01/23/2017

Conscientious Choices: How fair trade benefits businesses, producers, and consumers

Fair Trade CEO Paul Rice offered a visionary’s view of the emergence and future of the fair trade movement at the College of Business Predictions event in San Francisco.

by Amy DerBedrosian


Conscientious Choices: How fair trade benefits businesses, producers, and consumersinline-block
 

What’s in your coffee cup? Paul Rice sees far more than a brown liquid in his.

The president, CEO, and founder of Fair Trade USA knows that the farmer providing the beans received a fair price. He’s confident those beans were grown without child labor or environmental harms. He’s certain the contents of his cup meet the rigorous standards of fair trade certification.

Rice also understands that his beverage produces positive outcomes for farmers, businesses, and consumers alike. Introduced by Fair Trade USA board member Larry Ruff, MBA ’82, as the featured speaker at the sold-out San Francisco Predictions event presented by the Cornell College of Business and Johnson Club of the Bay Area on Jan. 17, Rice noted, “Some people call it impact sourcing. For us as consumers, fair trade is a way to buy based on our values. For the business community, it’s a shared value — for farmers to get a fair price, and to generate value for the firm by mitigating reputational risk or ensuring supply chain security and resilience.”

Rice knew none of this when he went to Nicaragua after graduating from the University of California, Berkeley in 1983. But he was disillusioned by the reliance on foreign aid and philanthropy to lift the global poor out of poverty. Rice explained, “We created dependency on aid rather than increasing the capacity of farmers to fix their own problems.”

Then he heard about Europeans who called themselves fair traders and had a simple slogan: "Trade, not aid." Rice recalled, “I thought it was a cool idea and rode out to the countryside on my motorcycle to recruit farmers.”

His efforts helped them receive one dollar per pound of coffee instead of just 10 cents. For farm families, the increased income was transformational. With coffee retailing at $8 per pound, buyers still made a profit.

“None of this happened thanks to anyone’s charity. It opened opportunities for entrepreneurship and hard work to be rewarded fairly,” said Rice, who returned to the United States in 1994 for an MBA at Yale University and then launched Fair Trade USA in 1998.

Fair Trade USA has since partnered with 1,200 brands and retailers, including PepsiCo, Whole Foods, Patagonia, West Elm, and Walmart. Rice commented, “The mainstreaming of fair trade feels like progress, but we also have a long way to go.”

So far, his organization has spent $100 million and generated $450 million in wealth — a significant social return on investment. In keeping with the theme of the event, Rice predicted fair trade is on the threshold of even greater growth and impact.

“It feels like a macro trend, not a fad. We’re asking more questions about our products and having more expectations. I call that the rise of conscious consumers,” he stated. “How does the business community take advantage of macro trends and enable them? I believe sustainability can drive profitability.”

Rice expresses optimism even as some in the public and politics question the wisdom of globalization. He said, “Fair trade is relevant across all industries, countries, and products. I like to think it appeals to all ideologies. Fair trade is for all Americans. It’s for the whole world.”


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