Making Fair Trade Work
Dan Clore
http://groups.yahoo.com/group/smygo
Citizen Action in the Americas, No. 1
July 2002
Making Fair Trade Work in Mexico
by Talli Nauman
Americas Program, Interhemispheric Resource Center (IRC)
http://www.americaspolicy.org
In Mexico, a growing number of co-ops, nongovernmental
organizations (NGOs), microenterprises, and campesino groups
are proving that fair trade offers a viable alternative to
communities struggling to cope with globalization.
Little more than a generation ago, Mexico was the classic
example of a protectionist, shielded economy; over the past
25 years, however, it has become a leading global free
trader, boasting commercial accords with some 30 countries
worldwide. The terms of these agreements favor large
corporations and put Mexico’s numerous campesino farmers,
artisans, small producers, family establishments, and
independent service providers at a serious disadvantage.
Local economies in Mexico have suffered under the free trade
model and thousands of Mexicans have been forced off the
land or out of business, taking low-wage jobs in the cities
or crossing the U.S. border to find work.
Mexican artisans, farmers, campesino cooperatives, nonprofit
organizations, and small locally owned operations are
responding to the challenges of trade liberalization by
coming together to establish support networks that give them
access to start-up capital, product development, marketing
assistance, and foreign distribution outlets. Largely based
in the countryside--and many of them indigenous--these
entrepreneurs have until now been passed over by Mexico’s
insertion into the global economy.
Beyond securing incomes for themselves, participants in the
fair trade market are also promoting a working alternative
to current commercial practices, one grounded in the
principles of social equity and sustainable development.
Their efforts offer an example for other communities in the
Americas struggling with the challenges of economic
integration.
Fair Trade Objectives
Frequently, free trade means maximized profits for large
companies based in the developed world and minimized
benefits for producers in developing nations. Fair trade
seeks to establish more equitable economic relationships
between consumer markets in industrialized countries and
producers in the developing world.
For example, Central American coffee farmers selling through
regular channels in 1999 were paid an average of 38 cents
per pound by intermediary buyers. That same year, coffee
growers commercializing their product via the international
fair trade consortium TransFair earned no less than $1.26
per pound. They received a better price, in part because
TransFair passed on more of the profit to producers than
most coffee brokers do, and in part because TransFair has
identified a consumer base that is willing to pay more for
fair trade-certified coffee. The coffee is certified not
only because more of the profits from its sale are passed on
to small farmers in Central America, but also because those
farmers grow it in ways that are not environmentally
destructive.
Fair trade is driven by a market in which supply and demand
are guided by social conscience. A number of organizations
in Mexico have adapted fair trade principles to the Mexican
context. For instance, in 1998, Guadalajara, Jalisco--based
environmental NGO Colectivo Ecologista Jalisco convened a
workshop with European fair trade organizations in order to
define a set of fair trade objectives and principles. Their
conclusions: The needs of local and regional economies
should be a priority in business decisions; environmental
costs and social criteria should be taken into account in
every activity; undesirable intermediaries should be
eliminated to maximize financial benefits for producers;
product and producer diversity should be supported; and
local and regional goods and service providers, as well as
consumers, should cooperate to organize themselves; consumer
education should be promoted through reliable labeling,
communication, and publicity.
Other Mexican groups add that fair trade should increase
opportunities for women, especially in rural and indigenous
communities. One such group is the San Cristobal,
Chiapas-based Foro para el Desarrollo Sustentable, a
nonprofit project made up of more than a dozen NGO
specialists in fair trade that since 1997 has been providing
consultation and credit mechanisms to grassroots enterprises
working for improved living standards.
A key Mexican organization engaged in the fair trade effort
is the three-year-old Mexico City-based Bioplanet Network.
Bioplanet is in the process of refining a checklist of fair
trade practices that its producer members should follow.
Currently, for enterprises to receive the technical,
marketing, and financial support that Bioplanet has to offer
they must be located in a priority ecoregion, demonstrate a
commitment to conservation, be organized for social benefit,
and offer goods or services of special commercial interest.
Fair traders like Bioplanet also acknowledge that principles
alone will neither turn a profit nor lead to national and
international policies more supportive of fair trade
regimes. On the demand side, consumers want high-quality,
easily accessible products guaranteed to comply with free
trade principles. On the supply side, producers must be
trained in standard business techniques, quality control,
and marketing to meet consumer requirements.
Taking Action: Making Fair Trade Work in Mexico
So far, BioPlanet has connected 55 small business in 12 of
Mexico’s 32 states, to 10 consultants and funding agencies,
making it Mexico’s best-organized fair trade network.
According to founder Hector Marcelli, Bioplanet was
established to respond to the needs for greater horizontal
integration between small businesses in rural communities
and for their vertical integration with environmental and
fair trade marketing experts. This cooperation helps provide
the quick return on investment that small, cash-strapped
companies need to make it. So Bioplanet set up a system in
which producers purchase inputs from one another, share
expertise and even earnings, add value to agricultural
products through refining or processing, and effectively
target appropriate consumer markets.
Bioplanet technicians train producers in converting their
raw materials into finished items that are retailed on the
open market. Meanwhile, Bioplanet also encourages producer
members to trade both unrefined and value-added products
among themselves, knitting an expanding supply chain.
Network advisors help producers achieve high quality and
establish diversified product lines, allowing them to offer
consumers more choices and to capture a larger market share.
For example, with Bioplanet’s coaching in Oaxaca state, the
Mazunte Natural Cosmetics factory buys sesame oil from
Tomatal Ecological Producers and periodically expands its
line of bath and beauty items. Another fair trade outfit
participating in the Bioplanet network, Quali Traders of
Puebla state, has expanded the products it makes out of its
high-protein, native amaranth grain crop to include flour,
cookies, beverage mixes, and snack foods. The May First
Local Agricultural Association of Vanilla Producers, a group
of 200 indigenous Totonacas in Veracruz state--among the
first cultures to harvest vanilla beans--is acquiring
equipment and expertise that allows them to distill vanilla
extract, rather than selling unprocessed beans.
Bioplanet conducts analyses of demands and international
standards, which allows network members to better identify
market niches and interface with foreign economies. The
organization also helps member firms with labeling,
marketing, international trade show exhibits, and contracts
with big buyers. For instance, under the Bioplanet label of
organic, shade-grown coffee, cooperatives in all five of
Mexico’s coffee-producing states are now selling to the
offices of the federal government’s environmental
secretariat.
Meanwhile, Bioplanet’s online marketplace
(http://www.bioplaneta.com ) profiles goods- and
service-providers, and it offers an efficient online
ordering system similar to those used by other retailers. In
addition to penetrating markets, finding clients, and
selling goods, the network is helping members win
development grants, locate seed money, and enlist
volunteers. When Bioplanet invests in a new startup, it does
so on the condition that the new business earmarks an
equivalent amount of investment to eventually back another
new fair trade venture.
For instance, Mazunte Natural Cosmetics--established with
$10,000 of international public and private aid--set aside a
portion of its income for the San Rafael Toltepec Producers
Union, also based in Oaxaca, to build a chocolate processing
plant and another portion so that Ventanilla Ecotourism
Services could construct a visitors’ center at its crocodile
nursery near Mazunte. Like Mazunte Natural Cosmetics, the
Ventanilla endeavor became profitable, so now it is
providing tourism courses to entrepreneurs in the Tuxtlas
Community Ecotourism Network.
Building a Movement & Changing Policy
Most of the fair trade operators in Bioplanet started up in
the late 1990s. Still others date back as far as 15 years
ago, when Mexico’s environmental NGOs began to work with
them. One of these NGOs was EcoSolar, which provided the
capacity building that got businesses like Mazunte Natural
Cosmetics off the ground.
In addition to EcoSolar and Bioplanet, various other
networks are helping forge a fair market base in Mexico.
Figuring prominently among them is the nine-year-old,
nonprofit Network of Self-Determining Sustainable Growers
(RASA), a coalition of 28 cooperatives and other groups in
Guerrero state that are applying a nine-point Alternative
Sustainable Development Model to control the production,
processing, and marketing of the fruits of their labors,
mainly organically grown coffee beans.
Also an important actor, the nonprofit Asociación Nacional
de Empresas Comercia-lizadoras de Productores del Campo
(ANEC), formed in 1995, consists of 62,300 small-scale basic
grains producers located in more than half of Mexico’s
states. In the past couple of years it has been working with
Greenpeace Mexico to provide Mexican-grown, nontransgenic
corn to domestic tortilla makers.
The 60,000-strong Huichol indigenous population, with a
four-state territory, is conducting a fair trade experiment
of its own. It is undertaking organic garden sales and
ecotourism as part of the Project for the Integral
Reconstitution of the Wixarika Territory and Habitat,
designed to reestablish control over ancestral lands and
maintain cultural cohesion.
Examples of smaller networks include a regional committee of
the Eco-Stores Network founded in 1998. Some of its members
also participate in The Circle Network, and others are part
of the Healthy Harvest Network inaugurated in 1999, which in
turn is a member of Bioplanet.
In one of the most recent manifestations of these networks’
progress, Bioplanet is on the verge of getting the signature
of Mexico’s Economy Secretariat on an important covenant to
provide federal money and logistical support for exports of
fair trade goods.
EcoSolar, Bioplanet, and other Mexican fair trade boosters
form part of the larger Rural Sustainable Development
Network. This umbrella coalition of 90 institutions was
established to seek consensus and coordination regarding
proposals and government outreach efforts intended to spark
policy and structural changes that will help fair trade
prosper in Mexico.
The Commission for Environmental Cooperation (CEC), while
part of the official free-trade bureaucracy created under
the North American Free Trade Agreement (NAFTA), has
responded positively to citizen pressure for a fair trade
opening. Headed by the three top environmental authorities
of Mexico, the United States, and Canada, the CEC has
supported fair trade by allocating seed money to Mexican
producers of green goods and services and by conducting some
of the best research publicly available on the finance,
market, and public/private sector partnership mechanisms
that could be incorporated into national policy to support
Mexico’s incipient fair trade movement. Among the mechanisms
that the CEC has explored are the creation of government
procurement guidelines, government guarantees of loans to
fair traders, targeted subsidies, and labeling regimes.
But Bioplanet’s 55 members report selling only about
$100,000 worth of products annually and, so far, fair
trading remains on the fringe of Mexican national
development policy. Much more capacity building is necessary
for incipient fair traders to realize their potential,
enhance market impact, and affect policy.
Meanwhile, dozens of additional organizations are seeking
admission to the Bioplanet Network. In Oaxaca, 30 small
producers already work with Bioplanet, but its technicians
have identified some 3,000 rural production initiatives in
the state that could stand to benefit from the tools the
network provides. Many thousands more goods- and
service-providers around the country have aspirations to
enter the fair trade market, but their projects have such
modest outputs and organizational strengths that they cannot
even reach the bottom rung of the ladder.
Greater impetus is required for toppling the formidable
barriers that these entrepreneurs confront. Besides lack of
training and institutional capacity, these include: market
distortions engendered by subsidies to big, foreign-owned
corporate agriculture; unequal access to quality
certification and inappropriate certification schemes;
serious inconsistencies in the way that funds are
distributed by the federal Social Development Secretariat;
community infighting engendered by competition for resource
control between local factions; the high costs of
advertising and marketing; lack of consumer education
regarding fair trade goods and lack of access to those
goods; and higher product prices resulting from including
environmental costs in expenses.
Local-Global Linkages
The small businesses that form the base of the fair trade
movement in Mexico have established alliances with other
nonprofit organizations, both in Mexico and outside the
country.
Contributing to the gathering momentum of Mexico’s fair
trade movement is a broad range of NGOs organized under the
umbrella of the Red Mexicana de Acción Frente al Libre
Comercio (RMALC), which conducts research and advocacy
related to Mexican trade policy. Also supporting the effort
are alternative Mexican media outlets taking advantage of
internet technologies, notable among them LaNeta,
Planeta.com, and the Centro de Investigaciones Económicas y
Políticas de Acción Comunitaria (CIEPAC).
In turn, groups based in Mexico and the NAFTA-zone are
hitching up with a number of larger, transnational
organizations and networks operating at the global level to
forward the fair trade agenda. Ashoka: Innovators for the
Public is a worldwide grant foundation that supports many
fair traders in Mexico and other countries. The Max Haveelar
Foundation in Holland has been instrumental in establishing
direct-sales markets for products grown and manufactured
with environmentally friendly processes. These fair trade
pioneers have since been joined by the likes of TransFair,
Global Exchange, Environmental Defense, and the Center for a
New American Dream, among others.
Some of these international organizations focus on business
models and strategies that allow fair trade operations in
developing nations to penetrate first world markets. Others,
like the International Institute for Sustainable
Development, conduct research and analysis that clarify
perspectives on trade and development, much of which is
specifically oriented to the Americas. Taken together, this
broad spectrum of organizations operating both locally and
globally is pointing the way toward a different style of
globalization, one that is more grounded in principles of
sustainable development, social justice, and South-North
equity.
Already, entrepreneurs based in small, traditional, or
underserved communities across the Americas are mirroring
the efforts of fair traders in Mexico. (For more
information, see resources list on page 7.) These efforts
create the potential for a viable fair trade network
spanning the Americas that could strengthen local economies,
increase security for residents, raise living standards,
foster healthy communities, contribute to political
stability, and diminish migration pressures.
--Talli Nauman
--
Dan Clore
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