Equal Exchange’s Radical Model: Building Democratic Trade Networks in Contrast to Conventional Supply Chains
A letter from Equal Exchange President Rink Dickinson
In the early years it was very clear that Equal Exchange was radically different and breaking many of the “rules” of the market. During this time fair trade or alternative trade was barely known so by definition, it was different because there were no alternatives.
Today, Equal Exchange is 150 times larger than we were after year three. What we are doing is living our original wild-eyed dreams at a significant national and international scale. And we are every bit as radically different. We break the rules of the market with every purchase we make from our small farmer partners in tea, cocoa, bananas, and coffee.
Our challenge now is to communicate the impact of our alternative model. Today, hundreds of companies use the fair trade name or seal, which may or may not involve a fair trade supply chain. Often the terms “fair trade” or “direct trade” are no more than marketing tools which don’t actually represent an alternative supply chain. Equal Exchange is too often confused in people’s minds with the sea of ethically sourced/fair trade/B Corp products and companies shouting out their commitments in the crowded market environment. But we, and the few alternative traders like us, are fundamentally different and I’ll explain how we are different below.
Supply chains are suddenly in vogue due to coronavirus. They can help us understand the real difference in what we actually do and the difference between marketing and real change. All goods that we humans consume come from supply chains; most are conventional and corporate. But if Citizen-Consumers can learn the difference between genuine alternatives and impostors we can communicate it to others which creates a better future for small farmers and artisans, for the planet, and for human rights and democracy.
The rules of conventional corporate supply chains
In broad strokes conventional supply chains seek to:
lower cost
minimize risk for buyers
increase monopolistic and oligopolistic networks for corporations, therefore, reducing competition
commodify economic relations
Under the world system, and before COVID, no one questioned how our supply chains functioned. We’d go to buy a car or a computer and assume that we’d be able to buy those things relatively easily. We'd kind of know that massive economic networks had negotiated in some way over price, attributes, availability, and quality. We’d evaluate and accept the options that we were presented with and move on.
The COVID crisis has disrupted and exposed the risks of conventional corporate supply chains.
Whether we are talking cars, phones, food, masks, or tests for coronavirus, there have been spectacular failures of our major supply chains. This is directly due to the rules of a system that aims to lower cost, minimize risk, monopolize networks, and prioritize commodity economic relations. Low-cost global supply chains seemed to work until they failed spectacularly. And once they started to fail they fell into a cycle of failure. The best way to understand this is to grapple with the reality of how a few companies actually control huge sections of the market. These corporations bought out all their competitors, and then increasingly ran a monopolistic system.
As we are seeing in live time, this global commodity chain system when broken is hard to repair. Largeness, slowness, bureaucracy, greed, incompetence, and market gyrations, have become the defining characteristics of the prevailing supply chain. It is important to remember that the reason for the creation of these global supply chains was not to lower prices for consumers, improve the lives of workers, or increase sustainability despite the use of that language. These chains were primarily built to benefit investors. And although the investors include many citizens, the controlling group of investors is the ultrawealthy.
Alternative trade supply chains: A democratic alternative
The good news is Equal Exchange and other Alternative Trade Organizations (ATO’s) offer radically different versions of supply chains. When we as consumers buy from a local farm we are not lowering costs or supporting large monopolies. We are integrating human relationships and community networks and food systems into our daily economics. We do this because it feels right, tastes good, develops us, supports our neighbors, and helps to create a better world. Equal Exchange’s democratic model holds many of the same values that inspire us as consumers to support our local farmers.
The Equal Exchange model versus the corporate status quo
Let’s compare our model to the four defining characteristics of the commodity status quo.
Lower costs versus committing to paying more
At its core, Equal Exchange is about paying above-market prices directly to small farmers. So we are in complete violation of one of the fundamental rules of the market. We do not pay more for everything we buy – transportation services, storage space, packaging materials – but on the key items produced by farmers, we are always breaking the ‘lower cost’ rule.
It is hard to convey our difference when there is so much marketing noise with even the most conventional companies seeking to assure consumers of their good deeds. And because we are now at a scale at which we compete and operate effectively, it is hard to fully understand how important and different our work is. But on coffee, cocoa, tea, bananas, nuts, and everything else, Equal Exchange offers upfront money in the form of pre-harvest financing, pays much higher prices, and fosters long-term reliable trading partnerships with small farmers and their organizations. This is all invaluable to small farmers and their co-ops. Yet despite all of this farmers still need and deserve even more. The conventional commodity chains are harsh and downright cruel and while our model is better, it is still insufficient.
Minimize risk versus taking risks together
Paying above market price is already a risk for Equal Exchange. And putting cash upfront is another risk. But the highest risk we take is working with new and emerging groups and helping them learn how to collect, process, and export products for the first several years. This is the most pioneering work that ATO’s like Equal Exchange, MarketPlace: Handwork of India, Ten Thousand Villages, and SERRV have done for many decades. There are other examples of building better supply chains such as when food co-ops buy produce from local farmers almost always before other buyers will take on the risk of purchasing from small local farms.
It is very hard to start up a small business and even harder to start a community enterprise. There are dozens of ways to fail and few paths to success. But mission-driven ATO’s, food co-ops, community development corporations (CDC’s) do some of this vital work and show that another way is possible.
Informed Citizen-Consumers need to keep understanding the high risk that Equal Exchange takes on to support and realize our mission and help us convey that difference to the wider world.
Increase monopolistic and oligopolistic control versus building decentralized democratic trade networks between farmers and consumers
When we as consumers buy from Starbucks, Peet’s, Dunkin Donuts, or other commodified brands, we don’t hear that we are supporting massive-scale corporate networks. These brands don’t announce when they buy subsidiaries or are acquired by various investment firms that are completely detached from food production and are simply looking to build a favorable investment portfolio. Similarly, their supply chains become more corporate as their brands keep changing hands while the strength of their brand masks their degrading standards of trade.
In contrast, Equal Exchange’s model is very different. We are much smaller than the multinational brands mentioned above, yet large enough to exist in the global economy. On the market side, our network of ATO’s includes worker-owners of various affiliated trade organizations focusing on different products and markets. Beyond Equal Exchange US, we have an ecosystem of allied alternative traders including Oke USA which focuses on fresh produce, namely bananas and avocados. The worker-owners at La Siembra in Canada sell chocolate and other products under the Camino brand. And worker-owners in the UK sell coffee, chocolate, and other products under the brand Equal Exchange UK. All of these organizations share the same values and commitment to breaking the rules of the market and facilitating alternative trade supply chains for small farmers. On the producer side, Equal Exchange and our alternative trade ecosystem engage in long-term trade relationships with dozens of democratically organized small farmer cooperatives in South and Central America, Africa, and Asia.
But the market environment is getting harder. Global corporations try to simultaneously pay their investors more and grow, which usually happens through mergers and acquisitions. The brutality of these shell games is often masked by a veneer of ethical or sustainable initiatives with an outsized emphasis and a much more modest impact. The global network is growing faster than ever but the growth is being accumulated by just a few big players.
Equal Exchange tries to simultaneously pay farmers more and grow in this increasingly monopolized market. For us, growth has been happening more so through cooperative integration and mergers, motivated by solidarity in the increasingly difficult market environment.
You, as Citizen-Consumers of Equal Exchange, are all part of this environment. We need strong Citizen-Consumers to use their purchasing dollars to support our alternative trade model and to help us build and strengthen our network through participation, learning, and consumer-to-consumer organizing so that we can continue to develop and propagate our model.
Commodify economic relations versus building human-centered systems and economic relationships
Our model is built on a network of human economic relationships. Our farmer partners are hard at work growing and processing coffee, cocoa, bananas, and other crops. At Equal Exchange, there are over a hundred of us roasting and packing coffee, taking orders, designing product packaging, creating resources and communicating with customers, loading and unloading vehicles, and delivering to stores – ultimately completing the chain and bringing small farmer products to Citizen-Consumers. The labor can be overwhelming but underneath it, there is a human network based on respect, democracy, engagement, and shared learning.
Our supply chain goes from the farm to the end consumer, building networks and demonstrating what a better future can be. Equal Exchange needs to keep articulating how different the rules we operate by really are. Equal Exchange Citizen-Consumers need to engage in our model and build conscious lines of cooperation with those organizations that are aligned with the same principles.
To build a better food system that respects farmers and meets the expectations of caring consumers, we need to go deeper. We will not find like-minded organizations by their corporate claims and marketing. We need to look underneath the hood and in most cases, there will be little there. The true allies will most likely pass two tests: an openness to alternative and shared economic structures and a genuine lived culture of solidarity and democracy.
Get involved in our network and invite others to do the same so that we can build a better food system and a better trade economy.
Thank you for your contributions,
Rink Dickinson