AAA meets fair tradeWe love fair trade! but what do the producers say?

Econ. Piero Ponce-FalconVienna, September 2nd 2013

AIESEC ALUMNI AUSTRIA

About me● Peruvian, Degree in Economics, University of Lima● Master in “Business Process Management”, University

of Applied Sciences Vorarlberg ● AIESEC Experience in Peru, Germany, Cameroon and

Egypt● Experience in project management and business

development in rural areas● Family agribusiness for tropical fruits (production and

sales) since 20 years● Interest in management of sustainable agribusinesses

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Agenda1. Fair Trade for customers

What does fair trade mean?Fair trade feels good

2. Fair trade for producersSources of informationAbout CEPICAFEStatus quo prior to certification

3. Impact and challenges during implementation4. Conclusions and recommendations

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1. Fair Trade for consumersFair trade is an alternative approach to conventional trade*

“Producers receive a better deal for improving their lives”“Consumers help reduce poverty through their everyday shopping”

* Source:Fair Trade Labelling Organizations International e.V., 2013 4

1. Fair Trade for consumersFive principles of fair trade

● Market access for marginalised producers● Sustainable and equitable trading relationships● Capacity building & empowerment● Consumer awareness raising & advocacy● Fair trade is a “social contract”

Additional dimensions: working conditions (equality, children’s rights), environmental sustainability (organic is encouraged), monitoring and evaluation (participatory processes) 5

1. Fair Trade for consumersFair trade feels good!

Fair trade leads to fair consumeProducts are tasty and healthyWe prevent child laborWe help farmers eradicate poverty in developing countries

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● 1.24 mio farmers and workers participating in fair trade by 2011

● 10% growth of producers for the period 2010-2011 (991 organizations)

● 30% growth on revenues for the period 2010-2011 (EUR mio 673)

● 54% of fair trade producers hold an organic certification

Sources:Verbraucher.org, 2004-2006Fairtrade Labelling Organizations International, e.V., 2011-2012

1. Fair Trade for consumers

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2. Fair trade for producersSources of information

● Testimony: CEPICAFE (Peru)

● CEval study, 2012http://www.fairtrade.net/fileadmin/user_upload/content/2009/resources/Final_Report_Fairtrade_Impact_Study.pdf

● Personal experience in developmental projects in rural areas 8

2. Fair trade for producersCooperative CEPICAFE (2013)

● Location: North of Peru● About 6,000 members (farmers)● Second level organization (grass-roots)● Fair trade certification for coffee and cocoa● 90% of cocoa is organic (Biolatina certification)

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2. Fair trade for producersStatus quo of farmers prior to certification

● Low management skills● Bad reputation of cooperatives in Peru● Weak trustiness among members● Average size per family farm: 1 hectare● Children actively support parents on the field● Low awareness of the fair trade approach

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2. Fair trade for producersMotivation for going fair trade

● New markets, better prices, pre-financing conditions● Technical assistance from CEPICAFE● Implementation of social services and loans● Social and environmental principles are more difficult to

transmit in the short term

Fair Trade becomes a business opportunity for them at first place

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3. Impact and challenges during implementationSocial structure of communities● Access to on site trainings and education● Food security at schools, technical assistance to

teachers on school gardens● Long distances to school & health services● Gender: generational transformation● Other issues (rainforest’s experience): parents afraid of

girls going to school without control (pregnancy), mostly women communicate constantly with educators (men stay on farm fields), school system matches with crop season 12

3. Impact and challenges during implementation

Socio-Economic situation● Higher and more stable incomes,

credits available● Inefficient top-down communication● High levels of illiteracy: difficulties

for traceability, building capacity and general administration

● Other issues (rainforest’s experience): democratic processes (better communication and education for adults) are expensive 13

Source: CEPICAFE, 2013

3. Impact and challenges during implementationOrganization of rural zones● Local governmental initiatives for promoting agriculture

through projects and technical assistance● Fair trade makes farmers be less dependable on

assistentialism (short-view social programs)● Other issues (rainforest’s experience): volunteering is

possible for advocacy and capacity building (professional adults & youth), low infrastructure for applying radio and TV messages, almost no internet

● Risk of long term implementation of the “help” approach14

3. Impact and challenges during implementationLocal and national development● Attractivity from local NGOs for joint works● Youth do not see themselves as farmers, they prefer

going to the cities for work & study● Organic production is expensive but possible

(complementary certifications)● New competition among the fair trade industry: small

producer organizations (cooperatives) vs hired labour (international companies)

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4. Conclusions and recommendations● Social and environmental issues to be trained

among farmers● Work at grass-root rather than individual level● Re-adapt school system to agricultural crop time● Potential for more organic participation● Higher demand for technicians and consultants in

rural areas

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4. Conclusions and recommendations

● Promote governmental projects by transferring them fair trade know-how

● Generate trust among local authorities, parents, teachers and press

● Recruit volunteers and promote entrepreneurship, particularly among youth

● More advocacy and political influence

● Current debate: big vs small farming 17

Source: CEPICAFE, 2013

Questions and answers

Contact:

Piero Ponce-Falconwww.pieroponce.com

Master Thesis on the topic of “Application of process management for sustainable agribusinesses“