Beyond Fair Trade - Partnerships To End Poverty

When I was teaching business in London, England a few years ago, some of my students asked about a relatively new concept called Fair Trade.  Downstairs was a Starbucks coffee house.  I knew they sold a brand of "Fair Trade" coffee, so I arranged a talk with the manager.  She told the students that Starbucks sourced coffee from farmers in developing countries under the auspices of Fairtrade International.  The idea was simple - the organization established a fair price (higher than market value); the company paid the farmers;  and consumers paid a little more for a cup of coffee branded "Fair Trade".  It was a win, win, win - the company acted in a socially responsible way, the farmer got higher than market prices and the consumers did their bit in fighting poverty in the developing world.

Today, the Fair Trade concept has been adopted by other corporate giants, at least when it comes to coffee.  Oana Branzei, an associate professor at University of Western Ontario put it this way:  "There is no coffee shop that is not a social enterprise.  Look at Starbucks and the way it competes by promoting the care it takes in sourcing and its social missions.  Now even McDonald's and Tim Hortons are trying to play up their connection to farmers.  Coffee is a small statement people can afford to make about who they are as responsible consumers".  Sustainable sourcing is also becoming an important part of "Fair Trade"  branding promoted by multinational corporations.  Kraft Foods, for example, highlights its connection with coffee farmers in the developing world in its "Respect the Bean"  advertising campaign for Nabob, one of its most popular brands.

While sustainability and price are key components of Fair Trade, some entrepreneurs have extended these concepts into a new level - business partnerships.  In 2007, Doi Chaang Coffee Company was launched in Vancouver, Canada in partnership with Doi Chaang village in northern Thailand.  The Thai villagers own 100% of the operation in Thailand and 50%  of the Canadian company.  Farmers are responsible for planting, cultivating and exporting the coffee to Vancouver where the beans are roasted and distributed internationally under the Doi Chaang brand name.  The company also has 400 branded coffee shops in Thailand (24 corporate - owned, 376 franchised).  According to John Alexander Darch, one of the entrepreneur - founders:  "The village gets 50%  of net profits and an elected body invests those funds into infrastructure.  They've built a road, brought electricity and water into the village;  they now have a dentist, supermarket, a farmer's bank, a hospital and a daycare".

The success of this business model is found in consumer response.  Since launching 7 years ago, the Canadian operation has grown 25%  each year.  Consumers know that 50%  of what the company earns goes to the farming community that grows the beans.  What a great example of social justice actually working in a real business setting.  No handouts here.  Everybody works, everybody benefits.  What a great business model for the future!  And not just in coffee!