Linking Rural Farmers with Global Markets

Over the past decade, there has been an increasing consumer demand for sustainably-grown fair trade products, but how does fair trade really work? How are rural producers in developing countries able to serve growing consumer markets in wealthy nations?

One of the major obstacles for small producers is getting access to credit to build and develop their business. Big banks consider them too small and risky, yet they are too large to qualify for micro-finance. This is where Root Capital steps in, a nonprofit organization that provides loans for grassroots businesses in rural areas of developing countries.

Consider the example of Rolando Lazo, a coffee producer in Jinotega, Nicaragua. Jinotega was wrought by violence and fighting during Nicaragua’s civil war in the late 1970s. Rolando’s parents were killed as a child, and he grew up in extreme poverty, often spending the night sleeping under trees for shelter. He made a living as a migrant farmer, but was barely able to cover his basic needs. All this changed, when Rolando joined a coffee farmers’ cooperative that was linked with a larger association of 19 other cooperatives. Over the past six years, the association received loans from Root Capital, ranging from $70,000 to $450,000. The loans helped the farmers develop an export business enabling them to compete in the global economy.

Today, the association sells its coffee to retailers in Germany, Ireland, Italy, the Netherlands and the United States, where Peet’s Coffee carries its beans. Rolando and his family now own a small plot of land and a house with electricity, TV, and access to high quality drinking water.

Root Capital is able to lend to grassroots businesses by raising money from investors at 2.5 percent interest, and lending it out at 9.5 to 12 percent interest. In addition, the organization also receives grants from companies like Green Mountain Coffee Roasters to train rural farmers in managing cash flow and financial decision making. Also, rather than getting paid from its borrowers, Root Capital gets paid directly from importers and retailers.

Since its launch, Root Capital has provided $200 million in credit to 282 small and growing businesses in 30 countries, maintaining a 99% repayment rate from borrowers and a 100% repayment rate to investors.

-Martina Georgieva

SOURCES: The New York Times, Root Capital

Sewing Project in Liberia Creates Fair Trade Jobs

In the basement of his family's building in Liberia previously occupied by warlord Charles Taylor, marred by bullet holes from a 14-year civil war, Chid Liberty has set up a business called The Liberian Women's Sewing Project. The initiative is a fair trade business, emphasizing good-work practices, high wages, and transparency. Liberty has a large table for open discussions between himself and his employees, a prayer room, and regular opportunities for the women to sing. He currently employs 32 women, but by the end of the next 18 months he hopes to employ over 500, with 370 sewing machines and a capacity of about two to four million t-shirts per year. "The truth is that something as beautiful as The Liberia Women's Sewing Project can come out of something as broken and decrepit as this building and conflict was," Liberty says, "We just hope to always be a metaphor for Liberia, that yes, this building has been completely broken down and yes there are bullet holes here, but as we heal the building, we are also healing ourselves."

- Clara Hill

SOURCE: "Bullet-ridden building in Liberia turns into fair-trade haven" - CNN

MDG #8 - Global Partnership for Development

Goal 8 targets both rich countries and poor countries in their committments of eliminating global poverty.

Rich countries are being held responsible for increasing debt relief and making fairer trade rules - especially in agriculture, giving poor farmers a chance to earn a decent living.

In contrast, poor countries need to have greater accountability to their citizens and better utilization of their resources.

"Just a small shift in the balance of trade could make a huge difference....if poor countries exports went up by just 1% then 128 million would escapte the poverty trap."

It is precisely this that world leaders from around the globe are seeking to accomplish with goal #8 of the Millennium Development Campaign.

- Tiffanie Depew

SOURCE: YouTube & End Poverty 2015

Fair Trade to Fight Poverty

According to a case study of coffee producers in Bolivia, fair trade has the potential to make a significant impact on the anti-poverty effort. The report goes into detail about the effects of fair trade. For instance, fair trade has the potential to reduce poverty by providing competition at the level of the intermeriaries and enabling capacity-building. As a result of its poverty-reducing impact, it may have a "positive influence on conflict prevention by contributing to a reverse of cultural inequalities." Fair trade has also influenced several trends in the non-fair trade market, and thus, it may have indirectly been responsible for reducing poverty for some producers in this market. You can read the summary and the full report here (PDF).

Chocolate on a Mission

Kuapa Kokoo is a co-op of cocoa farmers in Ghana, set up in the early 1990s. By pooling their resources, farmers were able to gain control of trading their own cocoa, managing the selling process more efficiently than government cocoa agents. One important aspect they oversee is measuring the crops, making sure that the scales aren't rigged at the expense of the farmer. In 1997, they decided to set up their own chocolate company to create even more benefits for cocoa growers. Divine Chocolate is now the most popular fair-trade certified chocolate in the UK, and it was recently introduced to the US. With a mission to empower their farmers to improve their livelihoods, Kuapa Kokoo has used its success to invest in building schools, digging wells for clean drinking water, providing mobile clinics for farmers in remote villages, and creating projects to help women earn money for their families when the cocoa season is over.