Friday, April 22, 2011

Starting a Malaysian Fair Trade Initiative!

Don't Just Be the Change 
you wish to see in the world, 
Be a Catalyst for Social Change!!!

If you are interested in bringing positive Social Change to Malaysia, I would like to invite you to join us in starting a Malaysian Fair Trade Initiative!!! I am looking for Malaysians who would like to promote an end to Business as Usual, and introduce an ethical business model that empowers disadvantaged communities around the world with practices that are free from exploitation and based on respect for universal human rights, women's rights, child rights, labour rights, and which incorporates environmentally sound practices. 

If you feel that you want to work with me in the coming weeks to start a Malaysian Fair Trade Initiative, email me, contact me on facebook or add your comment below. The time for bringing Social Change to Malaysia is now! We need conscientious consumers, human rights advocates, environmentalists, enlightened academics, internet savvy networkers, motivated university students, advocates who want to change the world, ethical retailers and Malaysians who believe a better world is possible. 

If you are in Malaysia and reading this blog, Fair Trade needs you!!

I arrived in Kuala Lumpur in mid-April and am available to meet interested individuals and organizations. If you want to be part of something greater than the sum of its members, join the Malaysian Fair Trade Initiative! 

The meeting is set for 9am on Saturday, April 30th. If you are interested in joining please contact me at journer (at) gmail (dot) com for more details.

Mitch Teberg, MA

Monday, April 18, 2011

Coffee Part III - Empowering Communities through Action

This is the third of a three part series on my findings in Aceh, Indonesia. First, I examined a failure in the Fair Trade system and the "negative implications" it has on farmer cooperatives. In the second post, I examined a recent case presenting the cooperative perspective of their dealings with a Fair Trade coffee importer and based on that, explored ways for Fair Traders to keep the system in check. In Part III, I present how I worked with the cooperative to create positive and sustainable solutions.

During our travels I was sharing a vision for the future of Indonesian Fair Trade with my translator, Mr. Faisal. He was fascinated by the possibilities in our discussion and suggested I meet with key people in the region to discuss my findings and to pass on this vision to them the way I had passed it on to him. He arranged the meetings for a Sunday when the cooperatives were closed. 

I met Mr. Rizwan Husin, founder and Director of Baburrayyan Cooperative, the largest coffee cooperative in Takengon with over 6,000 members; and with Mr. Mustawalan, a human rights advocate and the Chair of the Indonesian Fair Trade Producers Association, which includes all twelve FLO-Certified cooperatives in Aceh totaling over 25,000 members. Not only did they embrace the vision I shared with them, but they agreed that I should meet together with the management of the three cooperatives I had interviewed. Mr. Rizwan Husin agreed to host the meeting at his office. 

Twenty members of management from the three cooperatives arrived, as well as Mr. Mustawalan. The previous day I had made an outline for our work on the whiteboard. There were two primary issues I wished to address, first was regarding a common practice in the function of the cooperatives; and secondly to create a vision of the future of the Indonesian Fair Trade Movement. 

One principle Fair Trade embraces is to promote gender equity. I will state frankly that in some cases, particularly in agricultural cooperatives, I sense that Northern Fair Traders are all too often satisfied with minimal efforts of their trade partners in the South to address the gender imbalances and inequalities that can exist. This commonly comes out of fear of overstepping cultural boundaries and are overly sensitive of what they consider "cultural issues."

In other words, embracing Cultural Relativity as an excuse not to address existing inequality is alive and well within the Fair Trade Movement. For more on that topic, read a recent post, Gender and Cultural Relativity. Again, I quote Paul Hawkins regarding the stark differences between principles and practices, “Practice seems more humble word than principle, a word behind which it is easy to hide, and which often leads to some sort of failure. You can betray a principle, but you can always keep on practicing.”

Sumatra: The island where some of the worlds best
organic Fair Trade certified Arabica coffee originates

As a professional trainer in Fair Trade, development, gender, and women’s rights, I decided to directly address the existence of inequality in their cooperatives. To be successful the exercises had to be experiential and participatory; this was not to be lecture from some foreigner telling nineteen Muslim men and one woman how it ought to be.

I prefer tackling the difficult issues first. I divided them into small groups of four, and presented a scenario that resonated with the people of Aceh. Firstly, the Indonesian Parliament has five hundred and sixty (560) representatives from thirty-three provinces covering 17,000+ islands, of which Sumatra is one of the larger islands. Of the total representatives in Parliament, twelve come from Aceh. 

However, in this scenario those twelve representatives had been removed. From now on, the neighboring province of North Sumatra which had 17 representatives will also represent Aceh.  

I asked for each group to write down their reactions to this news and how they felt about it. The results were as follows:
  • Political and Social ambitions of people from Aceh not achieved
  • Different priorities between the two provinces 
  •  No infrastructure development for Aceh 
  •  No balance in development projects 
  •  Social jealousy 
  •  No ambition for the people of Aceh 
  •  This situation leads to conflict 
  •  A deep seated desire to be free from this situation

Next, I asked if each cooperative was founded on Participatory Democracy and there was a resounding “Yes.” Delegates are elected to represent their constituents, and meet with them a couple weeks before the annual cooperative meeting in which issues are addressed and local development projects proposed. Considering 50% of the village populations are female, I asked how many delegates in their cooperatives were women. I knew the answer beforehand: None in most cooperatives, and very few in the others.

Admittedly there was a sudden tension in the air. One man tried to change the subject, but I brought their attention to the whiteboard where in their own words and in their own handwriting they could see the impact of this practice. I went slowly through each one-by-one and let the words soak in, rewording it to regard women. 

Much to my surprise they entered an open discourse with me on this topic. Perhaps it was the way the issue was presented, or perhaps it was the atmosphere created by making this a participatory activity centered on their input. I didn’t push for immediate change; this was to break the ice. Besides, these deep seated attitudes that have gone unquestioned for a lifetime. What I wanted, and what I saw was a crack in their collective wall. When someone did mention culture doesn't change, I brought up that even the locally popular government of Aceh has 30% of its provincial representative seats reserved for women. I also brought up the cultural change a simple cell phone had made in the daily lives. Arguments for cultural relativity had no place here.

I heard from my translator that no one had ever breached this issue with them in such a way before. To state it succinctly, the way I presented the issue in relation to their cooperatives was quite direct:

Gender Equity is not a religious issue; 
       Gender Equity is not a cultural issue; 
              Gender Equity is not introduced from the outside. 

Gender Equity is about a principle they very much believed in: 
          Representation and Participation in a Democratic System.

From this topic we moved on to creating a vision, but to do that we needed to look at the realities they faced as cooperatives. I outlined the findings from my research, step-by-step, connecting each to the next as I had learned it:
  1. Currently 100% of the Fair Trade Certified Organic Arabica green beans from the cooperative are for export 
  2. No prepayments from coffee importers have left cooperatives short of capital 
  3. No capital meant no payment for members when they delivered their beans. At this time when conventional prices are as high as Fair Trade prices, members deliver their beans to the conventional markets instead since there is no payment offered on delivery by the cooperative 
  4. No prepayment also meant that there were no funds to process the beans to be export ready. This activity generates income for the cooperative and members of their community 
  5. From the perspective of the cooperative, this led to a loss in credibility with its members 
  6. A loss in credibility threatens the cooperative’s existence as member may relinquish their membership, or simply continue selling on the conventional market, thus greatly reducing the cooperative’s future ability to source the beans and process them for export
    There was a consensus that my findings were accurate. Now it was time to share with them what I had learned in the Philippines regarding efforts to make coffee cooperatives sustainable (For more information read: To Make Coffee Sustainable and Introducing Fair Trade High Above the Clouds

    I outlined the measures taken following the 2008-09 Global Economic Crisis by the Philippine Fair Trade Movement:
    Next we went through the steps to make coffee sustainable in a simple exercise that they could supply the key information in the following steps:
    1. Sell to the conventional market (let the price be X)
    2. Sell to the cooperative at Fair Trade prices for Y, which is a fluctuating amount higher than X, depending on the current market price (For this exercise, Y becomes the base price)
    3. The Cooperative processes, roasts, and packages their own Fair Trade Coffee brand for local consumption. A kilogram of packaged coffee could be sold locally at 2*Y (* represents to multiply in this equation). For local consumption in Takengon the price would be 2*Y, but in the cities of Aceh, this could be sold at higher prices
    4. Locally a 250gr package of ground coffee would make 17 cups (They like their coffee served strong here!). 4 packages = 1kg. 1 kg = 68 cups. 68 cups of high quality coffee served in the local contexts would make a handsome profit for a cooperative. The final retail price of 1kg of organic Arabica coffee = 12*Y. 
    I asked the cooperative members what they would prefer: X, Y, 2Y, or 12Y?

    Going through this exercise awakened them to a potential business venture! A cooperative could become sustainable on a local market. A collective of twelve cooperatives could expand such a venture to the cities of Aceh and throughout Sumatra!  

    Seeing the potential they had, I shared how to reach that potential with a simple coffee roasting machine that could be operated locally (Read Introducing Fair Trade High Above the Clouds).  

    But once again, the issue of a lack of capital surfaced and the discussion led to the idea of seeking outside funders. Instead of letting this go on too far, I asked a simple question: How many farmers there in the twelve cooperatives? They made a few calculations: 25,000 farmers. Then I inquired if 10,000 IDR (Indonesian Rupiah) is a fair amount to request from members once a month. They replied this was feasible. On the white board I made a quick calculation:

    x10,000 IDR
    250,000,000 IDR (approximately US$28,800) 

    They had capital for this venture! 

    Farmer cooperatives empowered to pave their own way;
    This is the future of Fair Trade!

    I divided them into three groups, each with a specified task to foster this newfound interest:  
    1. What is your vision for the future of Takengon, and how do we make it a reality 
    2. What is your vision for the future of Aceh, and how do we make it a reality 
    3. What is your vision for the future of Indonesia, and how do we make it a reality
    For the next 30 minutes they worked together to create a vision of their future and what they outlined was nothing short of impressive:

    Their vision for Takengon:
    1. Meet with the twelve cooperatives and Fair Trade exporters to discuss how to make coffee sustainable.
    2. Meet with government officials to discuss the creation of a legal and unified collective integrating all twelve cooperatives
    3. Raise awareness to members on making Fair Trade organic coffee locally sustainable
    4. With government support influence the education programs in the local university and high schools through the creation of seminars. 
    5. To invite educators and agricultural departments of the local university to the cooperatives
    Their vision for Aceh:
    1. Conduct a feasibility study about the viability of Fair Trade products in local markets
    2. Start a chain of franchised cafe's in major cities and universities in Aceh
    3. Promote the cafe chain in exhibits in and outside of Aceh
    4. Lobby local and provincial governments on integrating Fair Trade into local markets
    5. Conduct awareness raising campaigns on university campuses
    Their vision for Indonesia:
    1. Less than 0.01% of Indonesians are aware of Fair Trade. We need to promote Fair Trade via a multi-media campaign
    2. Lobby with big business such as hotels and supermarket chains to promote Indonesian Fair Trade products
    3. Join with the Indonesian Fair Trade Forum 
    4. Support the Yogya Fair Trade Movement
    With the above outlined at the local, provincial and national levels by farmer cooperatives in Aceh, it is my privilege to introduce the readers of this blog to the future of Fair Trade in the South:

    Thank you for joining Chou and I in this journey. It is my hope that I have been able to provide you with a glimpse of a vision for the future of Fair Trade, particularly if it is to be sustainable for Southern Fair Trade Organizations. 

     Mitch Teberg, MA

    Wednesday, April 13, 2011

    Coffee Part II - "It's not my Problem"

    This is the second of a three part series on my findings in Aceh, Indonesia. First, I examined a failure in the Fair Trade system and the "negative implications" it has on farmer cooperatives. In this post, I will examine a recent case presenting the cooperative perspective of their dealings with a Fair Trade coffee importer and based on that, explore ways for Fair Traders to keep the system in check. In Part III, I will present how I worked with the cooperative to create positive and sustainable solutions.

    Disclaimer: for legal purposes, the name of a particular Fair Trade Coffee importer has been removed from the post below.

    I must admit that I had always been under the naïve assumption that Fair Traders did not speculate on market prices. Why did I hold this assumption? I believed that as Fair Trade certified coffee importers they sought to be fair and understood the historic and current issues faced by coffee cooperatives and small producer groups. Fair Traders have principles that are far above the conventional traders! Not only that, they are certified as Fair Trade, and in that certification they have our trust! 

    Much to my surprise, when I met with a Fair Trade exporter and later with an organic Fair Trade certified cooperative in Aceh, I learned of a case that I would have expected from a conventional trader, not a Fair Trader. Sadly enough, it is not an isolated case.

    This blog post is dedicated to the Fair Trade importer who cost a coffee cooperative in Aceh tens of thousands of dollars. He is also the author of a rather blunt statement I heard repeated to me as his response to a request for dialogue from the cooperative:

    "It's not my Problem"

    On their website, a particular importer in question, based in USA, appears to embrace the principle of long-term relationships. However, what I discovered was quite the contrary. 

    With that stated, I would like to reiterate the purpose of my research and blog: This blog is the story of a journey with a purpose; a journey to present the voices of Fair Trade producers, artisans, weavers, farmers, and craftswomen and men. All too often the voices of producers are drowned out when it comes time for their voice to be heard. 

    This post is committed to giving a cooperative's side of the story that was fact checked locally.

    Current conventional market coffee prices are quite high. So high, as a matter of fact, that FLO-Cert has had to raise the minimum pricing standards from US$1.25/lbs to US$1.45/lbs. (for kg, multiply by 2.2) Other value-added payments such as organic certification were also increased. Perhaps the time for coffee farmers has come around!

    Ready-for-export organic coffee from the
    Tunas Indah Cooperative in Aceh.
    When I met with FLO-Certified Arvis Coffee Exporters in Medan, I spoke with owner and Director, Mr. Sadarsah about my research. Firstly, I wanted to inquire of his experiences in Fair Trade; and secondly, I was in search of Fair Trade cooperatives in Indonesia. Immediately he introduced me to a couple cooperatives and put me in touch with a terrific translator in Aceh who was quite knowledgeable about Fair Trade, Mr Faisal.

    Next, I began to inquire about his dealings with Fair Trade importers. Much to my surprise he immediately responded, "There is a lot of speculation on the Fair Trade coffee market." 

    But how could this be? A Fair Trade speculator? I honestly didn't get it. Then I thought to myself, "Ok, so a guy speculates and secures a price - a Fair Trade price. What is wrong with that? The farmers still get a Fair Trade price regardless."

    Mr. Sadarsah explained to me that it is an increasingly common practice for Fair Trade coffee importers to contract a quantity and lock in a price three to four months ahead of harvest time. So far I could see no wrong in this, so I continued to listen. 

    He presented me with a case of one importer. In July, 2010, an importer had made a contract with Arvis Coffee to buy three containers of Organic, Fair Trade coffee. The harvest season is in October, and in turn Mr. Sadarsah contracted with Tunas Indah Coffee Cooperative to fulfill the order. The contracted price was US$4.50 per kg of ready-for export Arabica green bean. Mr. Sadarsah requested a prepayment from the importer on behalf of Tunas Indah Cooperative, and was told that it was not possible. No reasons or rationale was offered; no negotiations. Simply, "Not possible." Within a week the conventional market prices began to rise. 

    To provide context to the story, when I inquired about some of the problems cooperatives faced, one repeated mentioned was a lack of capital. Capital was needed to 1) pay farmers for their coffee beans on delivery; and 2) to value-add by further processing the beans locally which they can sell to the exporter as export-ready with only a 12% moisture content versus an 18% that is normally presented to an exporter, who then has to hire workers to separate and dry them further. 
    Coffee drying done locally in Takengon, employing local
    community members with a "living wage." An example of
    promoting Fair Trade through local employment opportunities

    Again, referring to Part I of this series, in her publication, Coffee, Co-operatives and Competition: The Impact of Fair Trade, if Anna Milford had evaluated the "negative implications" of not receiving a prepayment, she would have easily seen that there are lost income generating opportunities for a community when a prepayment is not given. It is not simply an inconvenience for farmers to have to wait for payment as Milford claims.  

    Additionally, I have found that by involving communities in value-added local processing it will greatly increase a local communities knowledge of Fair Trade by experience in the system. After all, another principle of Fair Trade is to promote Fair Trade, and what better way to do that than to offer income generating opportunity! More about this and the future of Fair Trade in Part III of this series!

    Whether a prepayment is requested or obligatory is not the issue. Within the context of Fair Trade, the onus to provide a prepayment should be on the importer, not on the producer. There is a power imbalance that needs to be addressed - especially when all the initial costs are taken by Southern producer cooperatives. That is the purpose of having a principle in the first place.

    Back to the Findings: The problem for the cooperative was in fulfilling the contract made in July, 2010. The harvest came in October, 2010, and the conventional market prices were at US$7.00/kg, which is much higher than the contracted price US$4.50/kg. This put the cooperative in a difficult position. 

    From the cooperative's perspective, it will lose credibility with its members if there is no sale to any importer, and this was the one deal they had secured.

    Secondly, if the cooperative offers only US$4.50/kg when the local market price is US$7.00/kg, the members will sell their organic green Arabica beans on the conventional market for $7.00/kg where it is mixed in with whatever else came in the door. Furthermore, why retain membership in a cooperative that doesn't sell your product? The cooperative faced a suddenly stark possibility - with no members, how could it continue to function? 

    Directly stated, the cooperative's very survival is suddenly at stake. Understand that the income generation for the cooperative itself is from this transaction from farmer to exporter who in turn ships to the importer. The cooperative is the voice and union of the individual farmers, but where it generates much needed income is with value added activities.

    Answer me this, would you willingly buy at $7.00/kg from cooperative members, process the beans to be export ready, and sell at $4.50? Obviously not, so the cooperative and the exporter went to the importer to renegotiate the contract. 

    Let's review the possible outcome from a renegotiation: 

    A) the price is renegotiated to the current market value and the cooperative can value-add by processing it locally, employing local members of the community, and send to the exporter soon afterwards. On the other hand, while the importer is concerned about his profit margin in this lucrative commodity, when the market price goes up on this end, undoubtedly it goes up on the other end as well. So it is not that the coffee importer will lose money by increasing the contract price to the current market level. I would be very surprised if the importer made contracts with Fair Trade roasters locking in a July price, but if this was the case, this price can be renegotiated as these are Fair Trade roasters with a social conscious, or so we hope.

    B) the importer is reluctant to come to the table for renegotiation, but in the end, does so and agrees to split the loss with the cooperative (although the importer doesn't really lose here because his sale prices have gone up with the market as well), but at least there was an understanding made and hopefully lessons learned by the cooperative not to let an importer lock the price on the next contract. 

    C) the importer replies to a request for renegotiation with a curt, "It is not my Problem."

    As you may have guessed, C was the answer received by the cooperative. 

    The end result: What the importer did offer was an additional month to fulfill the contract. Unfortunately for Tunas Indah, the price on the conventional market did not retreat. Unfortunately for the importer I am bringing their business dealing to the surface by presenting the view of Tunas Indah Cooperative whose pleas for renegotiation went unheard in the office of an importer in the USA. 

    How much did Tunas Indah Cooperative lose
               in the deal with the importer?

    So, Mr. "It's not my Problem", let's take a look at your impact because it is your problem now. Essentially, you made the cooperative subsidize your purchase. Yes, a cooperative of farmers living off less than US$200/month subsidized your purchase. Where is the justice in that? You didn't even consider renegotiation, much less consider the impact your stance had on the cooperative itself. 

    Whether "It's not my Problem" were the actual words you uttered in response to a request for negotiation does not really matter, as that was definitely the impression you left on your trade partner. So much for your claim that you are utilizing a progressive approach to coffee sourcing worldwide because your action was more reflective of colonial era traders and does not follow Fair Trade principles. 

    Again, let me reiterate, when I inquired if there had been a prepayment of any amount with the contract, the answer was no. How can you, as the importer, refuse to renegotiate a contract when you didn't even provide a prepayment when it was requested by your trade partner? 

    When I made further inquiries into the current issues faced by local cooperatives, I learned that five of the twelve cooperatives in Aceh may collapse as a result of speculators like Mr. "It's not my Problem." A lot of time, effort and capacity building has gone into building up our Fair Trade cooperatives in the South, and it is the work of speculators that will tear it down.

    Why I think it is your problem now... 
               Because I still believe in Social Action!

    To a Fair Trade coffee importers guilty of speculation: As a Fair Trade certified organization, when you and other coffee importers are speculating on Fair Trade markets, more Fair Trade cooperatives will collapse. Furthermore, your callous attitude defending your speculating activities does not hold up to the principle of maintaining long-term relationships. When the Fair Trade certified cooperatives are wiped out due to speculators, that leaves no organization to certify as organic or Fair Trade. How will you supply the high demand for organic Fair Trade certified coffee from Sumatra after the last cooperative has closed its doors?

    Is it your problem yet?

    FLO-Cert: Here are some suggested areas for improvement, and these are suggestions coming from the COFFEE FARMERS, so pay attention:

    Firstly, re-evaluate and upgrade your auditing and monitoring of Fair Trade Coffee importers to the extent you audit and monitor coffee cooperatives. Push them out of their comfort zones with frequent four or five day audits detailing their actions and policies like you do with the cooperatives. If it increases your cost to do so, increase their fees to cover the cost of policing their fellow importers unscrupulous behaviors and disregard for the cooperatives they deal with.

    Fair Trade cannot support a system that scrutinizes one part of the supply chain and dismisses the behaviors of another.

    Secondly, this issue of prepayment. For several years there has been a flagrant disregard for any prepayment when requested. Let's re-evaluate this principle in light of the recent global economic crisis where it was difficult for Fair Trade Organizations regardless of where they were.

    I suggest that FLO-Cert utilize a democratic system in which members, from farmer cooperatives to exporters to importers and yes, to coffee roasters, are engaged to arrive at a new principle establishing a lower minimum percentage prepayment that is realistic and acceptable to all. It is better to have a minimum prepayment that is agreed upon than a payment that is frequently disregarded for years and detrimental to Southern partners, as is the current situation.

    Thirdly, to protect Fair Trade cooperatives from the likes of Mr. "It's not my Problem" there needs to be communication system integrated for cooperatives to contact and report speculative behaviors directly to FLO-Cert; and in turn for FLO-Cert to investigate with threat of revoking an importers certification. This has got to end now, and it is within the grasp of FLO-Cert to do it.

    Fourthly, Make Trade Safe. Establish acceptable contract templates for Fair Trade importers, exporters and cooperatives to utilize that has your stamp of approval. Formalize the contracts so as to remove speculation! Mr. Johannes Egger, your auditor in Indonesia shared his challenge in tracking down these contracts because they are made over the phone. In short, as an auditor he has no paper trail to follow.  I suggest you make a simple, easy-to-understand contract which specifies the quantity, but not locking in the price. Make trade safe for both parties. This is within your grasp! 

    Fifthly, end the certification of corporations that have long histories of labor and human rights abuses (i.e. Nestle). See their efforts to generate a brand that is Fair Trade certified for what it is: A Public Relations bid with Corporate Social Responsibility as the rational. How can you certify one hand as Fair Trade while the mindset and activities of the corporation remain unchanged with the other hand in a firm stranglehold on the throats of workers and farmers? There are so many issues with this company, in the South your certification of them has left a serious rift in the Fair Trade Movement and you need to know that! For more on your Fair Trade certified company, have  a look at the Corporate Watch list on Nestle's corporate activities  

    Make Trade Fair to both the South and the North

    and with that said, What can we do as Fair Trade advocates, supporters and consumers?

    I still believe in Social Action!

    XX Coffee Importer
    XXXXX Xxxxxxxxx Xxx
    Xxxxxxx, Xxxxxxxxx 

    Bonner Talweg 177
    53129 Bonn

    Telephone: +49 228 949230
    Fax +49 228 2421713

    Fair Trade consumers, advocates and activists, 
           it is up to us to Keep Fair Trade Fair!

    If you are reading this blog, I encourage you to take direct action!!! Fire off an email or call FLO! Let them know that the days of speculation, callous attitude toward Southern Trade partners, double standards, and utter disregard for established Fair Trade principles are over! As a Fair Trade certified organization, an importer must be held accountable! Call for transparency and demand social justice! The importer in question can begin by returning the US$20,000 owed to the Tunas Indah Cooperative! 

    That is what makes Fair Trade different. There is a system of accountability throughout the supply chain from farmer to cooperative to exporter to importer to roaster and to retailer. What a marvelous and empowering system!

    Write your views about the status quo to FLO-Cert. Take action and contact your favorite Fair Trade coffee roaster and ask them if their importer provides a pre-payment, then ask to see the actual contracts! You can make sure your Fair Trade Coffee importer is not speculating by locking in a price three or four months ahead of the harvest and essentially destroying the coffee cooperatives in the South!

    Part III in this series will exemplify where the future of Fair Trade must go in order to be sustainable.

    Mitch Teberg, MA

    Monday, April 11, 2011

    Coffee Part I - "You can betray a Principle"

    This is the first of a three part series on my findings in Aceh, Indonesia. First, I examine a failure in the Fair Trade system and the "negative implications" it has on farmer cooperatives. In Part II, I will examine a recent case presenting the cooperative perspective of their dealings with a Fair Trade coffee importer and based on that, explore ways for Fair Traders to keep the system in check. In Part III, I will present how I worked with the cooperative to create positive and sustainable solutions.

    On April 1st, I arrived in Takengon, Aceh, in search of FLO-certified Fair Trade coffee cooperatives. Takengon is a slice of heaven; a picturesque green mountain valley lies cradled 1,300 meters above the sea surrounding a crystal clear lake. A natural mountain high! Much to my delight most of the farming here is done organically and to my surprise, I found not one, but twelve cooperatives united under the Indonesian Fair Trade Producers Association. 

    A FLO-Cert Audit
    I selected three FLO-Certified coffee farmer cooperatives to meet with, one of which was busily preparing for an audit. For the cooperative, there a lot is at stake and there is constant concern about the “findings” of the audit. I could best describe the atmosphere as one in which the cooperative management was walking on eggshells. An audit lasts four or five days and closely examines the practices of a farmer cooperative. 

    Admittedly, it is a rare opportunity to be in the area when an audit was occurring, but I had the chance to meet Mr. Johannes Egger from Germany, the FLO-Cert auditor in Indonesia for the past couple years. The cooperative leadership had explained to me that a single mistake by a single farmer will get their certifications suspended. 

    When I asked Mr. Egger about this, he explained, it was not a single finding, but a repeated theme had to be established. If he discovered three similar incidents, then this was considered a finding, but a single incident was not enough to suspend a certificate. Additionally, a finding had to be made a few times before a certification would be suspended. Through my discussion with the auditor, I saw the fairness in the system; once a finding was established, FLO made gave written warnings in the audit and allotted ample time for the cooperative to make corrections.  

    He also explained the audit not only examines the cooperative in light of Fair Trade standards, but he reviews their constitution and the cooperative is held accountable to their own set of rules and regulations. Each cooperative is quite unique, so he must spend time reviewing and analyzing each cooperative and preparing questions regarding their adherence.  

    As often happens when Fair Traders come together, they learn much from the work of another. During our discussion we shared experiences and found many similar concerns and views regarding Fair Trade – him from his work in Indonesia and me from my research over the past several months. What I learned in meeting Mr. Egger was the rigorous audit the cooperatives undergo is actually what I had hoped for because we put a lot of faith into this certification and verification system. Although it pushed the cooperative out of its comfort zone, I felt a relief that the auditor held them to high standards to include their own; these are the very standards we believe are so important in Fair Trade that we label them as "principles."

    When I had met with the Indonesian Fair Trade Forum (FFTI) in Bali, the General Secretariat, Agung Alit, explained to me that every year he receives many inquiries and applications from handicraft exporters who simply want to buy a Fair Trade certification, but not adhere to the principles. For FFTI, it means turning away applicants because Fair Trade is not like other certification systems - it is about making an impact, and that is not for sale!  

    "Principle, a word behind which it is easy to hide, and which often leads to some sort of failure. You can betray a principle"  - Paul Hawkins

    Prior to arriving in Takengon, I met with a FLO-certified coffee exporter in the port city of Medan. Here I learned of a common practice that raised my eyebrows at first, but only when I went to meet with the cooperatives did I understand the full impact. 

    During my inquiry with each of the cooperatives I not only learned about their organic farming practices, but I also asked about their experiences with certified Fair Trade coffee importers. In particular, I asked if they ever received the 60% prepayment stipulated as mandatory by FLO-Cert. 

    None had. 

    I asked if they had ever heard of a single cooperative in Aceh ever receiving a prepayment of any amount. 

    None had. 

    I met with Mr. Mustawalan, Chair of the Indonesian Fair Trade Producers Association, and he verified my findings. 

    I discussed this with Mr. Egger, the FLO-Cert auditor, he also stated that to his knowledge, no cooperative in Aceh had ever received a prepayment of any amount, much less a prepayment of 60%.

    With this, I went in search of answers on the FLO-Cert website where I found a 2004 paper on Coffee producers in Chiapas and Mexico, Coffee, Co-operatives and Competition: The Impact of Fair Trade by Anna Milford. She writes, “Fair Trade licensees are obliged to pay 60% of the total payment in advance, so that the co-operative does not have to make its members wait too long for payment. It thereby reduces the membership cost of delayed payment, with all its negative implications. The cooperatives appreciated the prepayment and said it was of great help to them. But despite this being compulsory as part of the Fair Trade regulations, not all of the customers complied with this rule”  (p.60). 

    Compared to my own findings, Milton was putting it mildly. Like so many Fair Trade researchers and auditors, Milton closely scrutinizes the farmer cooperative, but does not seriously review the betrayal of a principle by Northern Fair Trade coffee importers. The term "obligated" is even stated, yet this violation is glossed over. 

    What is the purpose of utilizing such strong wording when there it is simply cast aside? Furthermore, Milton regards their noncompliance as simply being an inconvenience to farmers and does not examine the "negative implications."  These are important findings but she does not take them seriously, and evidently neither does FLO-Cert because seven years later I found a much worse behavior being reported to me. 

    In Paul Hawken’s highly acclaimed publication that should be on every Fair Trade Organization's bookshelf, The Ecology of Commerce, he eloquently writes, “We often hear about business standards and principles, but perhaps a better word… is ‘practices’. I am drawn to the word not only for its practical sense but because it implies that there is something to be learned, and that through consistent and applied practice, one improves one’s ability, get’s better at a skill, strives for understanding. Practice seems more humble word than principle, a word behind which it is easy to hide, and which often leads to some sort of failure. You can betray a principle, but you can always keep on practicing. (p. 68-9)”  

    Perhaps it is time to examine the purpose of a Fair Trade principle...

    Firstly, since the days of colonialism, which this era of Globalization replicates in so many ways, there exists a systematic imbalance in international trade. This imbalance has given much weight to conventional Northern importers. Essentially, the importers dictate the terms and conditions. If they don't get their way, they simply bring their business elsewhere. For this reason Fair Trade embraces a prepayment to farmers as a principle to correct this historic imbalance that remains a commonplace in the conventional trade system.

    Secondly, it is a recognition of the risk involved in the trade deal and that the producer is at a disadvantage from the onset. Many of poor producers lack capital, and without capital on hand they have to raise funds, and typically it means to borrow from local loan sharks at high interest because banks are frequently closed to small producers. This is the entry point into a vicious debt cycle that burdens many impoverished producers around the world. A principle of prepayment is to address this situation by empowering producers and strengthening their independence.

    Thirdly, this principle is tied to the principle of establishing long-term trade relationships. In conventional trade systems, the short-term gain is often the focus, and this can be a one-sided benefit. By building up our Southern trade partners, the relationship is one of mutual respect and trust based on long-term benefits for both the farming community and for the importers.

    From my research, it seems to me that FLO-Cert closely examines organizational practices of its Southern partners who undergo a strenuous and exacting audit on their practices, while dismissing the flagrant disregard of established and agreed upon principles by Northern Fair Trade coffee importers to the extent that a principle is seldom, if ever, upheld. Frankly stated, there appears to be a serious double standard in the system.

    But it gets worse. From here is where it is time to provide findings, name names, and identify behaviors for what they are... Part II will reveal my findings and look at ways to address the situation so as to present a win-win solution. 

    Mitch Teberg, MA

    Saturday, April 9, 2011

    The Start of a Fair Trade Movement in Yogyajakarta!

    When Research turns to Opportunity

    Yogyakarta, Indonesia is on the international news every once in a while when Mt. Merapi threatens local inhabitants with another volcanic eruption. However, outside of this Yogya is a laid-back city that has the charm and atmosphere of a small town. When I arrived, I was in search of four Fair Trade Organizations (FTOs) based there in hopes of meeting their producers and gauging the impact Fair Trade has had in Javanese communities. However, an unexpected opportunity arose.

    If Jakarta is the center of political power in Indonesia, Yogya is the center of academia. Home to one hundred and twenty-two universities with tens of thousands of students from all across the archipelago, Yogya represents nothing less than the future of the country. I can imagine no better place for FTOs to be centered. When I first learned of the existence of so many colleges, my first comment was, “Great!! How many campuses have Fair Trade Movements?” 

    Much to my surprise, the answer was: None. 

    I had just spent six weeks researching and learning about the strategies and plans of the Fair Trade Movement of the Philippines; it was time to share the lessons I had learned. After interviewing the Directors of three FTOs and on the way to meet their producers in surrounding rural communities, I began talking with them about the strategies of the WFTO – Philippines and lessons learned in cities such as Cebu which is expanding Fair Trade Movements on university campuses. I had separate discussions with each Director and they always came to the same conclusion: we began exploring numerous possibilities for the creation of a local Fair Trade Movement in Yogyakarta. 

    Mr. Amir Panzuri, founder and Director of Apikri agreed to hold the first meeting at their office and the others all agreed to come. Novi Kusuma Wardhani founder and Director of Java Ixora, Imam Hidayat founder and Director of Sahani Organic, members of the Ombudsman office in Yogyajakarta, a university professor in Borneo who happened to be on a study tour in Apikri to explore possibilities of introducing Fair Trade to Borneo, and Ms. Mbak Atiek of Apikri. This was the beginning of a new movement in Yogya! More importantly, this is the future of Fair Trade: Fair Trade localized in southern countries and in southern cities!

    No longer can Fair Trade only mean 

               Southern Trade to the North. 

    It is time for the Global Fair Trade Movement

               To enter a New Era…

    Time for Fair Trade to be Expanded 

               and Localized in the South!

    But how do you start a movement with founders of organizations that may have the same goals and uphold the same principles, yet work in different communities, utilize different approaches to address an array of social issues, have different trade partners, and may even have different Fair Trade certifying organizations? Well, the first step is to re-define a basic mathematical equation: 1+1 ≠ 2. 

    I was looking to create synergy with these leaders, each of whom has a strong personality with extensive experience in Fair Trade; they represent the solid foundations of their respective FTOs.   

    Synergy in mathematics: 1+1=11. 

    Now imagine 1+1+1+1+1….

    Each founding member of the new Yogya Fair Trade Movement understood Fair Trade as a business model very well, they utilized the principles in their daily work. My first task was to present the obvious, so I asked them to work together in small groups with the explicit purpose of identifying...

    Fair Trade as a Business Model...

    ...and Fair Trade as a Movement

    With the basics covered, I asked the members of the new Yogya Fair Trade Movement to do a self-assessment on a scale of 1-10 (10 being Yogya will be a Fair Trade Town in six months; and 1 being no activities and no movement). The average was admittedly low, but it gave us a baseline. Besides, they were not familiar with the ongoing activities of their fellow members and their respective FTOs, so here we gave time for each member to make a brief presentation. 

    As a Movement, we needed to identify areas for advocacy. The groundwork of each FTO here begins with the producers, and their community, so we started from there. Secondly, the local business community is an important area for advocacy, beginning with suppliers FTOs contract with. Thirdly, they identified the local government offices and upwards to the national governmental departments and ministries with whom FTOs collaborate. Fourthly, the universities in Yogya are very influential institutions locally and within Indonesia. Fifthly, the media, whether it is print, television or online social media, these are influential forces and can have a positive impact if harnessed in an advocacy campaign. 

    Additionally the local ex-patriots residing in Indonesia and the numerous tourists coming to visit Bali every year already have a high level of awareness of Fair Trade thanks to the millions of euros and dollars spent in continuous awareness campaigns of Oxfam and Maxx Havelaar in Europe, Australia, and New Zealand. Not to forget, numerous local Fair Trade shops have tremendous impacts in their communities such as the Dutch World Shops and Ten Thousand Villages in the USA and Canada.

    Lastly, the local and international NGOs in Indonesia would make for terrific collaborators as they are socially aware and active in a multitude of communities throughout the nation. 

    With areas of advocacy listed, next came commitment. By committing to advocacy in a particular area, there is a transfer of ownership from discussing the idea, to forming committees and groups which will lead areas of advocacy. 

    In the following meeting a couple days later, members of the Yogya Fair Trade Movement listed universities that they had close connection to, whether it was a connection with faculty, students, university administration, or student organizations. Of the one hundred and twenty-two campuses, there was a direct connection with ten. This was a start! 

    Create a Vision!

    Next the members listed out immediate, mid-term and long-term goals. Immediate goals center on initiating ten Fair Trade Movements on the campuses they had listed. This included identifying World Fair Trade Day as inauguration day for campus movements; creating a General Secretariat Office to support campus activities and facilitate intercollegiate collaboration; and designing a logo for the new YFTM. 

    The mid-term objective is to have 50+ university Fair Trade Movements within three years!!! The long-term objective is that Yogyajakarta becomes the first Fair Trade City in Indonesia! No small ambitions for this group of Fair Traders!

    It is my privilege to present the founding members of 
                  the Yogya Fair Trade Movement. 

    Chou and I look forward to witnessing the wildfire that is about to spread through the university campuses of Indonesia ushering in a new era as Fair Trade is localized! 

    Mitch Teberg, MA 

    Comments received on my FaceBook page regarding this post:
    Sarah Ulina Sinuraya of Mandiri Craft in Yogya wrote: "we'll join it....."
    Darwin Smith Toapanta Saltos "Fair Trade Movement, this topics will be a model for a Fair Trade Chocolate Movement here in Ecuador. The steps are very precise and the conceptualization of idea; 1+1=11 is applicable - many thanks dear Mitch. I´m taking note - :-)"

    Ten Thousand Villages Toronto "So great to see the Fair Trade movement expanding! Keep us posted, Mitch :)"

    Angelo Valencia Hi, Mitch, thanks for the updates and keeping the flames afire for the benefit of those who need it the most!