Equal Exchange was founded as an alternative trade organization (ATO) with the mission of connecting US consumers and small marginalized farmers from the global south from countries like Nicaragua, Peru, or India. Within the ATOs internationally, Equal Exchange has been identified with the organizations that trade food, support social movements and farmer coops, and is itself structured as a worker coop.
Alternative trade organizations had foundational influence in the broader fair trade movement but have been isolated from even their most natural allies including coops, citizen movements, community economic organizations, unions, and NGOs. This isolation has caused ATOs to not only be under grave threat for the future but at risk of not surviving the market in the next ten to fifteen years.
How is Equal Exchange, one of the most successful ATOs in the global north thinking about our future? What is our plan or strategy to try to survive and prosper in this next period? How will we need to change to increase our odds of success?
In general, we have been doing several things at the same time over the last five years, all of which are important pieces of the future we are trying to build. To increase the odds of success we must create a future in which consumers and producers can connect in actual partnership that is real, mutual and sustaining of fair economics and democracy building. We need to:
As we watched our fellow northern ATOs recede and face economic collapse we were compelled to act to save and support as many as we could. In 2008 we acted to keep Oke USA, the only fair trade produce company in the country alive. We invested $400,000 of high-risk capital into an organization that was effectively in bankruptcy. In 2013, we put $400,000 into Equal Exchange UK as a sister ATO to keep the doors open. We re-invested in that effort in 2017. In 2014 we invested $400,000 in La Siembra, a Canadian worker cooperative to keep their ATO model alive instead of becoming effectively demutualized and transitioning from an ATO to a brand at the service of venture capitalists.
There have been other circumstances where we looked at trying to lend a hand, There likely will be more. We believe we have done more to keep authentic ATOs alive,, competing and performing their vital work than any organization out there. Today Equal Exchange US and UK, La Siembra, and Oke are all in business, profitable, and together sell over $80 million annually. We have created an ecosystem of ATOs that walk their own path, but learn together and reinforce each other.
We have always tried to fairly balance commercial sales with strong partners and allies. Those deep partners were primarily food coops and churches. What we came to realize is that these semi-partnerships were ultimately weakly constructed, not structurally coherent and ultimately not able to allow us or our “partners” to co-plan, co-invest, co-sacrifice, and co-share any surplus created. As previously mentioned, ATOs are isolated from even their most natural allies. At times we may have been close to solving this isolation and lack of structural connection issue but ultimately that did not happen. Understanding that what we hoped for and tried to create in partnership was not there. This realization allowed us to re-engage in what our situation really was and still is.
In this last period, we have begun to directly organize citizen-consumers. This is to create a network to support Equal Exchange, our farmer partners, and citizen-consumer power in the market and society. As always, the benefits of this success will flow to Equal Exchange in part but well beyond Equal Exchange as well. We believe for any ATO to succeed in 2020 or 2030 it will require a very strong network of citizen-consumers. We need to build economic alternative institutions, and ATOs in most cases will need to build their own structures in this new environment.
What we can say after three years of active engagement is this work is among the most challenging we have undertaken. It is confusing. Everyone comes at this with their own assumptions. It is hard to share these. We are on unplowed terrain. We have left the heavily tilled ground of social responsibility and sustainability which most of the major players in the multi-trillion dollar global market now support in theory. We believe this is exactly where Equal Exchange as a pioneering, entrepreneurial, imaginative ATO should be spending its time.
Fortunately, Equal Exchange has been successful. Our network of ATOs has collective sales of $80 million in the U.S., Canada, and the UK. We have 160 workers, most of them as cooperative owners. We have hundreds of thousands of consumer supporters and now a few thousand more organized citizen-consumers. We have a solid balance sheet, positive net retained earnings and a capital base. We have three brands that are well established and have substantial value as brands to our competitor capitalist frenemies. We have a 33-year history of trying different things and succeeding a fair amount of the time. We exist at reasonable scale and can play our game in the midst of the broad, often challenging,and ever-consolidating market.
While we do this as a networked, international mini-group of ATOs, as the market gets more challenging there is more and more support for our approach and what we have done. For quite a while we and our farmer partners watched as the market took over fair trade and mainstreamed it to the point that it was unrecognizable. More recently worker coops & democracy have gotten more energy, attention and are now in a boomlet of their own. This development is truly exciting. As corporations consolidate further there is an increasing understanding of the need for a new economy, community ownership and worker ownership. One of the foundations of our mission is becoming more understood as a needed reform and that reform is happening in dozens of small organizations and a few bigger organizations across the country. Meanwhile, Equal Exchange has been living with the structure of worker ownership for decades and is yet again in our own unique space.
Equal Exchange remains a unique hybrid. We are one of the few ATOs of scale in the US. We are one of the leading northern ATOs on the planet. We are one of the largest worker coops in the US. As an ATO we support small farmers and small farmer democracy. We support worker democracy and have trusted our organization to workers to govern.
Over the past thirty-two years of building our hybrid model we have learned a lot about building a network of ATOs, fostering supply chains centered around farmers and sharing our unique business model with others. The heart and soul of Equal Exchange has always been about and continues to be about relationships. An unintended but clear mistake of our model has been leaving out our citizen-consumer base. The model will be stronger with them in. We believe our economic and political survival depends on doing this in an effective, meaningful way.
We have a brand. It is of great value to others. We need to continue to leverage our brand, our supply chains, and our unique model in the more hostile market. We need to bring citizen-consumers into our democracy and continue to build the most democratic brand in America.
One of the challenges of worker coops, consumer coops, and producer coops is how to reconcile two competing high level goals. On one hand most of these coops have an economic,organizational, and service mission. In the case of a consumer coop the mission is to serve the members, which translates to goals such as good and affordable food. In the case of a producer coop the goal is higher prices, while in a worker coop the goal could be rewarding and economically sustainable jobs.The competing goals are to run the organization democratically, where members participate in some type of joint democratic development and learning process.
It seems that most of the engaged coops are more complicated, not to mention the competing goals of economics and service versus democratic development. Most food coop have mission statements that will go beyond good and affordable food to goals such as supporting local producers, building a cooperative network, and moving towards greater food justice.The Equal Exchange mission is global and is about connecting US consumers with small farmers and demonstrating the viability of fair trade and worker coops.
Ignoring the layered complexity in the missions of many producer, worker and consumer coops, let’s return to the challenge of delivering benefits to members and the goal of living as a democratic/learning/mistake-making organization.
The United States at large and democratic countries in general are failing at learning, practicing, and building democracy. This failure of the last forty or fifty years has now reached the point where democracy itself as a value and a process is being openly sabotaged. This attack on democracy is very present in the US, but also in most countries that are more or less democratic. A short list of these countries would include France, the UK, Germany, India, and Brazil. Defending, developing, and creating political democracy in these democratic countries is becoming the great political challenge of this time.
My thesis here is that there is a connection between the challenges that democracy is facing on a political level in our democratic countries, and the problem democracy faces in our cooperatives. For democracy to function there has to be community engagement, dialogue, risk, learning, and some ability to learn from failure and success. There has to be participation, communication, and respect. The mix of risk, learning, failure, success, and starting that process over again is very fragile. The process and the results have to be considered fair and meaningful to the participants.
We are all experiencing the challenges in our political system. Participation in the US is too low and many people believe there is no reason to participate. There is an overt strategy to reduce citizen’s participation particularly directed at racial minorities.Communication, respect, and support for minority views is being greatly reduced. In this environment it is harder to obtain healthy learning, or understanding of success and failure which is vital to society progressing.Ultimately,the political process in most of our democracies is becoming weaponized between parties/interest groups and has become a fight for winning and little else.
In our worker, consumer, and producer coops the democratic dilemma plays out differently but the underlying processes are similar. The greatest threats to our nominally democratic coops are these:
Too little organizational success- picture a consumer or producer coop that is small, economically struggling and just doesn’t have enough members, capital, or capacity, and is weak economically. This type of organization does not deliver enough benefits to its members, is too marginal in terms of resources and capacity to work that well. Perhaps there is a culture of caring and sacrificing for this type of coop organization for a medium or long period but the risk of social fracture, anti-social fighting, poor management, poor board leadership is also quite likely to be part of the culture as well. Ultimately, these organizations are under extreme threat because they struggle to develop to a place where they can deliver benefits to their members. They are often at very high risk of destructive democratic conflict as well.
Too much organizational success- it seems odd to argue that success would threaten a cooperative organization. Possibly success in and of itself is not the problem. It is when economic success is present, but meaningful democratic control is not generally present or not really possible. My image here is coops that are ossified become coops in the name only. I am thinking of large agricultural coops that have been around for 50 or 100 years.They might be economically large, perhaps economically successful, but operate just like an average corporation. The democratic control of membership is long past and is basically there in form only. The messy issues of minority viewpoints, investing in democracy, and making good and bad democratic decisions are long gone.The worst form of this type of coop is one in which members are members in name only. The very worst situation is one in which “members” are coerced participants with no options but to sell to participate with no control whatsoever over “their” coop. An example of this is many large scale dairy coops in the US, which have delivery vehicles to isolated farmers to offer prices below the cost of production.
Too little democratic process- this often pairs up with coops that are economically successful but it doesn’t need to. How do we know when our democratic coops are keeping and building their democratic culture? How many high level decisions do members make and how often? If you are a farmer in a dairy coop in the US, or in a producer coop in Guatemala, or a coffee coop in Nicaragua, or a tea coop in South Africa how much involvement is the right level? That question applies to consumer and worker coops as well. Scale compounds these issues. To be economically stable it often makes sense to be larger. Being larger requires all kinds of skills which make the organization more complex which require skill and specialization. The larger scale and specialization in itself weakens commonality and group learning on successes and failures. It is easy to see an economically successful coop slowly, unconsciously evolve into an organization with little real democratic process, learning and decision making. Even in well intentioned situations what can result is the structure of democracy (well the board is elected by the members of this good sized entity and therefore we are passing as a democratic organization) with no democratic culture, or muscle.
Too much democratic process/destructive democratic process- again the problem here might be too much process or it might be an unskillful or destructive democratic process. Democracy is risky. We will make mistakes. The goal is to keep making decisions and mistakes but to avoid destructive, brutal, internecine, cooperative warfare. Every one of our genuinely democratic coops is at some risk of being brought down by highly destructive conflict through the needed democratic process. There is a direct relationship between the problem of too much democratic process and too little democratic process and this is where management and the board come in. As coops live through near death experiences from too much democratic process/destructive democratic process a lesson learned can often be to not put the organization at that risk again. Our very democratic structure and democratic participation can destroy us. So perhaps the solution appears to be to avoid those risks altogether (which might be sort of correct) but the way to do that is do avoid all large, unclear issues getting in front of membership (which is incorrect). The contradiction is ultimately if the membership doesn’t debate, decide, or learn together that the coop is on the path to losing its culture and raison d’etre. Perhaps ten or thirty years later the coop will become an economically viable organization but not really a coop.
Just to be in the market is risky. Most of us don’t really like risk. We must choose between unpleasant options all the time. A large part of that process requires solid management.
Building democratic coops also is in itself risky. We can only learn by making mistakes and learning. Meaningful large scale decisions need to be in front of membership with enough frequency for the coop as a whole to learn and advance. This group learning, struggle, and solidarity is the essence of what we are building. It is extremely challenging for membership, board, and management to build the skills to artfully negotiate the dilemma of which decisions should or should not go to membership. Usually there is no roadmap. What looks like an interesting vital issue to one person or group of people might look like the shadow of the real issue to another person or group. There is no right answer, but there is risk and danger nevertheless. Ultimately we need to learn the skills of managing democracy and communication while also learning the more standard skills of running an effective organization
Last year, Deepak Khandelwal wrote critically about fair trade certification and the contradictions of its apparent success. I would like to dive deeper into that conversation below.
On the one hand, fair trade food (less so handicrafts) is more widely known, with greater sales and distribution than ever before. At the same time, the pioneering Alternative Trade Organizations (ATO’s) who built the model of more just trade terms in the chocolate, coffee, tea, banana, handicraft, and clothing industries are under extreme duress. In the last decade Equal Exchange has saved three of these Alternative Trade Organizations (Oke USA, Equal Exchange UK, and La Siembra (Canada) while watching others falter and even close.
We now exist in an environment where multinationals deliver some version (sometimes weak,sometimes real, and sometimes fake) of fair trade through being endorsed by various certification schemes which in fact live off the revenues gained by that endorsement. This circular system has commodified fair trade, lowered standards, and confused consumers with a morass of schemes, standards, and logos. Perhaps the greatest negative impact of certification/commodification/corporatization of fair trade has been to present the market as a solution to poverty, unfair trade, and exploitation. At the same time, certification/commodification/corporatization has put activists to pasture and asked consumers to simply consume.
Lost in this process, has been the work of alternative trade organizations. What do organizations like Equal Exchange, SERRV, Ten Thousand Villages, Marketplace, or Oke USA do? How much do their operations really differ from what Dole or Hershey’s or JAB do when they add fair trade products or buy companies that use fair trade as a marketing attribute?
Alternative Trade Organizations, like economic alternative organizations in healthcare or housing, do several things differently and ultimately create completely different economic and social relations due to their mission, structure, management, and culture.
On a broad level, like their cousins in the housing or health care area, Alternative Trade Organizations:
a. Break the rules of the market
b. Show up with money or services and change the terms of trade
c. Involve producers and citizens in new forms of ownership and control
d. Change social relations
A multinational or a recently purchased new pet of a multinational can rarely do the market intervention of breaking rules and changing terms of trade.They often claim this accomplishment but don’t deliver. Corporations are opposed to and incapable of involving producers or citizens in new models and likewise, they are not capable of changing social relations.
In the next couple of months, we are going to host two fair trade friends we admire (MarketPlace, Ten Thousand Villages) on our webinars. Our goal is to learn more about what they do, how they do it, and how it differs from what the market in general or even more responsible corporations end up doing. These same issues resonate for Equal Exchange. We look at these questions all the time and evaluate how effectively we are doing on breaking market rules or creating new producer or citizen-consumer models. Often we grade ourselves harshly. In that process, we have perhaps not done enough to communicate the importance of everything we do to those of you who so strongly support us.
Intervening in the market and “playing” in the market is really challenging.Doing that for the benefit of those who are the most exploited and have the least control over the market is a contradiction.Equal Exchange and other ATO’s are built to do this.It is our mission. It is in our core DNA.Breaking the rules of the market while being in the market requires commitment, culture, and dedication. Ultimately none of us can succeed without you as citizens, supporters, consumers and advocates. Supporting real fair trade organizations is infinitely more powerful and effective than buying passive fairish trade products from the main market system. We believe by taking the time to look at how alternative trade organizations operate we will make your involvement in the Action Forum more effective and fulfilling.
We hope you can join us on Tuesday, February 13th at 7 pm EST for a webinar with Pushpika Freitas, President of MarketPlace: Handwork of India.
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