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Helping poor communities help themselves

Sensemaking / Helping poor communities help themselves

Simon Birch reports on how co-ops are changing some of the world’s poorest nations through fair trade and access to interest-free loans, working with entrepreneurial women.

27 Feb 2012

Simon Birch reports on how co-ops are changing some of the world’s poorest nations through fair trade and access to interest-free loans, working with entrepreneurial women.

Harvest is the busiest time of year for the cocoa farmers of Ghana. They live and work amongst the tropical rainforests where their cocoa trees grow. It’s a good business to be in, but one where fluctuating prices and other uncertainties can make life difficult. For one group of growers, coming together with fellow farmers and selling their cocoa on fair terms has made a huge difference.

Farmer Comfort Kwaasibea takes a break from her work collecting large, bright yellow cocoa pods, to enthuse about the changes a Fairtrade contract and membership of a co-operative have brought. “Fairtrade is a good thing”, she says. “We have made a lot of progress, and in our village we now have good drinking water, toilet facilities and schools.”

Crucial to this progress has been the work of Kuapa Kokoo, a co-operative of nearly 50,000 cocoa farmers. “Kuapa ensures that women have a voice and that we are heard”, says Comfort, a widow in her fifties with two daughters. “We would like to sell more cocoa to Fairtrade, so more farmers can taste a better life.”

Some of Kuapa’s cocoa goes into The Co-operative ’s own-brand chocolate thanks to a partnership with Divine Chocolate, the UK-based company in which Kuapa farmers have a 45% share. Since 2002, all The Co-operative’s own-brand chocolate bar range has been Fairtrade-certified – making it the first, and to date the only, supermarket to achieve this. Some of this is supplied by Kuapa, with the rest sourced from smallholder cocoa farmers (also organised into co-operatives) in the Dominican Republic and Peru.

Now, The Co-operative is taking an even more active role. It is helping develop co-operatives that in turn can become its own Fairtrade suppliers. In Kenya, for example, it has invested £125,000 in the Kibagenge Project, match-funded by the UK Department for International Development. The goal is to organise 11,000 small-scale tea farmers into co-ops and become Fairtrade-certified, so that they can supply tea for The Co-operative’s ‘99’ label. 

In Panama, meanwhile, The Co-operative helped long-established banana co-op COOBANA makeTruck with bananas on the transition to Fairtrade, and paid a voluntary premium for its produce before Fairtrade certification was even completed. COOBANA members voted to use the additional revenue to build a dining hall and community centre. The Co-operative has also invested a further £260,000, above and beyond the Fairtrade premium, in a three-year project to improve access to clean water, sanitation, and low-cost fuel-efficient cooking stoves, and to provide technical training for the members and their families. The hope is that COOBANA will be transformed from a marginalised, dependent banana producer into a successful international business.

The Co-operative was the first supermarket to champion fair trade back in 1992, pioneering the sale of fairly traded products such as Cafédirect coffee before the Fairtrade mark was even introduced. Today, Fairtrade products are sold in every one of its 2,900 stores across the UK, with almost 250 different lines on the shelves, from coffee to cotton bags, bananas to beansprouts. “We sell more Fairtrade products for the size of our business than any other supermarket”, says Brad Hill, Fairtrade Strategic Development Manager. In doing so, The Co-operative helps support over 200,000 farmers and growers and their families. And there’s evidence that shoppers increasingly understand the essence of Fairtrade: that producers get a fairer price for their goods.

Its success at bringing Fairtrade into the mainstream means that other supermarkets are now following, says Hill, so now The Co-operative has set the bar higher. “If a primary commodity from the developing world can be Fairtrade-labelled,” he says, “then it will be.” The process won’t happen overnight, but Hill hopes to be “90% there” by the end of 2013.

Fairtrade isn’t the only way of helping people to trade their way out of poverty in the global South, of course. The Co-operative Bank supports small businesses in some of the world’s poorest countries, and it launched a £25 million microfinance fund in 2007 to provide loans to individual entrepreneurs who face difficulties in securing credit.

Sometimes, however, larger co-operatives in developing countries also struggle to raise capital, in spite of a good track record in creating and sustaining jobs. There is no single reason for this, but it is typically because traditional lenders either don’t understand the business model, or because the co-op itself is unable to provide security.

This could soon change. The United Nations has officially recognised the contribution co-ops make to poverty reduction, employment creation and social integration, by declaring 2012 the UN International Year of Co-operatives. This year will also see the launch of the Global Development Co-operative (GDC), which has the ambitious target of raising $50 million – mainly from the co-op movement – to provide low-cost loans to established and growing co-ops in the developing world which are struggling to fund capital projects. These might include such essentials as vehicles to get produce to market, fridges for dairy co-ops and milling plants for coffee growers. The GDC is supported by The Co-operative, working alongside the International Co-operative Alliance. All being well, it will leave a legacy beyond 2012, helping extend the reach and benefits of the co-operative business model across the developing world.

Lending doesn’t always have to be on a large scale to be effective. New techniques such as crowdfunding can play a vital role in lifting people out of poverty. Take, an initiative launched by CARE International in partnership with The Co-operative. This allows people in the UK to loan small amounts, from £15 upwards, directly to small-scale entrepreneurs in the developing world. Lenders pick ‘their’ entrepreneur from website profiles, and can track the business’s progress through updates. Around three-quarters of the loan recipients are women – a deliberate bias, reflecting studies which show that women spend a greater percentage of their income on the welfare of their households than men, and so are better placed to be effective ‘change agents’.

Among them is Chham, an ice cream maker who lives in Sdey Village in Cambodia. Chham makes the product every morning, then looks after her children and two cows while her husband sells it. Like many of the entrepreneurs supported through, Chham’s business is innovative: she makes the ice cream without using any electricity. She does so by buying a big block of ice, using salt and rice to stop it melting in the heat of the day. She puts the ice cream mix on the ice, covers it, and stirs it every few minutes till it turns into ice cream. Chham used her loan to buy a motorbike, which means her husband can sell ice cream to customers further afield. As a result, she hopes to make more profit so she can afford to fund her children through school.

Although individual lenders won’t receive any interest on their loan, many say that their ‘social return’ – the sense of helping lift people out of poverty – is ample recompense. While in theory the borrowers might default, to date every single loan made under the scheme has been repaid.

Among the first staff from The Co-operative Food to sign up to were 21-year-old twins Amy and Lucy Smith, who work part time at the food store in the Hampshire town of Yateley. “When we went online we were amazed to see farmers, shopkeepers and tailors all wanting to transform their lives through running a business, instead of just wanting hand outs”, says Amy. Her sister added: “There were so many worthy entrepreneurs, but we eventually chose Esmeralda, who wanted to open a general store in the village of Capitan Claudio on the island of Cebu, a very rural part of the Philippines. Working [in the shop] as we do, this really connected with us. It’s really important to provide for the local community – that’s what we do in Yateley, and that’s what Esmeralda wants to do in her own community too.”  

Small is vital

There are around 500 million smallholder farmers around the world, many of whom are struggling in the face of climate change and economic uncertainty. Yet between them they feed one third of the world’s population
– a remarkable achievement that goes largely unrecognised on the international stage. With the global population set to reach nine billion by 2050, increasing the productivity of small farms could play a vital role in alleviating hunger and poverty, and in meeting future global food demands. One of the best ways of doing so is to help smallholders organise themselves into co-operatives, so they can share equipment and expertise. So, The Co-operative has launched its latest campaign, Grow Co-operatives, in partnership with Oxfam. It will use global events suchas the Rio+20 Earth Summit to push for recognition of the value of cooperatives in delivering improvements for smallholders.

Photo: Kuapa Kokoo - Ghana case study; CARE/Emilie Bailey

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