UNDP brings 'fair trade' to Turkey
The French man was looking for a quality food product with a good story behind it… The Turkish villagers were looking for a good buyer who would pay a fair price for their product, and they had lots of stories… This combination started a ‘fair trade' between Paris and Suvarlı, a small town of about 5,000 inhabitants in Southeastern Turkey .
New Horizons - Nicholas Mounard is the representative of a French company called “Alter-Eco” , which is a prominent actor in the ‘fair trade' system. Nicolas hiked in the mountainous countryside between Adıyaman and Gaziantep in the beginning of June to see whether they could take small Turkish producers on board as well. And indeed intensive negotiations and a bit of convincing power led to a three-year agreement between the small farmers of Suvarli and Alter-Eco Commerce Equitable . According to the contract, Suvarlı villagers will produce good quality Besni grapes, preferably organic, and the French company will initially buy 4 tonnes of it after the harvest, for a price which is well over what the villagers were paid by other tradesmen before. So why does Alter-Eco do this? “After all, we are also tradesmen”, said Nicolas; “but our company is doing it for ‘fair trade'.” So we asked Nicholas Mounard, Producer Support Manager of Alter -Eco Company , what ‘Fair Trade' was…
Nicholas Mounard: Fair Trade is based on different commitments. First of all, we pay a fair price. Fair price is a price that covers the cost of production. Then, it's a direct link. We work directly with the producer. Generally we speak with a producer organization. And we work in a transparent way. That means, we ask them to give all the information about cost structure, about accounting, everything... And for our part, we tell everything about our margin, about the way we deal with the product, who are our customers... A last criteria would be to work with sustainable agriculture, it means environmental-friendly production. It can be organic or non-organic, but it has to be sustainable and it has to respect the land.
New Horizons: So who are you, then? Will you please tell us about your company?
NM: I'm working for Alter-Eco. It's a French-based company but we also have a subsidiary in the U.S. The company was created in 1998, under an association. It was created by my boss, Tristan Lecomte. He opened two shops in Paris, selling food and handicrafts. But under this business model it didn't really work, because we couldn't make big volumes. Our volumes are quite an important thing for us because we pay more, so with big volumes you can crash the fixed cost. Through the shops, it wasn't efficient enough, so we closed the shop in 2000 and re-opened a company, called Alter-Eco, with a new business model, mainly oriented towards supermarkets. We are importing products from 37 co-operatives in 30 countries and we are selling under our own brand.
NH: Which countries, for example?
NM: Around 50% of our turnover is coming from South America: Brazil, Peru, Bolivia, Ecuador. Between 35-40% -these are products like tea, rice, spices and sugar- from Asian countries such as Phillippines, Thailand, India and Sri Lanka. We also get olive oil from Palestine. And 15% from Africa: like Togo, Ethiopia, Ghana and South Africa. For example, Ethiopia is making coffee. South Africa is making red tea. Ghana is making cocoa and chocolate. Togo is making dry fruits.
NH: How did ‘Fair Trade' start?
NM: Fair Trade appeared in the 1950s and the 60s. At the beginning it was mainly a religious movement. It was linked with the protestant church and the catholic church. During the 70s and the 80s, it became more political, with organizations such as Oxfam in Europe. They were making fair trade and also lobbying for better trading conditions against the World Trade Organization, or lobbying for the cancellation of the debts of poor countries. In 1990s appeared some new actors that were more oriented towards touching the everyday people, excluding any political opinion, just making fair trade and trying to develop trade volumes. To develop the volumes you have to go where people are going, so these actors made the choice to enter the supermarkets. That's what we did.
NH: How many companies are there, such as yours?
NM: I can't give you an exact number, but you can find two or three main companies in every developed country. It's mainly developed in Switzerland, Germany, U.K. and Italy. It's still very young in the U.S. and in Japan.
NH: How do you find your producers? Or do they find you?
NM: Both actually. Most of the products we are buying are certified by an association called “Fair Trade Labelling Organization" (FLO). They are based in Germany, in Bonn. They are certifying producer organizations under certain criteria which are social, economic and environmental. So FLO is a good basis for us because they give us the data base for all the producer organizations that they certify.
NH: Is it like a voluntary organization or do you pay for it?
NM: No, the system is organized like this: in every country you have what they call national initiatives. These organizations were born to promote ‘fair trade'. And then in the 90s, they decided that they should merge and have a common system for creating a common association called the FLO. FLO is owned by all national initiatives. So for every product, like for chocolate, for sugar, grapefruit, tea, coffee, etc., they will set the rules for buying fair trade products, saying “you should pay this price, you should be careful about this criteria" etc. So FLO is making the rules and making the certification under the criteria. FLO is a private company, they are making the certification and they go to every single organization to certify them.
NH: But Turkey is not included in this organization?
NM: No, there does not seem to be any Turkish organizations. That's why FLO is not our only source of information. Sometimes, for different reasons, we go outside because there is no standard for such and such a product. There's no rule, like for olive oil for example, importing olive oil from Palestine and from Morocco. But there is no rule for olive oil. FLO is not saying “you should pay that price for olive oil", so we cannot have any certified organization. If we want to make a fair trade (olive oil in this example), we have to identify the group, we have to identify what is a “fair trade price", we have to do all that job by ourself. So in that case, we really use our network, which is a network of producer organizations, NGOs, even Oxfam or the other fair traders, and they can tell us “OK, you should maybe go and see that organization that might do the products you need." We also receive a lot of offers from organizations writing to us or calling, saying “I have a very good product, you might be interested in buying this product." They usually send us samples of their product; we test it, and if we like it, and if there's a market opportunity, we go there to see what we can do.
NH: Is there a limit to the variety of the products? For example, if an oil producer in Turkey approaches you, what happens if you already have a few variety of (olive oil) offers?
NM: Well, you can work on a few different criteria. First of all, you either make the choice to work with more organizations, or you want to make the choice to strengthen the relationship with the organization you are already working with. So you are both driven by market demand, what market wants, and by your choice in the face of the organization you're working with. Let's take an example, olive oil organization in Turkey... We just have to see what the market is: do we need more volumes than we are doing right now, and if yes, what should we do? Should we just strengthen the organization we are working with, or should we work with another one? Usually we make the choice to have more impact of the producer we are working with, just because this producer, they usually don't sell all their product to us, they are just selling 10% of their volumes on the fair trade market and the rest on the conventional market. So usually the objective is to make fair trade proportion grow, just to have more impact on them...We judge on this, on distributing... And we always start with small amounts. Because when you launch your products, you don't know how it will work, so you begin with a few volumes, then you see how the consumers are reacting and if the sales are growing, you will buy more volumes.
“In fair trade, you have to be committed to a long term relationship with an organization.”
NH: Is this the way you usually work? Are there contracts you finish in one year-two years, or do you continue?
NM: We have never stopped working with a cooperative until now. That's also one of the criteria for fair trade that you have to be committed to a long term relationship with an organization. We always work on a three-year contract, but that's a rolling contract. It means that every year you'll tell them “OK, let's re-negotiate the contract." So they always have three years in front of them. They are able to invest in function of those volumes. So we never stop a relation. All relations we begin have a three-year future at least.
NH: Is there a special model? For example, do you work with a production company, or cooperatives? And if there are no cooperatives, how do you handle it?
NM: We have all different kinds of cases. We always need to have a collective structure, for different reasons. The first reason is that we are paying on two levels for price. The minimum price which is the price we want the producer to be paid and we add what we call the “fair trade premium" which is paid to the collective group to finance collective projects. It might be an association, a cooperative, a village committee.
The objective is to transfer most of the added value to the co-ops, to make them do the whole production. So we usually begin with a bulk import. We find a solution in France to package it, to design it. And then we transfer some of the added value progressively. On some products such as rice, spices, or tea, everything is made in the cooperatives: the raw material, the quality process, the packaging, the printing... But we always make the design. The design is made by computer in Paris. We send them the design, then they will work with a printer service provider. They print and stick it on the packages.
NH: Until you arrange this with the local people, do you do it yourselves?
NM: It's really case by case. Usually at the beginning of the relationship, we import by bulk and then progressivelly we transfer all the process. Let's take the example of the grapes here. The cooperatives we visited are not able to package for the moment. They don't have the machines for that. So we will import by bulk and we'll find a solution in France, no problem. But next year, maybe we can find a company here that will be able to do that, and we'll contract the company to make that for us. So we'll transfer a part of the added value in Turkey which is already a good thing. And then through volumes, through money invested in the cooperatives, some day they will get enough cash to invest in some packing machines, which is very simple for dried fruits. You just have vacuum machines. So you will transfer from the Turkish company to the co-op and they will do everything, and we'll send them the design, they will contact a printer in Gaziantep, they will print stickers and stick them manually on every bag, and put them in card boxes and export them to France.
“A collective structure that gathers all the products, and deals with us in trading is needed”.
NH: Are you approachable by individual producers?
NM: We always work with a collective form. For different reasons: first of all, it's too hard for us to say “OK, I'll buy 30 kg from you, 20 from you, 20 from you..." It's like impossible, for us to work with thousands and thousands of producers. We have to have a focal point which is the cooperative. So for pragmatical reasons we need to have a collective structure that gathers all the products and that would be the structure that is dealing with us in the trading relationship. And also, we always work with a collective group, with co-ops because it's important for us that the producer is not only selling the product but he's also the owner of an organization that might give him some other skills that help him manage (the group manager company), the quality process, manage the packaging. It's very important to have a quality structure, just to gather all the producers around a common project. That's also a part of the deal, so we are not reachable by one producer saying “I have one hundred kilos of this product"; that's not possible.
NH: You mentioned social projects by the cooperatives... What kind of projects are you talking about here?
NM: Social projects are financed by the premiums the cooperatives are getting. These have to be dedicated to collective projects. It's not always social projects. It's gradual. Usually at the beginning it's more about operational projects, to have more skills or about the process in the co-ops. They invest in the machines to be able to get more of the process in the co-ops. Then, when they have that, they usually invest in schools, in alphabetization programme, you can have all that kind of thing... Or you can also invest premium in environmental projects. You can use it for paying for organic certification, or for a re-plantation programme, etc. You can use it in plenty of ways. You just have to use it for common interests.
“The only thing we ask is that the premium is used for everybody.”
NH: So, that is your condition.
NM: We don't say “you have to spend the premium like that". That's the reason why we always work with collective structures and we are always paying a lot of attention to how the collective structure is working, that it works very democratically. The only thing we ask is that the premium is used for everybody. The project has to be voted by the general assembly of the cooperative, so every single producer is part of the collective structure. They gather once or twice a year in general assembly. And the president says “Okay, we should maybe spend the premium on school, or on machines, or an environmental programme." He says “I vote for this." That's the guarantee for us, if the cooperative is working democratically. That's the only condition for us.
NH: Would they want money for themselves?
NM: No. What I mean is, the only condition is to finance only collective projects. There's no point in saying “Ok, I have 1,000 Dollars; so I give $ 1 to you, $1 to you, etc..." It's not individual, it has to be something for everybody.
NH: So there has to be a project.
NM: There has to be a project. It can be inside the co-op for operational reasons (maybe they'd want to invest in something), or it can be a social or environmental project.
NH: Do you have examples of such projects?
NM: Sure. For example, rice in Thailand. They were selling their rice to a company but they could not make the packaging, so they invested in vacuum machines, to put their rice in vacuumed packages. So they could do the whole processing. They invested in 3 or 4 vacuum machines. Now, they can export by themselves the finished product.
Another example is cocoa in Ghana. They used the premium for school and for digging wells for water. Or as in the Brazil case, they used the premium for a re-forestation programme. In South Africa, they invested in a tea court, a place to make the tea dry. Before, they had to work with a private company and they were not independent.
"The project in Turkey was interesting for us, because women were involved.”
NH: Let's come to Turkey... How did you end up here today?!
NM: Good question! We wanted to import raisins. We wanted to have dried fruits in our range of products. The standards are both for each product, and also geographical. There is a standard for raisins in South Africa, but there is just one organization in S.A. and it was not very satisfying for us. We didn't want to work with them. The only solution was to find other countries. We wanted something different in terms of taste, colour and form. And UNDP Turkey Office was trying to find some outlets, some commercial opportunities from Turkish producers. The project people came to our office and said they found this product, these raisins. And it was exactly what we have been looking for. These raisins were different: bigger, different colour, with seeds, and the taste was different and very good. It was an interesting project for us, because women were involved. And we were in a part of Turkey that was different from the rest of the country. So it was perfect for us, in terms of product, in terms of taste and in terms of project. So we decided to come here to see what was the reality on the field.
NH: And what is the process after this? You'll go back to France after you make some calculations. Do you have to vote a decision? Or do you decide here and sign a contract?
NM: I'm here for knowing better the project and to meet the producers, to see with which producers we'll be working, define the work structure and the quality issues. Then I'm back to France. I will present to my team what my understanding of the project is and if they agree, we will approach... Before coming here, we had agreed on the product, we tasted it and gave a price. And we had a first understanding of the project, which was what we wanted. So I'm going back to France, and I will tell them if what we understood before was consistent with what I saw in the field. And if it's the case, then let's do it. We'll make the order and we'll sign the contract.
Shortly after this interview, Alter Eco Company did confirm its order to buy 4 tonnes of dried Besni grapes from the producers of Suvarlı village in South East Anatolia. The company is now waiting for the harvest in September 2006 to import and market the product in French supermarkets.
Meanwhile Suvarlı villagers and producers have already started on creating a cooperative structure, which is a fundamental part of the Fair Trade criteria.
Besni raisins for health:
During his stay in Suvarli, the villagers told Nicolas Mounard many stories about their Besni raisins. This one is about the healing power of the dried grapes:
A Suvarli man was taken seriously ill during a visit to Syria . He immediately went to see a doctor. The Syrian doctor examined the patient and asked him to come back the next day to get his prescription. Before going to bed that night the villager ate a handful of raisins that he brought with him on the journey. Next morning he woke up feeling on top of the world, strong as steel… The doctor couldn't believe his eyes, and asked him not to tell this to anybody; “otherwise" he said “we, doctors, would loose our job!"
Suvarli people have many such anecdotes about the healthy quality of their big, tasty raisins, containing seeds. They believe that this type of raisins, which they also call “the Prophet's raisins”, have a good effect on jaundice disease and stomach disorders, and increase red blood cells.