Franchising Fair Trade

Our time in the Philippines has come to a close. Admittedly, we have learned many lessons from the Fair Trade movement here, but amongst the most valuable lessons here is how to introduce Fair Trade in local markets. Not surprisingly, many Southern Fair Trade Organizations (FTOs) have overlooked local community and national markets as they focused on exporting to the North. The reasons for this neglect center on the low levels of awareness of Fair Trade in the South; inherent challenges to enter local markets without external support; and the existing focus on catering, marketing and exporting to the North. “How and where do we start?” are often the first questions they face before attempting to enter domestic markets. 

I see the Philippine Fair Trade movement is working together to establish a united foothold in the local market. One of the first organizations I met when I arrived in Manila last month is the main organizer of this concerted effort: Advocates of Philippine Fair Trade, Inc. (APFTI). They work in close collaboration with the WFTO - Philippines. 

APFTI is an organization of expert marketers, networkers and advocates motivated by a genuine entrepreneurial spirit. Executive Director, Vincent Roaring explained the driving mechanism of APFTI, “If we are successful, we are successful in our mission. It is a mission, but it is the drive in our heart that really matters. We have to go beyond what is physically available to us. APFTI is run by social entrepreneurs; emphasis on social entrepreneurs. What is a social entrepreneur? Whatever he receives, whether it is 30% of the resources, he is committed to 100% of the mission. That is the spirit of APFTI; give us half of the resources, we will take care of 100% of the objectives.”

At this time,  one of APFTI's missions is the expansion of Fair Trade into the local markets. How to expand local markets has been an issue the social entrepreneurs of APFTI grappled with for the past couple years. Their solution: A national chain of Fair Trade Shops! They began implementing their project in 2009, and have learned a lot in the process of starting with four locally operated shops in Cebu, Bohol, Naga and Cagayan de Oro. Interestingly enough, each shop showcases local producers as well as cater to the market interests of local buyers.

Jennifer Garand, the Marketing Consultant at APFTI, went on to explain the management of the initial Fair Trade Shops. “These four shops, they are not really owned by APFTI, it is a partnership. APFTI partners with existing Fair Trade producers in the area as in the case with the Fair Trade Shop in Cebu where we partnered with Southern Partners Fair Trade Center (SPFTC), a known Fair Trade producer in the area; in Cagayan de Oro, with Salay Handmade Paper Industries. They are both members of WFTO – Philippines. In the case of SPFTC, it is an existing shop they converted into a Fair Trade Shop. It is really successful. In Cagayan de Oro, they were about to close the shop because they were losing money. Then we talked to them about the idea of a Fair Trade Shop, and after a year they are very happy. They doubled or tripled their sales and doing well now. The key is to partner with an established organization in the area.” 

If anyone thought opening a few Fair Trade Shops in a market with little-to-no awareness of Fair Trade sounded ambitious, how about starting a nationwide Fair Trade franchise? Now Imagine this:

20 Philippine Fair Trade Shops by 2015! 

Jennifer spoke about the shop operations. “At the moment it is 100% owned and operated by our partner, but that is not our plan. For the next 20+ shops, APFTI will be directly involved in management of the shops. At the moment we just assist them in the promotions and advocacy, and of course supply.” To initiate this effort, APFTI has received assistance from EU funders, but they do not plan to remain dependent on those donors. Many hard lessons have been learned from the recent economic crisis that continue to haunt the Fair Trade producers throughout the South. 

In the North, a Fair Trade shop may have reduced or stopped ordering altogether in order to weather the economic crisis, but in the South when every buyer you supply suddenly takes the same action, the impact is amplified and a global crisis becomes very personal. Honestly, every time I mention it with managers of Southern FTOs, I see a sadness reflected in their eyes; there is a sense of abandonment and disillusionment that trade is not all it promises to be, whether mainstream trade or Fair Trade, all is subjected to the same whims of a globally interconnected market.

Admittedly, to make Fair Trade Shops sustainable in the Philippines will be a real challenge. Essentially, it is a nationwide test to prove the viability of Fair Trade as a business model in local markets. Talk about putting it all on the line! Vincent noted that the strategies must be amended, “Adjustments will have to be made to ensure it is sustainable. If we see at some point the donors will disappear, or they are so fatigued, or EU organizations cannot assist, we need to make sure it is sustainable. That is a principle in Fair Trade.”

Shop-Based Advocacy

When we visited the leading Fair Trade Shop in Cebu, I asked SPFTC Director, Gigi Labradores about the motivating factors for opening the shops. She enthusiastically replied, “We thought Filipinos should be able to taste the products that we produce, not only foreigners. And then they should also see that there is a business that is socially oriented and fair, but it can be able to provide for the needs of workers; ensure the supply chain does not trample the rights of other people, but it is still competitive in price. It is also something we would like our countrymen to know, in Cebu and elsewhere, so it was an advocacy on trade justice and at the same time we are concerned for workers.”

Gigi shared about opening the Cebu Fair Trade Shop, “I guess we were a bit aggressive. We loaned a certain amount to put up the renovations. There were some problems with carpentry at that time so there were additional costs. We repainted the shelves and everything. The whole look was changed. The next thing was what to put into the shop. If we only put our products and if we only think about Cebu products, it will not be attractive to other buyers and Cebu is very particular; health and wellness products. So we had to be sure that our producer network and the WFTO partnership, and community members of other members could bring their products to Cebu.”

Perusing the Cebu shop you can find mango juice, kalamasi juice, virgin coconut oil and dried mangoes aligned on the shelves; decorative handmade cards from Salay in Mindanao, attractive handmade soaps, and fashionable handbags made of recycled materials; decorative crafts and gift items that tempt any buyer who is contemplating the perfect gift for a friend or loved one; and locally made cookies and Filipino coffee. They even have rice coffee!  Gigi described the customer preferences, “In our experience people come, like foreign tourists, they chose juices and dried mangoes. When locals come, they go for the health and wellness and there are also orders from companies for recycle products. This is the particulars of our market. We had a big order last December from companies for recycled bags. That was one of the big sale items in December.

Much to their surprise, the sales in the Cebu shop more than tripled in the first month of operation, and with a concerted awareness raising effort, sales have steadily climbed. Gigi shared her experience, “I think the advocacy work helps a lot in promoting all the things that you do, every month you have to be known, published in media, interviewed, to have activities so people can come to the shop. We partner with other civic organizations. It improves the sales.

If you want to expose what Fair Trade is and how it is able to address poverty in a country or a community that we commit to and serve, we should be able to make ourselves known and be visible. Fair Trade is not just a philosophy that adheres to addressing poverty, it is also a product that enhances or embraces quality. It respects the rights of people and producers and at the same time it takes care of the needs of consumers. So, we need to showcase and let Fair Trade be known. The product quality edge; we believe, if people can know, they can have a choice. There is a dried mango and other products that do not use preservatives and can be available locally.” 

Gigi went on to explain the function of the shop as a showpiece, “That is why we talk about advocacy and why we had to put up the shop. It is not just for income, is also the basic point for advocacy. People will not understand your thoughts if they don’t see anything concretely. Like this mango, it is produced in Cebu, we partner with these communities, and this is coming from the indigenous group. So people come, they appreciate what is being done, they know more and understand this is Fair Trade.” 

One thing Chou noticed was how the WFTO Philippines functions as the center of a strong national network of FTOs, while APFTI Fair Trade Shops are localized centers for producers to network and get involved in Fair Trade activities and advocacy in their community. Local shops were empowering local producers, making Fair Trade tangible to their neighbors! 

Out of a driven interest to learn more about this up and coming franchise, Chou and I flew to Mindanao to visit the Fair Trade Shop in Cayagan de Oro operated by Salay Handmade Papers. We met with Raelita Legaspi, the APFTI Consultant in northern Mindanao. She explained the suppliers of the products sold in the shop as members of WFTO Philippines. To this she added, “Some of those who display their product here are on their way to become WFTO – Philippine members.”  One strategy they have for enticing local producers to join Fair Trade is to provide market opportunities for their products in local Fair Trade Shops. Making Fair Trade accessible to producers is an important lesson here.

Rae described her current project in APFTI, “When we see that they are marginalized and see that their products have potential in the local market, we help them by giving them product development services, design and packaging services so their products become more attractive to the market. Then we help them sell in shops like this, but our efforts don’t stop there. We have a lot of activities with other sectors."

Youth and the Spirit of Volunteerism 

Rae went on to explain, "In the Philippines, there is no Fair Trade market to speak of because we relied on foreign buyers. It is only now they have been hearing about Fair Trade. It is very important for us to reach out. One of the sectors we think are very receptive to Fair Trade is the youth. We even have a youth Fair Trade network in the colleges and universities in the area. They have entrepreneur programs for colleges now and we touch base with these programs. They are in the bracket of 17-21 year olds, very idealistic. 

We rely on a lot of people who like advocacy, who have the heart for Fair Trade and the producers. They like it. I get the students to come help out. The good thing is when we have activities like marketing activities and promotions, they come and volunteer and work with us. In fact, I am the only APFTI personnel in the whole of Northern Mindanao. It becomes difficult because I am also in a project helping farmers and that covers a lot of rural areas in Mindanao I have to visit. We rely on partners and volunteers to help us with marketing Fair Trade products. We have partners in one of the schools and when they have a Foundation Day event, they ask us to bring products they can sell; anything to show people Fair Trade."

An important lesson needs to be touched on here because in some cultures or socially hierarchical societies, youth are all too often ignored. I challenge you, regardless of where you reside: Never miss an opportunity to engage the youth! Cultivate the interest of youth in the local, national and global Fair Trade Movement! Find ways to expand their exposure to the social issues surrounding Fair Trade locally and globally; facilitate their learning through direct experience; and above all, incorporate their ideas on how to expand Fair Trade! 

What do I mean by that? Listen to them, they are the future! We often forget that the youth of today are the consumers, advocates and community leaders of tomorrow. To harness their interest in addressing social issues their generation faces through Fair Trade is to provide opportunities for them to get involved directly; provide opportunity for the youth to own Fair Trade; empower the youth by opening avenues for them to take action!

Do a quick calculation: It doesn’t matter if you are a producer group in the South or a retailer in the North, how many high schools and universities are you actively engaged with at this moment? How many student clubs or Young Advocate Movements are you sponsoring through talks, experience sharing, or providing volunteer opportunities for? How many Fair Trade products are found on campuses near you? If you find that your ranking is quite high in this regard, I invite you to share your experiences in the comment section below. Find ways to support other Fair Trade movements around the globe by linking with them directly.

If you find there is room for improvement for your Fair Trade Organization or network, write a list of activities you can undertake in the next four weeks in order to engage local youth in your community. I assure you, the impact of your efforts will be felt in the long-term commitments they make to social change. Don’t let these opportunities pass you by. 

During my travels in the Philippines I had many opportunities to share my own experiences as a volunteer in a Fair Trade store near my Alma mater. For me, volunteering there was a formative time. I was encouraged to read about our producer groups and learn about the various social, political, and cultural contexts that shaped their world and influenced their work. I was amazed how in that shop the world became so small. A magical thread woven from the producer to consumer; from one heart to another, across seas, and across cultures, a single purchase united people across the globe. Genuine and true. That is the spirit of Fair Trade.

On a personal note...

There are many lessons to be learned from the development of a Fair Trade Franchise in the Philippines. In this blog I have highlighted a few that I found to be noteworthy. As for additional lessons learned and more of the how-to components, I will write more about those in a future publication which after all, is the purpose of this journey. Originally I was focused on presenting the voices of Fair Trade producers, and as I mentioned in the last posting, I overlooked a vital component of Fair Trade – the Catalysts for Social Change.

However, that is not all I have overlooked. As this journey enters the third month and the inquiry leads me to Indonesia, I see that there is a need to create a more comprehensive publication that is useful for Fair Traders around the globe; something that can present the contextual realities as well as provide practical tools that can be utilized by practitioners, advocates, and consumers alike; to present a common understanding of Fair Trade, the issues it faces as a movement, and reflect on lessons learned. 

I believe we need to go beyond the 50 reasons to buy Fair Trade and understand what is really happening when Fair Trade is introduced to a community. Not only that, but to look at how Fair Trade practices can be strengthened and improved; how to utilize holistic approaches that do more than touch upon social issues, but can be utilized to strengthen communities. For me, a future step is to find that socially aware and conscientious publishing company...

As always, we welcome your thoughts, ideas and suggestions. Your commentary is greatly appreciated. Thank you for joining us as we go to Indonesia to learn about Fair Trade there.

Sincerely,

Mitch Teberg and Chou

Development of Local Markets

In the wake of the global recession, one lesson became clear for “developing nations” in the South: Don’t depend on exports to the North alone!!! Generally speaking, the heavier the dependence on trade with the North the greater the impact of “The Great Recession,” as the World Bank has conveniently boxed and labeled it. For the multitudes of poor in both developed nations and in poor alike, it was much more personal and the effects continue to be felt in long lines of the unemployed and in the households of the underemployed. 

For so long in the shrouded halls of trade negotiations, it has been the promise that trade with the North will save you. The fallacy of this assumption became painfully clear as Northern nations, in an attempt to protect their own economic well-being, greatly reduced imports from the same Southern nations to whom they sold this lie. Even the helping hands from the North cut back their assistance to the point many NGOs and donor agencies greatly reduced their funding for local development programs and projects. In some cases, they were halted or scrapped altogether. Such is the world of empty promises. Better luck next time and thanks for playing. 

This stark reality was also reflected in the alternative market of Fair Trade. A generalized sliding scale was a predictor for the impact of the global recession. The more dependent on exports to the North, the harder the impact on Fair Trade producer groups in the South. The Philippine Fair Trade movement has definitely learned an important lesson.

In recent years there has been a concerted effort to unite Fair Trade Organizations (FTOs) regionally and nationally. The World Fair Trade Organization (WFTO) based in the Netherlands has increased the room for regionally based networks to expand their influence and unite FTOs with common interests. 

Africa: COFTA

Asia: WFTO-Asia

Latin America: WFTO-LA

Europe: WFTO-Europe

The Pacific Rim: WFTO-Pacific

The WFTO-Asia works with the existing formal and informal networks in Bangladesh, China, Cambodia, India, Indonesia, Korea, Laos, Nepal, Pakistan, Philippines, Sri Lanka, Thailand, Timor Leste and Vietnam. “WFTO ASIA serves as a platform wherein member-organizations share, among each other, culturally sensitive and regionally distinct strategies in the areas of skills and organizational development, technology transfer and access to information. WFTO ASIA fulfills its role as the voice of Fair Trade in Asia by promoting the standards and principles of Fair Trade among various actors at different levels of the value chain. It works to involve producers, workers, service providers, intermediaries, public sector institutions and consumers to the process of bringing about social and environmental justice to the global trading system.” 

In the Philippines, the Fair Trade movement united under the banner of WFTO-Philippines and has been progressively adjusting its national strategy. Amongst the lessons learned in the Great Recession is, Do not depend on exports to the North alone!!!

No matter how well-intentioned the Fair Trade Movement of the North may be, when faced with a recession there is a logical reduction of imports from the South in both mainstream and alternative trade. For this reason it is important that the FTOs of the South learn a valuable lesson and begin to expand their local and regional markets while relying less heavily on the promises and good intentions of North. 

The Fair Trade Movement of the Philippines

My inquiry into the local Fair Trade movement began with meeting Ronald Lagazo, the Director of WFTO-Philippines, which has thirty member organizations. I asked about the recent effort to expand the national market access for local producer groups through the creation of Fair Trade Shops which I had heard so much about. 

“The Fair Trade shops are operated by members, like Saffy is operated by SUFRUDI in Santa Ana, Manila, and SPFTC (Southern Partners and Fair Trade Corporation) in Cebu, and Salay Handmade Paper in Cagayan De Oro, Mindanao (the main island in the south). Right now they are catering to the members of WFTO Philippines. We buy them from them and their products are displayed in the store, so it is the market avenue for some of our members. They may be based somewhere in rural Luzon, but they are supplying products in Mindanao or in Cebu, that is an opportunity for them."

Currently there are thirteen stores operated by FTOs, of which, four new stores are part of a recent development to expand Fair Trade into the local markets. Ronald explained, “APFTI (Advocate of Philippine Fair Trade, Inc.) is a non-profit receiving funding for this initiative. The grand design included coffee shops in the stores, more like a deli-café. The partners don’t have so much money or funding, so they can’t afford a real big space to put in a coffee shop at the same time. Instead they started with a retail store first, but I think they want to go there. The funders have been quite impressed with the efforts put into the stores. There are a lot of lessons we learned from this.

The Fair Trade store in Cebu is quite successful in this regard. They do have a fairly regular article coming out about them in local newspapers. They get major coverage for their activities. Some of the media people go and buy from the shops, so they are quite successful with the media engagement. They do a lot of promotions. Gigi Labradores is doing all the efforts to go out of her way to meet people and present products. She networks with a lot of local organizations and people.”

In addition to starting a chain of national Fair Trade Shops, the WFTO-Philippines have established a national set of criteria to become a Fair Trade Organization. “Last year we went full swing with implementation of the agreed upon requirements for WFTO-Philippines members, we had seven organizations apply… 2009 was more of a self-evaluation year.” 

 

Additionally, the WFTO-Philippines established their own Fair Trade label. Ronald Lagazo noted, “We had very good international feedback over the FT-Philippines labeling certification system. For one, the FLO label is very expensive and not accessible to small producers. The application fee is very expensive. The label is meant for the Philippine market. If it goes international and is accepted, that is ok with us, but we never intended it to be for the international arena. Some members were initially concerned about adding another label, but locally this label can differentiate us from other businesses. It is not a problem to add another logo to the labels.”

While talking with Ronald about developing local markets, he mentioned Bote Central as an “interesting case,” but what I discovered is more aptly described as unconventional, even revolutionary in their approach! Because their efforts are so direct, and on the surface they sound so effective, I decided to investigate more closely. Currently, I am in the beautiful mountains of the Philippines to follow up on Bote Central and their approach  to developing Fair Trade in local markets. With this, I will leave you in anticipation of what is to come in the next posting, but one thing I can assure you at this point is that it is a fascinating study and much can be learned here! 

Thank you for joining me in this journey. Feel free to follow this blog and to add your comments, ideas or suggestions as we go.

Sincerely,

Mitch Teberg, MA