The main thing is sustainability [interview]

The main thing is sustainability [interview]

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Aldo Risco Mejia is responsible for agriculture investments in northern South America at our Oikocredit office in Lima. We spoke with him about his practical experience of fair trade.

How important is fair trade in your everyday work?

Aldo Risco Mejia: Around 80% of our partners, nearly all the organisations in Peru with which I work, have fair trade certifications, almost always paired with organic certifications. If partners want to be certified, we support them, but we do not ask them to do so, that’s not our job.

It’s good for us if the partners are certified with one of the fair trade labels. It makes it easier for us to assess the social impact of the work of the partner, and it simplifies the selection processes and monitoring. But it's not that easy everywhere. In Peru it’s no problem to find certified companies that export their coffee directly, and certifications can help with export.

However, the situation is different in other countries in Latin America, where it’s more difficult for us to find smaller cooperatives that are interested in organic farming and fair trade. Unlike in Peru, they export through large companies. In addition, the climate conditions are different, and the willingness not to produce conventionally is lower where the conditions are more difficult.

Sustainable, organic and fair trade – does everything belong together, or can one go without the other?

Aldo Risco Mejia: For Oikocredit, the focus is on sustainable production, careful use of soils and natural resources, good agricultural practices, and that cooperatives and the companies with which we work have responsible management practices and treat their staff and members well. Sustainable production is possible, we see that in our work. But it doesn't happen exclusively in 100% organic cultivation and on fair trade certified farms, especially since organic products are, justifiably, expensive.

Fair trade standards also cover social issues, like working conditions, payment of workers, their rights and safety.

Aldo Risco Mejia: Let me give you an example. We have a new agricultural partner in Ecuador, which has just received its first financing from us. The company produces conventionally grown bananas and cocoa on 1,000 hectares, but the entire farm is Rainforest Alliance Certified, a fair trade certification that’s common here in Latin America

It’s interesting for us that the farm has another certificate, the international Sedex Members Ethical Trade Audit (SMETA) seal, comparable to the certification of the Fairtrade Labelling Organizations International (FLO). The company needs the SMETA certification to be able to sell its bananas. SMETA focuses particularly on the health and safety of workers. Working on farms carries a relatively high risk of accidents, and the certification specifies that all work processes are set up to prevent accidents and injury.

The company also has a medical centre on the premises, which is looked after by a permanent doctor. Good medical care helps prevent illness, but the centre also ensures that action can be taken quickly in the event of an accident. Thanks to the certification workers are compensated for loss of earnings if unable to work after an accident. Such social aspects and safeguards are immensely important in our context.

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An important factor in fair trade are the guaranteed minimum prices and premiums.

Aldo Risco Mejia: That's right. And as an agricultural scientist, I look closely at this. I look at the prices for the producers and the profits from selling fair trade products to the consumers and the premiums compared to the effort done. We have seen contracts where farmers who have both fair trade and organic labels sell their coffee for US$ 1.60 per pound. At the end of the day my question is: what is the price on the market?

In Peru, for example, everyone can sell their coffee directly, which means that the cooperatives can negotiate directly with the roasters. We observe that the roasters are currently more interested in quality than in certification and are also willing to pay well for good quality. We see it as our task to support the producers and their organisations in producing good quality in a sustainable way.

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Sri B Ram Babu, CFO, Grievance redressal Officer - Maanaveeya Development & Finance Private Limited
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