • Michael:

    Thank you very, very much for this wonderfully detailed document, and for reaching out to other experts within CRS. We are very grateful to have feedback from so many people with field experience.

    Just to let you know about the process, once we have all the comments in (the deadline is mid-April), we will produce a summary document addressing everyone’s points and how they will be incorporated into the next draft of the standard. Given that some topics might require further research, we are hoping to have the consultation summary document and the next draft of the standard ready this summer.

    In the meantime, I wanted to point you to some NGO market access partners – as you indicate, they actually serve more as private sector actors doing the buying and selling. The cases I’m listing here do rely heavily on external funding (from individual donors as well as foundations/NGOs/governments), but in the end many of the groups have become independent, self-sufficient Small Producer Organizations.

    Chetna Organics works with independent cotton farmers in India to access the FT market via FLO’s Contract Production standards. It looks as though some farmers have formed their own independent trading organizations:

    TerrEspoir sells dried fruit from small-scale farmers in Cameroon. This group now seems to be certified under the FLO Small Producer Organization standards, but I believe was a much looser ‘independent smallholder’ grouping before.

    I’m sure you know Traidcraft – they have also used the contract production model to support farmers as they transition into co-ops – see a raisin case study from South Africa, for instance. At that time I don’t think the FLO contract production standards were open to dried fruit from South Africa, so I don’t think they were certified during the transition period.

    There are also some private companies that leverage external donor funding to help smallholders get certified to FLO’s Contract Production standards.

    Fruits of the Nile in Uganda and Tropical Wholefoods/Aga Khan Foundation’s dried fruit projects in Pakistan. I doubt these particular projects turn much of a profit, though, so they might be seen as more NGO-type models.

    Zameen organic cotton is perhaps a similar model; their for-profit marketing organization is certified as a contract producer but is partly farmer-owned.

    So many different models . . .

    Anyway, thank you again for your feedback and support!

    Kind regards,

    Charlotte Opal (independent consultant helping FTUSA develop its own standards; former Vice-Chair, FLO Standards Committee)

  • Miguel says:

    Thank you Michael and CRS for the comprehensive feedback. I think there are some interesting recommendations that I hope we will be able to incorporate. I look forward to working together and with many other organizations in developing a comprehensive system-wide process to assess the impact of these standards and the farm worker standards in our pilots.

    Kind regards,
    Miguel Zamora

  • Thank you very for this pleasingly meticulous article, and for getting out to new experts inside CRS. We are very thankful to have response from so many folks with field knowledge.

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