Alternative Business Models Building Fair and Equitable Partnerships
Part 2 in the Just Food System Series by Dana Geffner
In part 1 of this series, I discussed conventional vs. regenerative business structures as part of Pathways to Creating a Just Food System. In part 2, I dive into a few examples of alternative business models that are building fair and equitable partnerships with organizing efforts around the world. By understanding governance structures that officially center people, supporting these efforts, and replicating them, we can visualize a path to creating a food system that works for us all.
Centering people over profits: people as owners
Equal Exchange is a worker-owned cooperative with democratic principles. The founders envisioned a different way of doing business, one where trade values each part of the supply chain. In 1986, they found a loophole in the Reagan administration’s embargo of Nicaraguan coffee through a Dutch solidarity organization. Their goal was to partner with Sandinista-organized small-scale coffee farmers to sell bagged coffee to U.S. consumers as an act of solidarity with Nicaraguan coffee farmers and to support a grassroots movement challenging U.S. trade policy and to prove that business could be done by centering all people within the supply chain over the centering of just profits. They believe that by organizing a more democratic food system that puts power in the hands of small-scale farming communities, alternative traders, and Citizen Consumers, a more secure future can be created for us all.
Nearly 40 years later, Equal Exchange is thriving, with sales reaching over $70 million annually with 100 worker-owners. They are 150 times larger than they were after year three. Each worker-owner invests an equal share in the business and receives one vote, and all financials are completely transparent to all worker-owners. They have a top-to-bottom pay ratio that hovers around 4:1, and profits are distributed equally among them at the end of each year. They have written into their policy that 10% of pre-tax profits are donated to NGOs working within the space to transform food systems. Their unique vision of how to secure funding works with “mission lenders” such as religious organizations with a social justice stance, social finance groups, and individual stockholders that receive Class B preferred shares in the cooperative. This allows them not to lose sight of their mission “to build long-term trade partnerships that are economically just and environmentally sound, to foster mutually beneficial relationships between farmers and consumers and to demonstrate, through our success, the contribution of worker co-operatives and Fair Trade to a more equitable, democratic and sustainable world.”
Rob Everts, former co-president, states, “We have always believed that while investors deserve a seat at the proverbial table, it will never be THE seat in order for workers-owners to maintain control of the co-op. Equal Exchange and traditional Venture Capitalism are like oil and water. We would never cede the control they often demand, including sales & net income goals, board seats, and executive roles.” For their lines of credit, they only work with community-based banking institutions.
Equal Exchange has also created a Citizen-Consumer initiative to go above and beyond just marketing products. The initiative is to help consumers become more active in how food intersects with politics, agriculture and trade, climate justice, and economic, social, and human rights. With over 3000 members, they are able to have more in-depth, meaningful, and intentional discussions around our food systems, how corporate consolidation has created a bigger race to the bottom for us all, and share ways each of us can be part of the solutions.
Their governance structure is made up of 6 worker-owners elected by the board, up to two more chosen by the board, which can be either worker-owners or outsiders and up to 3 Citizen-Consumer members. Their bylaws include a clause that states “Never Sell Out,” ensuring that in the event of a sale, all net proceeds would be donated to another alternative trade organization.
As you can see, Equal Exchange has been extremely intentional from the beginning and continues to move in the business world this way, alternative to the core. I applaud them for working within a capitalist system that has everything stacked against them; they refuse to give up organizing for a better world, and I will continue to be an advocate for transforming our food systems because they continue to inspire me.
All stakeholders hold the key: 50 years running
El Puente is a German-based organization founded in the 1970s by students committed to building bridges around the globe. This group of students wanted to connect continents, countries, and, most importantly, people to end injustices. Starting with a nonprofit association in 1972, they imported their first products from Paraguay to raise awareness about the exploitation of people in majority countries. As their popularity grew, they envisioned a business structure that made all the stakeholders shareholders. So, in 1977, they created a multi-stakeholder business structure. The full supply chain would become owners of this newly founded for-profit organization: the producers (artisan and farmer organizations in the global majority), employees, customers through the German Worldshops, and the original founders. Each stakeholder group would own 20% of the business and hold two seats on the board—one female/one male. This allows them to make decisions very differently from traditional corporate boards that generally consist of investors whose main focus is maximizing profits by any means necessary. Their salary pay ratio hovers below 3:1.
Over 50 years later, El Puente is going strong, with 8 million euros in sales annually, 50 employees in Germany, and 100 producer organizations made up of anywhere from 10 people to 80,000. They sell a wide variety of products: handicrafts, soda, tea, orange juice, wine, rum, rice, quinoa, chocolate, dates, other sweets, and coffee, with ⅔ of their sales in food and coffee. Profits are reinvested into the company. Each year, a percent of profits are donated to the nonprofit specifically dedicated to a fund for producers to access as needed. Everyone decides on spending for a wide variety of things, from attending international conferences to contending with climate change catastrophes on the farm. All of this is written into their bylaws. All shareholders vote on any changes to bylaws.
I spoke with the executive director, Jette Ladiges, and asked her what she was most hopeful about. She said, “I see El Puente as the blueprint for showing how to do business differently and how to structure business differently, but at the time still be economically viable. We started working to create a project where we support start ups to go in this direction so they do not just think about where they can get their investments. I’ve seen it so many times where really good businesses are being sold, or got a big investor coming in—it can destroy everything if their mission is not written into their structures and policies,” and she goes on to say, “I am a firm believer that a company’s design shapes its priorities, where it invests and channels its profits, the way it engages with its environment and the way it is making decisions—and of course it is of absolute paramount importance who has power and a say in making these decisions. It should always be the stakeholders, not the shareholders.”
Family-run businesses with social justice in their bylaws
Dr. Bronner’s is a 75-year-old family-owned business with a rich history of social justice from its inception as a 1960s counterculture brand. While the brand is synonymous with soap, they also make food-grade coconut oil and chocolate bars. Becoming a Benefit Corporation, a new corporate structure available in the United States that creates a legal tool around missions and values, was important to the family. This allowed them to enshrine into the Dr. Bronner’s business structure their commitments to organic production, fair trade relationships with small-scale farmers, generous compensation packages for employees, and a high-dollar financial commitment based on pre-tax profits to contribute to charitable and activist causes. In 2023, they donated over $5 million plus countless human resource hours to working on policy for safe and transparent cosmetic labeling, climate action, drug policy reform, and animal advocacy.
They use nearly 40% of their revenue on their relationships with producers for their high-quality organic and fair trade ingredients, share 25% of their revenue with employees, have a starting wage of $25.93 for permanent employees, offer the best employer-paid health insurance and provide a 10% annual bonus to their employees. Their executives are committed to not making more than five times that of the lowest paid fully vested position with their 5:1 salary cap. All of this results in an extremely low employee turnover rate.
Further, they are committed to working with small-scale regenerative organic farmers around the world and have invested millions in their farming communities, building factories to bring high-paying and healthy jobs to majority countries that have little infrastructure and opportunities. At their sister organization Serendipalm in Ghana, they produce the only truly sustainable and ethically produced organic palm oil. In the palm oil factories, 40% of the workforce is unionized. I have traveled to Ghana several times to visit their palm farmer partners, sat in meetings with them to discuss income, and witnessed the women working in the factory celebrating the end of the workday by singing. I have also seen dirty palm facilities in the countryside and mono-crop palm tree farms that go as far as the eye can see and beyond. Visiting these exploitative farms and production facilities, it is clear that Serendipalm is doing things vastly differently by prioritizing people and the planet.
Dr. Bronner’s operational team works directly with their farmer partners, sharing techniques and learnings to help sequester carbon so their farmer partners can be more resilient and contend with our climate emergency. It is clear that Dr. Bronner’s does not cut costs by buying cheap ingredients or pocket excessive profits by exploiting their farmers and workers, and the commitments are solidified in their official business structure.
Obviously, these are just a few examples of businesses structured differently that put their workers, partners, and the health of our planet first. There are many around the world that we can support, and I encourage us all to consider how our favorite brands operate or how we would like to start our own businesses with the lens of building communities to participate in transforming food systems for the better.
Part 3 of this series will highlight alternatives to our conventional grocery stores that keep money in the pockets of communities and farmers rather than lining the pockets of the wealthiest men in the world.
For over two decades, Dana Geffner has worked to raise awareness of a just food system that works in solidarity with small-scale farmers and artisans, protects worker’s rights and encourages trade policy transformation that benefits people and the planet. She is co-founder of Fair World Project (FWP), an NGO based in the United States that advocates fair trade for organized small-scale farmers and labor justice for workers globally. She was the host of For A Better World, a podcast about fair trade and the farmer and worker-led movements that are fighting for equitable food and farming systems, and editor of the magazine with the same name for over 10 years. She helped to develop the Regenerative Organic Certification to help strengthen the social fairness pillar of the standard and served on the board of directors for 6 years of the Regenerative Organic Alliance. She is a co-founder and current board member of Grow Ahead, a crowdfunding platform that raises funds for farmer-led agroforestry projects to address the challenges of climate change in global south communities. She holds a Master’s in Public Affairs from the University of California, Berkeley, and a Master’s Certification in Food Systems from the Berkeley Food Institute. She is now working on a book that will be published by Chelsea Green at the end of 2024 that shares tools for creating more justice in food supply chains to create a more hopeful future for us all. Her goal is to stop corporate extractive growth that is driving inequality and to participate in building a just economy for everyone.