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Organic Consumers Association

Fair Trade Coffee One Alternative for Small-Scale Farmer

  • Fair trade a boon to small, poor producers
    By Ma. Ceres P. Doyo
    Philippine Daily Inquirer, 6/8/08
    Straight to the Source

 THE ABOMINABLE middleman. The usurious money lender. Bad farm-to-market roads. Limited access to mainstream markets. Limited cash flow and delayed payments for goods. Uneven supply vis-à-vis demand, and vice versa. Problems with quality control. Etcetera. All these plus the current international food crisis.

How will Mang Gimo, a struggling, small producer of organically grown rice and other native products, survive with the above factors conniving against him? Why should Aling Nena and her women's group continue making sweetened kaong and nata de coco when they have no access to supermarkets and groceries? Who will package and market the wild honey that the Mangyans of Mindoro and the Tingguians of Abra harvest from the forest? Who will bring the village cooperative's muscovado (healthy, unrefined) sugar to the cities?

Is their packaging attractive enough? Is the costing competitive? Is the coffee roasted according to café society's preferences? Is it worth the producers' sweat? Are they within reach of consumers in search of alternative products for their alternative lifestyles? What about quality?

Despair not. Many questions could find answers in the fair trade movement. Fair trade advocates are a boon to those who earn their living as producers of food and other goods for the world while adhering to egalitarian and sound environmental practices.

Is the Philippines in the international fair trade map? Not in the fullest sense of the word that all of the products have an international official stamp, but local fair trade groups are making their mark in the landscape here and abroad and, through their efforts, community-based enterprises (CBEs) are able to get good prices for their products.

One local advocate of fair trade is Upland Marketing Foundation Inc. (Umfi) which brings products of CBEs to mainstream markets on fair trade terms. Umfi has partnered with an international church-related lending institution in order to push its local efforts. But this is getting ahead of the story.

HR respected

According to the International Federation for Alternative Trade (Ifat), a worldwide network of trade fair organizations, "an organization may call itself a fair trade organization if everything it does and produces is done according to fair trade conditions." For example, human rights are respected and there is no question of child labor. But more is required. Ifat looks at the mission of a company or group and require that the company also do a campaign to encourage fair trade.

Ifat director Stewan Durwael describes fair trade as something that gives equality great importance. "It gives people a chance. It's not about giving money, but about making money. In my eyes, fair trade is the most optimal form of development cooperation."

Quality that cares

Umfi executive director Rene A. Guarin said Umfi has placed eight main products in supermarkets. Sourced from CBEs, these products are organically produced rice, muscovado sugar, jams and jellies, organic vinegar, bottled sardines, calamansi juice, wild and cultured honey and virgin coconut oil. Add to these naturally fermented soy sauce, banana ketchup, sweetened kaong, nata de coco and salted eggs.

These come under different brands but most of the bottled products now have the "Farms and Cottages" seal with the catchphrase "Fair trade, quality that cares." The brand "Healthy Rice" now occupies a prominent place in major supermarkets. Rice comes mostly from northern Luzon, the Bicol region and South Cotabato in Mindanao.

"We pack the rice here," Guarin said while showing packers at work in the Umfi warehouse. "We have polished and unpolished red, brown and white. We carry only organically grown rice grown mostly by cooperatives." The supply has to be steady, Guarin stressed, because when the brand disappears from the shelves the consumer will shift to another product.

The taste and quality tests are even more important. "We have our own food technologists," Guarin said while touring the Inquirer inside the Umfi warehouse and office in Pasig City. "We conduct lab tests. The producers waiting for the results are like students waiting for their final grade. Some fail in the taste category. Maybe the right procedure was not followed. But when it comes to food products the first question is, is it clean?"

And then there is the pricing. There has to be balance between price and inputs, Guarin said. But the more daunting part is about the cash flow. Suppliers like Umfi could collect from supermarkets only after 30 days. Where will it get the cash to pay new deliveries from producers?

Fair finance

Umfi recently tied up with Oikocredit, an international church-related lending organization that helps organized groups and cooperatives through financing. Although Oikocredit assists microcredit enterprises, it gives loans not in micro amounts but in bigger cash trenches (say, several millions), and not to individuals but to cooperatives and organized groups.

Oikocredit's catchphrase is "Fair Finance, Fair Trade."

Fair trade in different parts of the world is now one of Oikocredit's advocacies and beneficiaries. Umfi is not the only group in the Philippines that Oikocredit is helping. Pecuaria Development Cooperative based in Bulacan, a community-based enterprise (CBE) producer and partner of Umfi is also an Oikocredit beneficiary. Pecuaria is a farmers' cooperative that does organic farming and puts high in its mission gender equality and ecology.

Umfi provides access to technology, financial resources and growing markets to CBEs while providing high quality and healthy products to consumers. As a fair trade organization it wants to see producers first meeting their needs with their own produce (for food security) and selling the surplus. For Umfi, transparency in dealing with the producers is paramount. A product is chosen only after the producers meet at least the minimum wage for their workers.

Business partners, no dole-outs

Umfi had its beginnings in 1992 when the Philippine Business for Social Progress (PBSP) and the Upland NGO Assistance Committee (Unac) organized a marketing program for skills training, information dissemination and market linkaging. Because of its little impact on communities, the program had to develop new approaches in product development and marketing.

In 2000 PBSP and Unac turned the program into an independent group. Umfi was born. Umfi was going to treat beneficiaries not as dole-out cases but as business partners. Umfi hit the ground running with product development, business development, marketing and finance. Upland communities are the Umfi's sole concern. Coastal and lowland areas are now in Umfi's map.

Among the supermarkets that carry Umfi brands are Shopwise, SM, Robinsons, Rustan's Pure Gold, Ever and Landmark. Here brands try to visually outdo one another so packaging is important. To date, Umfi has supported over 110 community-based enterprises (CBEs), maintained a network of corporate buyers and put the CBEs' products in more than 300 supermarkets and outlets in Metro Manila and Luzon.

Butterfly

Guarin says that one very important role Umfi plays is that of "bridging the big divide between the rural agri-business and the large urban merchandiser. Umfi is slowly finding a niche especially for organic products. Its new packaging shows a butterfly. Butterflies are said to be among the first creatures to be affected by pollution.

"Our organic products are so successful that we are being copied, Guarin said. "But our fair price position is still unique. Umfi has enjoyed steady growth with annual sales of $0.6 million in 2006.

Many consumers in developed societies patronize so-called fair trade products that come from developing countries. Fair trade products bear a logo. This means these products have passed scrutiny in both quality and equality. This means producers have received a fair and stable price for their products. It is alternative consumerism.

Small but growing

Guarin said that the business partnership with CBEs created an unprecedented demand from the urban-based market. The muscovado sugar that used to be supplied by only one cooperative is now produced by four other groups. They averaged volume sales of 240 metric tons per year.

From an initial volume of 2.5 MT of organic rice per year, Umfi partner-farmers have increased their sales to 600 MT per year.

In world economic terms fair trade is still small, but its support base across the world is huge and growing. Some facts and figures:

Five million people in Africa, Asia and Latin America benefit from fair trade.

3,000 world shops and 55,000 supermarkets add up to more than 79,000 outlets for fair trade products in Europe.

More than 1,000 staff and 100,000 volunteers are involved in fair trade organizations in Europe.

A combined sales turnover of more than one billion euros a year (2005) and growth rates of between 20 and 30 percent per year since the beginning of the 21st century.

Fair trade is an alternative to a super-globalized economy that runs rough-shod on small producers. Small and good need not perish.

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