Shawn Askinosie gives us his thoughts today on why Fair Trade is good, but just not good enough. Aksinosie Chocolate is not Fair Trade certified, but Shawn explains their own socially responsible program that he hopes other businesses will imitate.
The Relevant Elephant: What should a consumer know about typical Fair Trade products? What are the benefits? What are the drawbacks? How could it be improved, or is there a better system all together?
Shawn Askinosie: First of all, understand that Fair Trade is just a label that you would find on products such as coffee, chocolate, and other things. Essentially, for fair trade certified cocoa, farmers need to be a part of a large cooperative that can afford the certification fees. Then there needs to be a middle level of bureaucracy to administer the standards of the cooperative.
From a price standpoint, fair trade cocoa, per ton, is only 150 dollars more than non-fair-trade cocoa. That doesn’t seem like very much, does it? It’s not. And people need to know that.
Now, are there other environmental, social, and economic benefits to fair trade? Absolutely. Fair trade is a great start. But the bottom line, economically, is that Fair trade is only 150 dollars more per metric ton. I pay more than that… sometimes way, way more than that.
So for me, while I think that Fair trade is a great idea, today it’s been reduced to not much more than a bumper sticker idea that makes people feel good about themselves. People aren’t aware of the real, true, trickle-down effect is for the farmer. There’s just not a lot of benefit for the farmer, and I think there should be.
Don’t get me wrong: I think fair trade is good, it’s just not good enough.
TRE: How would you improve the fair trade idea?
SA: Well, we have improved it. We’ve started our own program, called “Stake in the Outcome”. This is a program where we share ten percent of our profits with the farmers. We can trace back 100% of our beans to the farmers that grew them, and we share our profits with them directly. We don’t give the money to a middleman, we don’t give it to a government official. I fly down there and hand each farmer their share of the profits.
The second part of the program is our open-book management. Everyone in our company, from the farmers to the factory workers, knows our financial status. When I fly down there to distribute the profits to the farmers, I have our financial statements translated into Spanish and I explain it to the farmers. I go line by line through the reports so they know exactly how the company is doing and exactly how I calculated their share.
TRE: Does your Stake in the Outcome program lead to better products for your customers? Is this the same with all Fair Trade products?
SA: People need to understand that just because something has a Fair Trade stamp doesn’t mean that it tastes better. It has nothing to do with taste.
With our program, we’re trying to link the quality of the bean to the profit, which is linked to the profit sharing. By allowing our farmers to benefit when we benefit, they are more willing to grow better-tasting, higher-quality beans.
TRE: How did the farmers react to this program?
SA: The farmers, in both Ecuador and Mexico, were amazed. They were appreciative that I even came back to meet them. They had never met a chocolate maker before, let alone one who came back to thank them. Second, they appreciated that I brought back chocolate made from their beans. They had never tasted chocolate from their own beans before. Finally, they were appreciative of the money. Even though I had told them beforehand, I think they were surprised that I followed through with it.
TRE: How does being a “socially responsible” business affect your bottom line?
SA: I think that’s a good question. We’re a socially responsible business because it’s part of who we are. I don’t really look at it from a financial standpoint. I’ve never analyzed whether or not it impacts our bottom line. This is how I run my business because I don’t know another way to do it.
This is the fourth and final part of a series with the lawyer-turned-chocolatier from Springfield, MO.
Shawn Askinosie is a great guy. You can tell from talking to him that he genuinely cares about the farmers, his employees, and his customers.
I wonder how a company like Starbucks could incorporate this kind of idea in place of their “fair trade” stuff. It seems like a company that large could influence a lot of other companies to join them in making a bigger difference than by Fair Trade alone.
Shawn has created an extraordinary business; from profit-sharing with those who deserve it, to an excellent product, to a socially aware and sustainable operation, he is to be commended for his efforts.
I like how he didn’t bash fair trade, but merely explained how it’s the tip of the iceberg in doing good. I hope more entrepreneurs catch on to his ideas.
And, as a sidenote to what trehugger said:
Starbucks, in my opinion on this topic, actually does a pretty good job. Yes, they mark some of their coffees fair trade, but like Shawn, they work directly with their farmers, not with a middle agency.
i thought fair trade isn’t.
Loki, you thought fair trade isn’t what?
I like his improvement to the idea of sharing the profits with farmers. This seems like a decent fair trade upgrade.
Great post. There are a lot of really great ideas here that really underscore the importance of an emphasis on relationships even in the marketplace.
At the same time, businesses are businesses; they aren’t charities, and they operate on market norms. I’m not insinuating that the business’s underlying motivation is selfish (nor do I believe it is entirely altruistic), but there must be some motivating effect, if even speculative and immeasurable, that tends to that which is every company’s ultimate purpose: profit.
As a sidebar, I love Askinosie Chocolate.
(Did you catch the pun?)
While the issue may be unresolved, fair trade seems to be the first step on a ladder towards building socially conscious businesses. Furthermore, its use as a label has shed public light on an issue that few people were aware of or even cared about. Labels generate attention, but the problem lies in that rarely sustain interest or provoke deeper thought. Fair trade sometimes seems to work as little more than a stamp for businesses that wish to be branded as socially conscious (and gain a big profit doing so). That is why fair trade is good, but just “not good enough”. It is good to know that there are individuals like Askinosie who are going above and beyond. It definitely makes me want to dig deeper to find the truth about things.
Interesting blog - it raises many pertinent issues that (sadly) get far too little coverage currently.
A couple of points:
I thought “Stake in the Outcome” was something that Jack Stack was responsible for introducing - is SA’s model based on Jack’s or something different?
The content of the blog as it related to Fair Trade focused pretty much exclusively on price. To me, and most of the business partners that I deal with, Fair Trade is much much more than just the price paid for whatever the product is. It’s about how we trade with people, what conditions we expect them to work in, how we work together to protect our environment, and how we treat our customers.
The Fair Trade movement has evolved rapidly over the past few years. Without doubt, the label “Fair Trade” will be used and abused, especially as large corporations see value from exploiting the ‘brand’ - but most people involved in Fair Trade are committed, passionate and driven to continue helping communities around the world to help themselves upwards and onwards.