Closing in on nearly 50 years of collaborative work for the common good, Jacinto has served as the coop’s manager on seven different occasions, and still works to teach and advise it younger members. He is gifted with storytelling ability, his voice carrying the gravitas of experience and age, his eyes reflecting the sparkle of youth and exuberance. Among the stories that he shared with the members of our dialogue was one about Father Hector Gallego, and the unlikely beginnings of the Esperanza Cooperative.
“One day in 1968, I was walking along and saw a stranger riding a mule. He reached out his hand to greet me: ‘I’m Santa Fe’s priest,’ he told me. ‘I don’t believe you, priests only greet rich people,’ I answered him. He said: ‘There’s always a first time…. I want to invite you to a meeting this Thursday.’ ‘I don’t have time for meetings,’ I said, lowering my head. ‘No? Those are the very people I’m looking for, people who don’t have time,’ he told me. And he left me bowled over. I went to the meeting. I saw him greeting children and that impressed me. We sat down in a circle.What I saw and heard that day, made me think differently. That day I changed forever.”
“We woke up to the injustice of the wages, the fraud that the stores pulled off with the weighing of the products and their prices. So we decided to form a cooperative. But how could we start a cooperative if we did not think we had any resources? So Fr. Hector threw out a 5 cent coin in the middle of where we were seated, and asked, ‘How many pieces of candy can we buy with that coin?’ ‘Five!’ we responded. Others present looked in their pockets for a 5 cent coin. And others as well. The priest held up 10 coins and said that we had enough for 50 pieces of candy and sent a young boy off to buy them. It was 12 noon, we were all hungry. That same boy passed out the candy to the 50 who were present. The priest asked us again, ‘what does it taste like?’ Someone shouted, ‘it tastes like heaven!’ The priest concluded, ‘that is how cooperativism is done.’ The next week a group from Pantanal bought 1 quintal of salt to sell, and in El Carmen each person began to save 10 cents a week. That is how the hope of the peasants got started, our cooperative.”
Father Hector eventually was “disappeared,” never seen again nor his body ever recovered. I found it interesting that Jacinto, in telling this story, never added the fact that the priest had been a guest at Jacinto’s home at the moment of the abduction. I suspect that omitting that detail keeps the focus on the part of the story that Jacinto wishes to emphasize: the priest was taken in the dark of night, but his lessons about humility, cooperativism and stewardship continue on as lights in each day. In Jacinto’s thinking, the story is all about the man and his message, and not the details of a midnight atrocity.
Jacinto says that his job is to keep telling the tale and teaching the cooperative youth the profound lessons of the humble priest, that cooperatives can be life-saving structures when they are founded upon and operated for the common good. Even as an elder of the cooperative, his appetite to represent the lessons of Father Hector pushed him to board a plane in Panama City, fly through the questionable skies of Hurricane Irma, visit the foreign land of the U.S. for the first time, navigate a language barrier and offer himself as a testimony to successful cooperativism.
I never met Father Hector Gallego. I never even read much about him before the last several weeks. But I feel as though I somehow know exactly what kind of a man he was….
The Fair Trade Movement (FT) emerged in the face of unfair trade mediation as an alternative so that people that organize might improve their lives, and to be a space of solidarity among different actors beyond national borders. Nevertheless, in our case study on Nicaragua and Central America we show that the institutionality of the power relationships under elite market governance has been capable of setting FT against its own principles and turning solidarity into a mere formality. How can FT resist this market force and at the same time deepen its alternative FT principles? Taken as given that there are cooperatives, organizations and people that prove the importance of organizing and cultivating global solidarity, in this article we study certain practices of this FT network that seem to point to its involution, and on that basis we suggest that FT needs to reinvent itself. To do so we focus on coffee, which constitutes 70% of what is sold as FT.
The FT movement began in 1964 within the framework of the UN Conference on Trade and Development (UNCTAD). In 1973 trade in FT coffee began with Guatemalan cooperatives under the brand of “Indio Solidarity Coffee”. In the decade of 1980s the volume of products increased, and their design improved: solidarity stores sold combinations of coffee, tea, honey, sugar, cacao, nuts, bananas, flowers and more. In 1988 the “Max Havelaar” seal began operating. In 1997 the Fair Trade Labelling Organization was created (FLO) so that producer families could confront their adversities and vulnerabilities and improve their organizational skills (MacDonald, 2007). But, according to Taylor et al (2005:204), after having an ATO (Alternative Trade Organization) governance structure with strong roots linking consumers and producers, it shifted toward an impersonal brand and the search for market niches under a conventional strategy. In 2011 FT-USA and FLO divided, the former preached “fair trade for all” increasing even more the volume of coffee traded from producers without regard to whether they were members of cooperatives or not (Valkila, 2014).
Parallel to this division, the FT seal faced even more challenges – more competition from other seals with attributes similar to FT. Many coffee buyers and roasters opt for the direct-trade approach instead of fair trade. Many cooperatives face a mixture of governance and “privatization” crises with their resulting turn toward less democratic governance structures. This is an expression of a context of the all absorbing neoliberal market, in which FT increases its volume getting into the conventional market, while it neglects a good part of its principles of transforming unjust trade relations.
This all absorbing context is shaping the actors, and at the same time is shaped by them. This directs our attention to the relationship between the structure and the actors (Long 2001). The structural perspective by itself runs the risk of determinism, while just looking at the actors and their actions runs the risk of voluntarism. Structures are expressed in rules and regularities, collective and persistant phenomena, while social actors produce and reproduce the structures, interpreting them in their actions. The structures, like conventional or FT mediation, limit and facilitate the action of the social actors without 100% determining them.
Within this structure-actors framework, we propose that FT resolve this paradox of growth with involution by going back to being “alternative” as it increases its current growth, deepens its democratic structures and improves its capacity of governing those markets. To do so, we work with a foundation of information and analysis from various sources. First, we reviewed studies on FT, analyzed secondary data and tested the process of weighing coffee from its cherry to export state, including cupping parallel to what the organizations did. Second, we talked with managers of companies, individual merchants and producers, coffee buyers and roasters from FT and direct trade, inspectors of the certifiers, cooperatives in Europe, social bank officials and directors of international aid agencies; within this framework we studied outstanding cooperatives and associative enterprises in each country in Central America (see Mendoza, 2016a, 2016b, 2016c, 2016d and 2017a). Third, since 2010 we have worked with 35 first tier cooperatives in Nicaragua (20% of the total first tier coffee) and with various organizations from other Central American countries, accompanying them in their actions and reflections, an immersion that has given us an understanding from inside the cooperatives. Finally, we organized spaces for reflection where we triangulated information and analysis with the members, staff and board members of the cooperatives.
After this introduction, we present the innovative character of FT. The second section describes the context of the neoliberal market that is absorbing what is innovative of FT. The third and fourth sections discuss the involution processes. The conclusions summarize the principal findings and suggest a path for the re-invention of FT.
1. The novelty of fair trade
From our experience, there are at least two obstacles keeping small producer families from getting out of poverty: the extended family, and their position in the network that mediates their access to markets. The institution of the extended family is a protective network that keeps their members from getting poorer and enables them to survive, but at the same time it keeps them from organizing into other spaces to improve their lives. It is an example of what Woolcock and Narayan (2000:232) have called ‘bonding social capital’: protective social and solidarity networks useful for the survival of poor people, but with the risk of limiting the creation of connections and initiatives that go beyond the close circle with limited opportunities for growth. The latter refers to the mediation network that combines usury, low prices for their products, and cheating on the weighing and the quality control of their products, mediated by relationships of subordination where “the height of poverty is not having anyone to exploit you.” Because in moments of extreme urgency (e.g. illness of some family member) that network provides a certain amount of protection. The institution of the extended family keeps its members from falling into extreme poverty, and at the same time keeps them from getting out of poverty; and the commercial-financial mediation is a mechanism for dispossession combined with palliative help.
the face of both institutions, FT responded with an alternative perspective and path. Figure 1 shows the FT framework: cooperatives, certifiers, social banks and buyers who operate under the FT seal. On the right side is the chain of actors what revolves around coffee, and on the left are the organizations that support that chain. In principle it is social justice and not the power of the market that moves these product chains, actors and social relations. Consequently, first, for the producers to avoid usury and ensure the supply of the product, they receive loans through their cooperatives on the part of social banks and coffee buyers (companies, stores and cooperatives from countries in the North); a good part of that credit is pre-financing worth 50% of the value of the product that they are going to buy at an interest rate of zero.
Box 1. Purposes of FT according to Cafedirect
We reinvest the profits of your purchases in the producers and their communities. This is in addition to the FT premium that we pay the producers. As a minimum we reinvest a third of our profits, and so far we have reinvested more than 50% of our earnings. We believe that the producers are the best ones to decide how these earnings should be invested in their communities, and so since 2009 the development projects have been managed by Cafédirect Producers’ Foundation (CPF), an aid organization led by producers for producers.
Second, to keep the producers from falling into extreme poverty because of the price paid for coffee, and to incentivize sustainable agriculture, FT sets a minimum price of $1.40/lb, provides $0.20/lb as FT-premium, $0.30/lb as organic premium and a quality bonus for an additional amount that varies by buyer. (See Figure 2 for the historic comparative evolution between market prices and FT prices).
The FT premium is tied to a plan that the cooperative establishes (Fairtrade, 2009) where $0.05/lb is for families to improve the productivity of their coffee (FT-FLO, 2011. The organic premium goes directly to the producers.
Third, in order that the product be traceable and trust be built up over long term relationships, there are organizations that certify compliance with agreements and policies; for organic coffee international certifiers do it, for the FT premium and practices FLO CERT does it; the buyers stick to what the certifiers say, and the social banks to their financial analysis procedures and commercial contracts.
Fourth, a direct relationship is established between consumers and producers where the FT earnings the producers themselves manage in their communities, families and farms (see box).
FT, in addition to its economic face, is also social, political, environmental and cultural, as its eleven principles indicate: opportunities for economically disfavored producers, transparency, trade relationships, payment of fair prices and salaries, no child exploitation, gender equity, decent working conditions, skill strengthening, promotion of fair trade, environmental protection, and the preservation and defense of identity.
Here we highlight the combination of trade, finance and production in a transnational structure of north-south counterparts, with a pluralistic framework of principles of equality and equity. This leads to the families organizing, improving their production, their lives and their identity in family and in the community, and cultivating a direct relationship with consumers. FT is a space for transnational learning and social, economic and environmental transformation, with a commitment of the countries of the north to those of the south, and of consumers to producer families.
2. All absorbing market and international aid structure
This novel FT network has become involuted. Here we describe the market and international aid conditions that – in our judgement – have slowly absorbed FT.
2.1 Tendencies in the dictatorship of the market
Stiglitz (2016) reminds us that the restructuring of market policies increased the inequality and slowed the growth of the economy. Milanovic (2016), studying 20 years under neoliberal policies between 1998 and 2008, found that 1% of the population (the plutocrats of the world) and the middle class of emerging economies of Asia were the winners. Neoliberalism presents us a “natural market” without social and institutional roots, while it promotes markets rooted in the interests of international capital with manipulated regulation. In contrast to this myth of the biased market, we understand markets along the lines of Polanyi (2001), as socially and institutionally rooted. The FT movement constituted a type of market rooted in producer families and consumers under the idea that an “alternative” market is possible and necessary to reduce the inequality. How is that market relationship expressed around coffee, the crop which we are using to look into FT?
Considering the formation of the price of coffee in the last 80 yrs, the historical tendency is that the producer families have been losing over time. In the decade of the 1930s, the price to the producer was 33% of the final value of the roasted and ground coffee (Wickizer, 1943), it dropped to 27% in the decade of the 1970s (Clairmonte & Cavanagh, 1988), 15-20% in the decade of the 1990s (Pelupessy, 1999), 10% in 2001 (Mendoza & Bastiaensen, 2002) and 11.67% in 2009 (Mendoza, 2012b); in other words, it went from 33% to 12% in eight decades. The gap between the consumer price and the amount the producer gets has widened; the FT idea that the consumer would pay a higher price to redistribute more to producer families apparently has not happened even within FT itself – producer families do not get more advantages from being part of FT (see Valkilia, 2014; Ranjan, 2017). A second idea of FT was avoiding the intermediary sector to benefit producer families, but it seems that this intermediating sector is the one that has most benefitted, grown and made even more difficult the ideal of communication between producers and consumers. Stiglitz (2002) argued that the problem was not globalization, but its management; 15 years later, Stiglitz (2016) recognizes that its management did not change at all. The case of coffee seems to also be an expression of that reality.
On looking into the increase in the value of coffee, we find that the final product has more and more inputs that have increased its aggregate value. This is part of what is called the “supermarket revolution” managed by the demand side, where the wholesale distributor defines the rules and governs the entire product chain (See Reardon et al, 2007). Consequently, if the market demands a certain type of coffee, all the actors rush to respond with the quantity and quality of the coffee defined by the moment. The market has been demanding differentiated and quality products. Countries like Colombia and Costa Rica have conquered the markets for speciality coffees (e.g. close to 50% of the coffee of Colombia is sold as specialty coffee).
In contrast FT, it seems, grew in volume and not so much in terms of product differentiation. The FT seal, in addition to being expensive, nearly the same as the FT premium (Valkila, 2014), has lost its attraction to consumers; several seals have emerged proclaiming different environmental and social attributes; buyers like Green Mountain and Starbucks have dispensed with the FT seal; other buyers and roasters have opted for the direct trade approach, because in addition to ecological and quality coffee they want the additional price paid to reach the producers, and not be left in the administrative structures of the organizations. Other models have also emerged, be they in response to the market or as alternatives to it; the Starbucks model, revolutionizing the coffee shops of the world with its own seal; the Capeltic coffee shop in Mexico that emerged from an alliance between a cooperative in Chiapas and the Iberoamerican University, connecting consumers with producers (see Colsa, 2013); a cooperative in Panama that organized the coffee chain from production to roasting (see Mendoza, 2017a). These last two break the elite market model and show that the relationship between producers and consumers, a FT ideal from the 1980s and 1990s, can be achieved by another path different from that of FT.
2.2 International aid within FT
In the same period in which market power rooted in elite interests was growing and FT grew in volume, international aid was increasing. Based on the experiences that we know in Central America, we argue that a good part of that aid helped to “inflate” the cooperatives around the demands of the market, and made the arrival of projects be translated, in the eyes of the members, into FT benefits, contributing to the fact that the organizations neglected efficiency and effectiveness, which accelerated the FT involution process.
A good part of investments in dry and wet milling, offices and laboratories were the product of external donations. Generally the technical assistance staff of the cooperatives, many times including the management/administrative areas, were paid by international aid. So the cooperatives, without yet having an economy of scale and the profitability that would have allowed them to have management structures, joined that existing practice of having managers and technicians. That staff, in turn, responded more to those who were paying them, and less and less to the families who were the owners of the cooperatives. These structures, given the boom of projects and fair trade and organic premiums and extra payments, did not have a problem of providing benefits to the members, who believed that those benefits were for being efficient cooperatives and for selling their coffee through FT. In other words, international aid subsidized FT, particularly the growth of the intermediary sector, “inflated” the costs of the certifiers, who charged more because the cooperatives “were receiving donations”, and unloaded tasks of the certifiers onto the technicians of the cooperatives, and contributed to the fact that the cooperatives took on salary structures and investments that were not in accord with their organizational capacity and level of economic growth.
The distorted situation that FT imprinted on the cooperatives became a problem when international aid reduced its donations to Latin America beginning in 2008. Then something of the real world appeared: member families who had not improved the productivity of their farms in spite of years of good coffee prices and international aid projects; empty first tier cooperatives, some not even collecting coffee; cooperative structures with administrative-management staff with high salaries unrelated to the economic capacity of the cooperatives. In other words, while the dictatorship of the market rooted in large capital intensified, the drop in international aid “deflated” the supposed capacity of the cooperatives, they began to feel the problems, some sold their assets, others went broke or resigned themselves to having cooperatives privatized by the new elites, and some re-emerged as efficient organizations responding to their members.
3. Mechanisms that involuted FT
So far we have seen how the force of the market rooted in the elites and the international aid industry gave shape to the FT network and the cooperatives; they subjected it to the demand for undifferentiated products (commodities) turning the cooperatives into simple companies and “ngo-ized” them, making them dependent on external subsidies. In the last 8 years those forces intensified, reducing FT to just its economic part, and so FT divided, its seal lost competitiveness, its product became more standardized, another approach and organization, like direct trade gained ground and another model appeared that was able to link producers and consumers. Meanwhile trade inequality and injustice intensified; just like the global inequality that Milanovic made evident.
Figure 3 summarizes the mechanisms that led the cooperatives to involute, and the FT structure that produces that involution and the glocal (global and local) power that sustains it. As a cooperative takes on each one of the four mechanisms, it is legitimated in its fall by the FT network and is pushed along by the glocal power structures. In this fall, the cooperative gets privatized and governed by ideas commonly known as “neoliberal.”
3.1 Mechanisms that entrap the cooperatives
How do these mechanisms work? Once an organization is trapped by one mechanism, it pushes it on to the next and so on. Many organizations, even when they fall into the third mechanism, can maintain the formality of their organization – meetings of its bodies, minutes and financial statements – while its insides get eroded, but when they fall into the fourth mechanism, the cooperatives end up as privatized entities.
3.1.1 Mediation and the “lottery culture”
When we compare the conventional chain with the FT chain, the price to the producer, in relative terms (% of total aggregate value), is smaller in the FT chain than in the conventional one, even though in absolute terms it varies: sometimes it is a little bit bigger. There are two reasons for this: the consumer price of FT coffee is higher but its distribution through the chain (roasters, buyers, importers, exporters) is relatively detrimental to the producers; the FT premium and the organic premium for coffee get to the members (producers) in an unequal way: some have not gotten anything for many years.
For greater rigor on this data, we triangulated information starting from the members themselves, a process in which we saw the manipulation that is done of the members. In the house of the member we reviewed their receipts where the amount of coffee that was sold was noted, and the prices that their cooperative paid them. We saw that there are cooperatives where the members have not benefitted from initiatives financed by the FT premium, nor have they received the premium for organic coffee for 4 to 6 consecutive years; there are cooperatives where the members have received an organic premium of US$29/qq and even US$15/qq in FT premium in cash and physical investments; and there are cooperatives whose members have received the two premiums between both of those extremes.
Table 1. Intermediation Costs (cyclo 2016/17) (in US$)
1st tier cooperative (exporter)
Successful 2nd tier cooperative
Failed 2nd tier cooperative
Havest collection and processing
Taxes: income and municipal
Source: based on interviews of cooperative managers and administrators.
We saw that the intermediary part of FT has grown. This is where the structure of the cooperatives, certifiers, social banks, roasters, distributors and FLO organizations is found. This structure that has grown would also be limiting producers, consumers, FT cooperatives from having a more fluid relationship. In the national intermediate sector of coffee exporting countries, what is noteworthy is the fact that the difference in costs (exporting, administration, processing, taxes and financial expenses) between the FOB price (export value) and the price paid to the producer is enormous. They go from US$30 up to US$45 from cooperative to cooperative. The tendency seen is paradoxical: if the cooperative is a second tier one and has high volume, the gap is larger; if the cooperative is a first tier one, with less volume and members, the gap tends to be smaller. This is paradoxical, because it should be the reverse, more volume of coffee exported, the smaller the per/qq costs, and therefore the price paid to the producer should be greater.
If the cooperative belongs to its members, why are the fair trade and organic premiums and the profits in many cooperative getting stuck? First, the intermediate sector has grown by the force of the neoliberal market and the predominant type of international aid, as well as because key actors of this intermediate sector manipulate the rules of the entire FT system. Secondly, the FT certification and organic product costs in terms of their fixed amounts as well as the burden of technical work on the cooperatives are considerable. Third, coffee productivity is not increasing, and some cooperatives are trapped by the “lottery culture” mechanism, of storing in the warehouses coffee that was purchased in hopes that the price would rise and thus “win the lottery”, and many times they do not get those expected prices.
When the cooperative loses in a cycle then – as happens in slot machines – they try to “make up for it” in the next cycle; in this process they do not follow the decision making processes of the associative side of the cooperative, as the members lose confidence in their organization and the FT network. These loses, added to the complaints or rumors of the members about what is happening in the cooperative, exasperate the management and some leaders, who see themselves under pressure to consider other options, like the one that follows.
3.1.2 Purchasing coffee from third parties
Before the 2006-07 cycle 100% of the coffee that the cooperatives exported came from its members. In that cycle international coffee prices began to increase, and the entire FT system grew in volume; for example, cooperatives in Nicaragua went from 10% of total exports of the country in 2006-07 to 28% in the 2011-12 cycle, a great increase normally channeled through FT (Mendoza et al, 2012; Mendoza 2012a). Also in that 2006-07 cycle the purchase of third party (non member) coffee began on the part of the cooperatives, under the argument that they needed coffee to fulfill the contracts with the buyers; and it was with the 2011-12 cycle that purchasing coffee from third parties took off, in some cooperatives comprising up to 70% of their total exports.
What is the problem of buying coffee from third parties? Conventional coffee bought from buyers, against whom the cooperatives emerged, is exported as if it were the coffee of the cooperatives. In some cases, that conventional coffee is exported as if it were organic coffee, due to the deficient control on the part of the certifiers, and because of the increasing independence of the business side of the cooperatives which circumvents the associative side of the cooperatives. Given that coffee purchases from third parties (coffee buyers and non member producers) lacks any quality control of that coffee, mixing it with the coffee collected from the members affects the yield (conversion rate of APO coffee to APS coffee), and thus the quality of the coffee of the members. So the cooperatives that most buy third party coffee prioritize their resources for those purchases, which is why the members do not get zero interest loans, some get loans at interest rates of between 12-20%, and the rest do not get any credit at all. The more a cooperative buys coffee from third parties the less it responds to its members.
In a parallel fashion, there has been a drop in the amount of their coffee that the members have been turning in to their cooperatives since the 2006-2007 cycle. In a study of 33 cooperatives in Nicaragua, we found (Mendoza et al., 2011) that only 32% of the coffee production of the members was turned into their cooperatives. In other words, the members sell their products to other markets, and many times end up falling once again into the historic practice of the “sale of future coffee”, an institution that is a producer of poverty (Mendoza et al., 2013). Others show the resistance strategy that the producer families call “for one dirty deed another”, whose logic runs like this: “if they are buying coffee from all over and are passing chemical coffee off as if it were organic coffee, then if I get some money I will put chemicals on my coffee and not say anything;” “I will only sell the cooperative a little, in case it gets some project funds.”
Under this mechanism, the business side of the cooperatives responds less to its members and does not listen to their complaints, because it can buy coffee from third parties with having them demand transparency, reports, loans or technical assistance. For the administrative structures of cooperatives like this, it is cheaper to buy coffee from third parties (without providing credit, technical assistance nor reports), and in addition it allows them to take advantage of the quality of the coffee of the cooperatives for themselves (lower the yield of the members which means paying them less); while the members and their cooperatives are being cleaned out.
3.1.3 Coffee yield in the dry milling process
In the beginning of the 1990s the cooperatives criticized the private owners of the dry mills for cheating them in the weighing (measuring the degree of moisture) and in the quality control of the coffee in the dry mill. In the face of the market demand for better quality coffee, the cooperatives and the FT network understood that the quality of the coffee could be improved, cheating in the weighing could be avoided, being fairer in the yield (from APO to APS), lowering the costs of the dry milling and getting better prices for the coffee. So they invested in the construction of dry mills and laboratories. In the first decade of this century the quality of the coffee in the cooperatives was felt in the country and around the world, as well as the importance of the cooperatives, and with that the importance of the small producer families (Mendoza et al, 2012; Mendoza, 2012a). In the second decade of this century, within the context of the intensification of the control of the market structures, because of the withdrawal of international aid and the damage the coffee rust caused on the plantations, and the fact that the members did not feel that they were being reimbursed for the improvement in their coffee quality, in large numbers they changed from the caturra variety to catimor, a variety that is productive but of low quality. So a good part of the members began to complain again, this time against their cooperatives, about the fact that they were being cheated in the weighing (measurement of degrees of moisture), the measurement of the imperfect coffee and in the determination of the quality of their coffee.
How does this happen? A first dispute is over the weighing: if the scales are calibrated in the different harvest collection centers that a second tier cooperative tends to have, there would be no problems. Nevertheless, in many cooperatives the scales in the harvest collection centers are not calibrated to the central scale in the dry mill, so that is where the complaint comes from that “it weighed so much here, but there (in the mill) they said it weighed something else,” at a loss higher than what tends to be lost in transporting the coffee.
The second dispute is about the moisture content of the coffee, that also has to do with weight – table 2 shows data with pretty fair percentages, above which question would be raised. The institutionalized rule for 6 decades now is that there is nothing intermediate: it is either wet coffee or sun dried. If the coffee is wet, 56% is discounted and if it is sundried or moist 42% is discounted. An experience of a first tier cooperative that exports coffee is revealing: “The coffee from my cooperative has a 49% yield; one day I took 100 lbs of wet coffee and I dried it on the patio of the dry mill until it gave me a reading of 12% moisture content, then I put it through their mill and it gave me a yield of 76%; the manager of the mill did not believe me. I did it in their mill! (Leader of a first tier cooperative). This case is exceptional, it is worthwhile to think about what is in play with the yields (conversion APO to APS). One of the achievements of the cooperatives in the decade of the 1990s was that their members got accustomed to turning in sun dried coffee (42%); while in recent years the complaint is that that sundried at 42% is being considered more and more as if it were wet coffee.
Table 2. Nicaragua: Calculus of coffee yield (lbs)
The dispute is over the procedure for determining those percentages, and particularly on the rule of sun dried or wet. There is a technology called Moisture Determinator that has a screen to measure the moisture in the coffee to be exported, which should have between 10-12% moisture content. But generally that tool is not used in the harvest collection centers, and in some cases where they use it they come back with ranges that respond to “sun-dried” (42% means 0 lbs discounted), “moist” (42.46% which means a discount of 6 lbs) or “wet” (46-56%) which is a discount of 14lbs.
The third dispute is over the percentage of the hulling. Table 2 it appears as 16%, but in many organizations it tends to get up to 18%. The variation depends on the variety (e.g. the hull of catuaí coffee weighs more) and the quality of the coffee, and also on the treatment it is given. Table 3 shows the manipulation of the APO coffee conversion to APS coffee. The accepted conversion ratio is between 2.02 and 2.06 qq APO to 1qq of APS (gross export). Nevertheless, in the last six years that conversion ratio in many cooperatives, and historically in the businesses that own dry mills, has increased from 2.06 to 2.10 and even 2.20, and in some cases higher than 2.30. In the table we see that 100qq APO in a 2.6 ratio is equal to 48.5 qq, and those 100 qq in a ratio of 2.20 ends up being 45.45qq APS, a difference of 3.09qq APS, which at a price of US$160 qq (minimum price+premium) is US$490. A small producer with 1.5 mz of coffee that produces 10 qq APO loses just in the dry milling close to C$14,000 (US$490), much
Table 3. Coffee yield in the dry mill (assumption: 42% moisture content)
Price (U$ 140 + 20)
Ratio of 2.06 to 2.20
(4854.37 – 4545.45)
Source: based on a series of interviews of owners of coffee mills, buyers and supervisors of harvest collection and processing areas.
more than the value of the FT premium itself. If his second tier cooperative exported 50,000 qq at a 2.20 ratio, using 2.06 as a reference point, its members lost 1,544.5 qq (US$247,131).
Table 4. Defect equivalency table
Total defects (equivalents)
Total defects (equivalents)
Full Black beans
Full Sour bean
Severe coffee bore damage
Dry hull or pulp
Light coffee bore damage
A fourth dispute is over the percentage of imperfect coffee (see Table 2, dark columns). In the decade of the 1990s the cooperatives also improved the quality of their coffee, and the members got accustomed to delivering clean coffee, and in times of low prices the coffee buyers demanded quality and the coffees traded by FT became known for their good quality (Valkila and Nygren, 2009). This is where the alarm over reports of high percentages of imperfect or second quality coffee comes from. How does imperfect coffee get calculated? 350 grams of coffee are taken and from that amount the number of defects are identified (see Table 4). Then they are weighed and the percentage of imperfect beans is obtained. For example, 4 primary defects are added up and 3 secondary defects, each one of them is weighed (let´s say 5 black beans = 2 grams, , that 2×100/350 grams = 0.57%); likewise with the other defects. Then the imperfection rates are added up and let´s suppose there is a 2.5% imperfection rate in the sample. That is what is then applied to the total coffee through the simple 3 rule. Strictly Higher Grown coffee is specialty grade coffee with 8-10 defects, among which there can be no primary defects.
Coffee buyers define the limit of defects for the coffee that they acquire: the smaller the percentage of defects, the more the coffee is worth; and if the buyers ask for coffee with less defects, the more the dry mill works in response. The possibility for manipulation in the imperfect coffee consists in the following: “if the buyer asks for 12 defects as a limit for such and such a price, and the managers ask whether they can accept 15 defects, and if the buyer accepts, the managers report the required 12; the difference of three, weighed in grams and expressed as a percentage of exportable coffee is the managers´earnings” (cupper of a dry mill). This happens because there is no control nor supervision on the part of the owners (members) of the dry mill.
Finally, the control over the sieves (size of the beans) and the quality of the cup. There are sieves from sizes 10,11,12…up to 20. Exportable coffee is from size 15 on up. The buyers propose the price of the coffee depending on the size of the sieve. If they want coffee from 17-18 size screen, they pay more than for coffee from 15-16 screen, and if in addition they want coffee that score 85 or higher in quality, the price goes up. The quality of the cup of coffee is calculated on its aroma, acidity, body, flavor and residual flavor, the points are added up and 50 additional points are added (Chemonics International Inc., & Star Cuppers de Centroamérica, 2005). The larger the sieve and the better the cup, the more the coffee is worth, and more work is required to choose the coffee that meets these requirements. The possibility for manipulation consists in that the coffee from the cooperatives has good size and cups well, and therefore would get a good price and require less work, but the members do not know that, so the members are paid as if their coffee did not have such high quality and good size.
If the cooperatives progresses to the point that their members turned in sundried coffee (42% moisture content) and better quality coffee, why did the conversion ratio reach and surpass 2.10 and the rate of imperfections go up? It has to do with the increasing purchase of coffee from third parties – which generally is of lesser quality and has more moisture content – with the manipulations described that respond to the interests of the administrative staff responsible for the negotiation and management within the dry mills, and with the reaction of the members that neglect the moisture content and quality of their coffee under the tactic of “one dirty trick deserves another.”
3.1.4 “NY price + 10”
Some cooperatives that have been trapped by the mechanisms described above end up going broke, others survive because the management structure accepts proposals from some export companies without their members knowing about them: “NY price + 10”. In this case the export company proposes exporting their coffee (the coffee of the company) under the name of the cooperative, which means using the export license and FT certificate of the cooperative. For that operation the cooperative receives US$10/qq for the FT premium, and the company gets the NY price + US$10/qq of the premium. If the transactions are for 20,000qq, for example, the cooperative, without having collected coffee, “only providing their documentation”, earns US$200,000, like the private company. If the cooperative has organic certification, an additional $15/qq is added on.
These transactions, that according to our sources are increasing year by year, generally are done by the management structure of the company and that of the cooperative. In most cases, given the confidentiality of those transactions and the huge gap between the management structure and the members, there are enormous personal earnings at the cost of the cooperative and the FT system. This reveals two governance structures, that of the companies with their managers, where they have control mechanisms under the oversight of their “operational owners”, and that of the cooperatives with their management structure, where the control mechanisms on the part of their “owner-members” (members through their bodies) are deficient. This phase means that the cooperatives have gotten to the extreme of being practically privatized, even though they present themselves as cooperatives.
Summarizing, the payments get stuck (FT premium, organic coffee premium, quality differential, cooperative premium, additional payment or adjustment), there are losses through weighing and moisture content, the purchase of third party coffee to the detriment of the entire FT chain, manipulations around the percentage of imperfect coffee and the quality of the coffee, and renting out the FT seal and the organic coffee certificates to private companies. This shows the dominance of disastrous mechanisms and the absence of cooperative control mechanisms from its associative side, which leads to the business side of the cooperatives privatizing the cooperatives.
3.2 Institutionality that facilitates the fall of the cooperatives into the disastrous mechanisms
It would be difficult for a cooperative to fall into these mechanisms if the FT system, in addition to the role of the members and the bodies of the cooperatives, were fulfilling their functions rigorously, transparently and in accordance with the objectives of FT. How does the FT system facilitate the cooperatives falling into these mechanisms? We note down four modalities: the primacy of formality and form, the idea of the cooperative as an economic individual, the depoliticized perspective of organizations, and the modern asymmetrical relationship of infidelity.
3.2.1 Formality and form
Formality refers to the requirements to be met to access credit or a specific certification. Form is the way in which an organization operates. Certification and the analysis of the cooperatives tends to be reduced to the formality of aspects prepared by the management structure of the cooperatives, mediated by a relationship of trial-exam. This includes signed minutes of the monthly meetings of the administrative council, records of activities on organic farms, organic certification forms, the legal documentation of the cooperatives, financial statements and data on production areas and volumes.
For example, the record of information on each organic farm is not analyzed by the certifying organizations nor by the cooperative, it is just a formal requirement; likewise the data format on each member and their farm kept by the cooperative. Formality indicates that the organizations are the ones that request the inspection of the organic certifiers, so they make the request at the end of the harvest, when they are now ready to export, which conditions the certifier to have to stick to the formality of reviewing the product in the context of the dry mill, and have to rely on the data received. The certifiers are not accustomed to corroborating the origin of the coffee noted in the report prepared by the administrative staff of the cooperatives, according to which X quantity of coffee is from such and such a cooperative and from such and such a member.
The financial statements and the audits are difficult for the members to learn about; even if the members would hear about the report, they are left overwhelmed by the sea of numbers. The audits are a simple formality to say that everything is going well and that “you should correct these receipts and add up those items in X table.” It is thought that that financial report is for the bank or any aid agency. The same thing happens with the information on yields, quality and prices paid.
Added to this formality is the way aid organizations operate, mediated by an asymmetrical relationship between the person giving the test and the one being tested, which makes the administrative staff of a cooperative cultivate the logic of complying with what the aid agencies ask for, and makes the aid agencies cultivate the logic of being like a judge who issues rulings (approves, punishes, suspends and cancels certifications, approves or rejects loans). This same relationship happens when the organizations visit a member to “verify”; in the face of this, the member prepares to “pass the test”, in other words, sticks to the orientation of the technical/administrative staff. In other words, the conditions of the formality and form create a favorable atmosphere for the administrative staff to de facto govern the cooperatives.
This modus operandi of the organizations is mediated by market relationships. Some organic coffee certifiers charge by volume of organic coffee exported and/or by the producer size, which incentivizes the certifiers to work with organizations that have more volume and that have producers that produce larger volumes, which in turn conditions them to comply only with the formality, not “going to the countryside”, because that would require more time, and in addition any attempt to investigate more about where the coffee came from could lead the cooperative (the management structure of the business side of the cooperative) to prefer to hire another less demanding certifier, which would be a reduction in the income of the certifier.
How did things get to this point? FT emerged as a movement. Still in the decade of the 1990s the cooperatives in Central America felt proud to be exporters and cooperative members. They would receive visits from FT organizations in an environment of social commitment and learning under the spirit of being an alternative path. This process of FT became professionalized. Certifiers drew up their procedures, controls and ways of working, while the cooperatives turned into businesses that would sell coffee and NGOs that would execute projects turning in reports to the agencies. Slowly alongside that the movement nature disappeared, which at one time emphasized personalized relationships.
These institutionalized practices limited the FT organizations from detecting when conventional coffee from third parties was passed off as organic coffee and as if it were a product of the cooperative, because their way of verification ended with the table of information prepared by the administrative staff themselves, and because their own interest was reduced to the financial return. They did not detect when the minutes to the non-existent meetings were fabricated; and if they fulfilled their role, the person signing the notes would say that he/she were in the meeting, because that person takes on the attitude of someone passing a test, saying what the organizations want to hear. Even though they might know that there are leaders that are in those posts forever, outside organizations stick to the legal documents that provide evidence that the leaders were just named to their posts. So in the organic coffee certification, it does not matter whether the product is organic or not, what matters is fulfilling the formality; the buyers are content to receive the “certification”. The entire chain operates this way.
3.2.2 Perception of associative organizations as homogenous entities
This institutionalization and professionalization entails two ideas. The idea of homo economicus, a rational individual who maximizes his/her earnings and erodes the “alternative” procedural and movement character, moved by the idea of homo reciprocans, the idea of human beings who seek collaboration. We distinguish between “individual interests” where the interests of certain individuals prevail, and that of the cooperative, where the individual interests of its members would have to prevail – which is coherent with that Sen advocates for in “ethical individualism” and not “methodological individualism” (see Bastiaensen et al 2015). The problem is that the organizations that form part of the FT system perceive the cooperatives as if they were something homogeneous, as if the cooperative was an expression of only the business side, only in the figure of the manager, and as if the cooperative was just something economic. So they deal with the manager believing that with that they are automatically contributing to the cooperative.
If the perception is that a cooperative is like an individual, the formality and form developed by the organizations to certify and make decisions on loans and purchases end up being optimal. If it is an “individual” before an organization, it assumes that it only has to be based on the formality, and stick to its form; if all the information is centralized, this type of relationship is reinforced. On making a cooperative equivalent to the management, outside organizations legitimize their permanence in that post, while at the same time getting around the entire organizational apparatus that cooperativism entails.
In light of this perspective, that individual is not obstructing the functioning of the organs and rules of the cooperative. On the contrary, that person is a hero who is sacrificing for the cooperative, something that the managers themselves end up believing: “Without me, the cooperative would go broke in a matter of months.” And if the cooperative buys coffee from third parties and becomes a type of intermediary, and if those practices are questioned by the members, the first to defend the decisions of the leadership of the business part of the cooperative tend to be the actors of the FT apparatus: “it is to fulfill the contracts and benefit the cooperative.”
3.2.3 The assumption of de-politization
If institutionalization (and professionalization) killed the movement nature of FT, and the idea of homo economicus made the alternative perspective of FT disappear, the third element of organizations is their conception of the cooperatives – and all the FT network organizations – as depoliticized organizations where the political is reduced to administrative procedures. Under this idea, the asymmetries and the injustice that we have described in the FT chain are left invisible, concealed a formality, e.g. to confirm that the organic coffee from a cooperative is really organic a lab test is required that costs US$300 according to the certifiers, something that could be part of the formality, but it is something that the certifiers do not tend to do, “because that test the cooperative itself would have to pay for, and the cooperative does not want to do that.” Does it sound reasonable that a certifier would pay US$300 when it earns $3,000, 10,000 or 20,000? Our hypothesis is that the certifiers that were founded to ensure that the organic products were organic, end up being prisoners of the idea that business is business. The same thing happened with the banks and coffee roasters and buyers.
The cooperative is seen as only economic – also by critics of FT like Griffiths (2012) who sees the political as something that disrupts the economy. The actors of the chain appear to be focused on the business of producing, processing and selling coffee and on credit services. This is consistent with the conventional approach of the economy, of increasing production by just adding inputs, a slogan that is also repeated by the producers who think that with credit (or more projects) they could improve their production Trapped in this perspective, the prominence of the management and administrative and technical staff increases. This separation of the economic from the political and social, like the separation of the visible (input and output) from the invisible (power relationships, human capacities) makes the focus of the role of any committee to be economic. It is not perceived that the lack of committee functioning, the mutual “lack of oversight” and the formality of the general assembly are expressions of political decisions. The marginal role of the leaders linked to the associative side (the social aspect), and the role of the administrative/technical staff linked to the economic aspect, is the result of that separation and negation of the political aspect in their own actions, which precisely is an expression of the political aspect, concealed by the administrative aspect.
3.2.4 Modern infidelity
The logic of “the justice of the market” is imposed. The social banking sector is built on the purpose of generating earnings; so, if before they worked only with the cooperatives, now they also work with private enterprises. In the case of FLO, their excision can be seen also as an expression of a double standard: it emerged to work only with small producers, now FLO divided into its FT-USA expression also works with large coffee plantations (large business owners), in the face of (or against) precisely those from whom FT emerged. Among the buyers, for example, Green Mountain established itself in good measure within the FT brand, and now can do without the FT seal to dedicate themselves to generating profits, because the FT seal has lost weight in terms of consumer demand – “Business is business.” So the FT seal, which was a means for the small producers to sell their production, was turned into a means for large companies to expand their markets.
This disloyal practice toward those “from below” is reproduced along the chain. “From above” the idea is that those “from below” should be loyal, without protesting and leaving, integrated into the logic of the market; if a cooperative has difficulties in honoring its debts with the social banks, the buyers are in solidarity with the social banks; if the certifiers or social banks certify or provide credit to a cooperative without investigating the organizational functioning of the cooperative, or without verifying if the organic coffee really is organic, no one complains, no one sees that those actions are damaging for the cooperative: there is no loyalty to the producers families, the members of the cooperatives.
3.3 Power structures and the hollowing out of the cooperatives
Cooperatives would not fall into these mechanisms if their members really acted as members, if their organs really functioned, and if their staff and organs responded to the principles of cooperativism. The involution of FT also happens due to the action of a small elite who, behind the backs of the cooperatives and the FT system, have been taking over the cooperatives and FT.
Seen from the region, the second tier cooperatives concentrate investments thanks in good part to the premiums, quality differentials, cooperative premiums and profits. They are the door to certifications, banks, markets and FT organizations; to information and external relations; and they are the ones who have what the organizations want: reports, records, meeting minutes, information. Seen from the perspective of the entire FT chain, an iron circle exists among the second tier cooperative, the buyers, certifiers, and social banking sectors.
Historically the patron and the foreman used to live in the same area as the peasants; that proximity created more vertical control (from patron to the foreman, and from the foreman to the peasant) and kept the peasant families from taking advantage, like paying with less product or working less than planned. The patron kept control over the foreman through informal rules and through the knowledge of what was happening in the terrain; thus he was able to keep the foreman from taking advantage in his favor. Since the decade of the 1980s this structure became globalized: in FT the equivalent of the foreman is the administrative structure. They manipulate the chain because the “new patron” of FT is geographically far away, and because the chain is infested with formalities and does not know the local reality. A constant in the new structure has been the fact that the peasants (members of the cooperatives) continue to be excluded from this structure, and at the same time reproduce this structure.
This structure is a historical institutionality of patron client relations which says: “the peasant has no right to ask for information; the patron is the owner and it is his right to not share information.” The FT structure intensifies this institutionality: to the eyes of the member families, the management structure, and behind that structure the FT organizations, appear to be the patrons that have the right to not provide information. And in the light of these patrons, the members appear to be ignorant or incapable of improving the quality and productivity of their coffee.
This reminds us that historically peasant families have lacked strategic allies. Organizations have come in to use them: some came to form communal banks and ended up creating their own banks and financing large producers who have been dispossessing small producers of their resources. Other organizations arrived to sell products with the peasant families, and then consolidated that intermediation, left the peasant families as providers of products. And others came in to swell the rants of guerrillas and soldiers, who, after toppling dictators, left them abandoned to their own fate.
Under these conditions the first tier cooperative were not able to have an influence on the second tier cooperatives. If they tried, they faced a wall: “FT and the social banks say that you cannot replace me, because my signature is on the contracts”; if there a manager who is a favorite of FT is changed, they say, “if you change the manager, we are not going to buy your coffee” – FT “encourages the buyers to commit for the long term, which tends to prioritize the role of the technical staff, because they stay longer than the elected leaders” (Taylor et al, 2005: 203). If committed scholars seek information from the FT organizations, the response is, “we only provide information to the cooperatives” – understood as the small group that manipulates the mechanisms and keeps the leaders and members from knowing the financial and commercial reports.
This type of transnational collusion is what has emptied most of the first tier agricultural cooperatives of their content. Most of them no longer provide savings and loan services, some are not even collectors of the coffee harvest. Their boards do not meet monthly, even though “minutes” of monthly meetings do appear. Their members do not know what decisions are made in their cooperatives. The notion has become internalized that the motivation for being a member of a cooperative is only financial and that you have to depend on the patron to receive favors (loans, projects).
The FT movement and cooperativism are public goods of humanity and their role should be contributing to equity and democracy in our societies. Both emerged as alternative movements, but slowly have tended to be an expression of the “iron law of oligarchy” (Michels, 1915). The difficulty then was mediation as a producer of inequality, and the challenge has been doing away with usury and accessing markets through a transnational alliance. Nevertheless, if we calculate the injustice through costs, weighing, dry mill yields, not getting premiums for fair trade, organic, nor quality, donated projects… The large amount of producer families who are impoverished does not surprise us, nor the small amount of families who get out of poverty. The system of injustice is like a spider´s web, it traps the weakest and leaves them at the mercy of the large spider of capitalism. The paradox is that this FT structure would be reinforcing that mediation that dispossesses the peasant families of their cooperatives and worsening the inequality.
Taylor et al (200) identified the problem of FT in its governance structure, tensions between the democratically elected bodies with leadership rotation, and the continuity of the technical staff in the organizations, and therefore suggest monitoring and auditing from FT. Valkila (200) argues, in the case of organic coffee, that the most marginalized producers with low productivity are trapped in poverty under the organic FT system. In this article we follow the direction of Taylor et al (2005) about governance in the FT structure, which in the last 7 years has become a challenge; we coincide with the findings of Valkila (2009) and we believe that it is explained in the whole FT network. So we find that FT is an expression of an organizational problem in the whole FT network, a governance structure absorbed by the conventional market. Within this framework quality coffee and organic coffee do not receive differentiated prices for the producer families, nor do they make a difference in terms of the unjust conventional market, the benefits of FT have been captured by glocal mediation, and that FT structure tends to worsen the most despotic power relations of rural society.
How has this happened? A small group has been becoming aware of FT and has been capable of manipulating it to their own benefit. From the member, to the president, manager, inspector, sellers of coffee, up to the consumer of coffee, all act in good will. It is the system expressed in mechanisms that make the inequality and poverty worse, and that institutionality is embedded in informal rules that respond to a social order of exclusion and controls tons of formal rules. That institutionality operates in accordance with the ideas of the “rational individual”, fordism, the hacienda and has a hierarchical organizational character, from which they reduce the political to an administrative formality, make the business side wipe out the associative side in the cooperatives, and erase the “fair” in FT. This system for two decades now has been globalized, capable of producing an involution of FT. When that system operates, it is an expression of the saying: “in open treasure, even the just sin.” Under these conditions, whatever model, even direct-trade which has emerged in recent years is – and will be – absorbed.
Why recover fair trade? We are coming to understand the problems and the consequences of FT and commercial mediation. We are living a phase of scarcity of external resources that makes it difficult to continue covering the injustices in FT, and makes the members ask about the FT and organic premiums, the premium for quality coffee, the weighing, APO-APS conversion rates, the cost of certification… Consumers are also beginning to ask. The involution of FT can be a “door” that closes, and at the same time it can be a “window” that opens.
Why rescue fair trade? The more differentiated a product is, the more the cooperative movement is needed (with transparency and effective bodies) and the whole FT network (with transparency, combining institutionality and movement, results and processes) and the more families can improve their lives (generating more income, learning more, cooperating more and contributing more to their cooperative). The more democratic the FT network is, the more possibilities there are for transforming rural societies, reducing poverty and inequality.
How can FT be rescued? Donovan et al (2017), using the value chain approach, and interviews of leaders in the coffee, vegetable and milk chains, suggests that this approach be broadly applied for greater collaboration among the actors outside and inside the chain. Nelson (2017), summarizing studies on the impact of FT, states that FT needs “to learn about its effectiveness in different contexts and places of the value chain to find ways of responding in a flexible way and adapted to local conditions and their assumptions.” Meyer (2017), studying community banks in Brazil, conceives them as community social enterprises that create and govern the commons as response to the deficiencies of market and state institutions, from where we could understand the FT chain as a chain of community social enterprises.
Based on these authors and taking more concrete steps, we talk about two modalities, and within this framework we list some changes. First, attracting groups of people that would build connections between rural society and the FT system, making the first tier cooperatives really be cooperatives. Mendoza (2016), studying the contribution of cooperatives to peace in Central America, found that there were hundreds of religious and lay people between 1950 and 1980 who, inspired by the changes happening in the church back then, connected with rural societies and built bridges between a good part of that society and organizations in favor of change. Observing that a good part of that rural society, expelled to the highest mountains of Central America, currently has the better quality coffee in the region, it is important that groups of people like those religious and lay people mentioned above return to the countryside, this time to decisively contribute to the reinvention of FT. This is possible if we build connections with the movement side of the Church that is now starting to open up, and with universities so that the students might be trained with a missionary sense to build those bridges – between the FT system and that part of rural society that historically has been destitute.
Secondly, building bridges with immersions organized in the south and in the north (Mendoza, 2015). So that the generation of professionals that work in the FT system, who did not live the experience of the first generation in dealing with unfair trade and families that organized into cooperatives, might have immersion opportunities (living three weeks with member families) to become aware of the reality. Immersion does not automatically awaken awareness, but it does provide the conditions for it to happen. Or, just as religious mediation made it possible for the religious to leave their chapels and look for God among the poorest, thus transforming religious mediation itself, so also the mediation of FT can make it possible for its members to seek and build justice among the poorest, actions through which they might transform FT mediation itself.
Under these two practices we list some possible changes. That the members turn in more than 32% of their production to the cooperatives: 40, 60% or more. That the certifiers, buyers, social banks and cooperatives might put their audits, data on organic certification, sale prices as stipulated in the contracts, costs of processing the coffee, yields in the dry mill (degree of moisture, hullingm imperfect coffee and quality of the cup), amounts of loans made to clients on a webpage. That the first tier cooperatives might develop savings and loan services, increase their own equity, be responsible for collecting the coffee harvest and measuring its moisture content with appropriate technology and decide on 100% of the use of the FT and organic premiums. That rotation of leaders and managers in their posts be a reality. That the second tier cooperatives specialize in coffee processing to the extent that their income and costs allow them. That the FT and organic certification be done directly with the first tier cooperatives.
With this model, producers will recover trust and improve the quality of their coffee, and consumers will appreciate drinking quality and organic coffee, knowing that they are contributing to peasant families and the mitigation of climate change. Corruption will be limited. The dignity and importance that managers, technicians and cooperative leaders have will be recovered. The social banks will recover their loans with less cost.
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 Collaborator of the Winds of Peace Foundation (US) and associate researcher of the Institute for Development Policies and Management (IOB) and member of the COSERPROSS RL Cooperative.
 Professor of the Institute for Development Policies and Management (IOB), University of Antwerp, Belgium and associate researcher of the Nitlapan Institute, Central American University (UCA), Nicaragua.
 Multatuli (pseudonym of the Dutch novelist and ex colonial administrator, Eduard Douwes Dekker) wrote a novel in 1860 with that title (Max Havelaar) where the protagonist with that name resigns from his position as colonial administrator in Java (Indonesia) over colonial abuse, forcing the producers to plant coffee and sugar cane instead of basic products, and imposing a tax system on them that produced famine. The book created awareness about the fact that the wealth that was enjoyed in Europe was the product of the suffering of the population in other parts of the world. This in turn gave rise to an ethical policy that consisted in returning that wealth, by educating some native groups loyal to the colonial government.
 We have followed the issue of coffee since desde 1996 (see: Mendoza 1996, 2003, 2012a and 2012b; Mendoza & Bastiaensen, 2002).
 If the calculation was done on a cup of coffee, the producers get relatively less than 1%. This is due in good measure to the costs of the other ingredients and processes involved in getting a cup of coffee in coffee shops
 Subsidies covering costs of organizations is a generalized practice in Latin America: See the Ceibo case in Bolivia (Bebbington, et al 1996) and that of Soppexcca in Nicaragua (Donovan & Poole, 2017).
 Hirschman (1970) proposes the concept of exit, voice and loyalty. If there is a possibility or protesting (having a voice) there is a possibility of loyalty and the risks of abandoning the organization can be reduced.
If they keep quiet, the stones will cry out (Jesús, Lc 29.40)
“I already saw that movie”, said the drunk, on seeing the animation of the lion that roars at the beginning of many movies. In the beginning of the 1990s, dozens of women from Marcala (Honduras) began to be trained to defend their rights and cultivate an awareness of equality, to “marry to live together and not to be the property of anyone”, “leave the house to participate in workshops on learning”, and “overcome conformism”. Over the years they understood that that awareness and that fight against violence would require generating their own resources, “on earning some money you can decide what to buy for the house”, so they envisioned an organization that would help them to have land, produce on it, and sell their products. So in 1988 they founded the Coordinator of Women Peasants of La Paz (COMUCAP), and learned that “organization is for bettering oneself and not for being envious”, and that “it is beautiful that both the man and the woman work, you have what you need to eat and you can rest.”
As COMUCAP grew in number of members and economically they acquired investments for processing coffee, aloe and juices; they exported coffee and sold soap, shampoo and juice; they bought land and planted it;M and many projects came in. Nevertheless in 2012 they learned that their organization of 283 women members was about to fall off a cliff. What had happened? What had pushed them to the edge? How could they move away from that cliff? In this article we try to respond to these questions, precisely to “not trip over the same stone twice.” Behind the animation of the roaring lion there is a movie that has not yet been seen. Let´s look at it.
Crisis Situation in COMUCAP
An independent audit revealed that the debt of COMUCAP was close to one million dollars, that the assets of the organization had a lien on them due to the debt, that a piece of property bought for $150,000 had not been turned over to the organization, and that it was not clear where resources from international aid had gone. This information raised the eyebrows of the members in the 2012 assembly. Other data followed: 100% of the coffee exported was organic and fair trade, in the last 3 cycles prior to 2012 they had exported close to 10,000 qq of export coffee; a good part of that coffee was bought off of individuals who were not members, close to 1,000 qq of coffee was from the coordinator of COMUCAP herself, whose quality surprisingly scored at 85, while the coffee of the members was equal to or less than 81; the yields (from 1 qq of cherry coffee to export coffee) were dropping; the premiums for organic and fair trade were confused with project financed by international aid, making it impossible for the members to see that they had not received neither premiums. The crisis was even more harsh because it coincided with the arrival of the coffee rust on the plants, that not only lowered their production yields, but in many cases anthracnose came behind the rust leaving the coffee fields with dead trees.
What had happened? From the beginning the board of directors had granted the coordinator a General Power of Attorney, with which she was able to take loans out of the bank, buy and sell the assets of the organization and sign international aid projects. They had technical and administrative staff subordinated to the coordinator, whose daughter was the commercialization manager for all the COMUCAP products, her sister was the manager of the aloe plant, and her son in law was the coffee manager. The board of directors was used only to sign checks. The reports to the annual assembly appeared to be “sharp” bathed in a sea of numbers, reports that were legitimated by the representatives of international aid as “transparent”. The audit and fair trade and organic certification inspections would confirm every year that “everything was in order.”
The coffee rust and the “human rust” had bashed the organization of the 256 members. Obviously all those losses and debts had to be assumed by the members. All this is like the animation of the roaring lion, because this type of movie is repeated in many parts of Latin America. Nevertheless, as the philosopher Heraclitus said, though we bathe in the same river, we never do it in the same water; the next section responds to the question about what things pushed COMUCAP to the edge of the precipice. Let´s sit down to watch this film.
Process that pushed COMUCAP to the edge of the cliff
Problem: COMUCAP in 2012 was on the edge of the cliff. What pushed it therer? To help, let´s use the “5 whys” of the methodology of Lean: find the cause of the problem, then the cause of that cause, until we reach the root cause. This methodology was developed in the 1950s by Taiichi Ohno, Toyota pioneer (http://www.toyota-global.com/company/toyota_traditions/quality/mar_apr_2006.html). It is the methodology that is behind Aristotle´s idea in seeking the origin of movement: “everything that moves is moved by something” and there is a “motor” that moves everything. That is why we ask ourselves 5 times “why”. See the Table with the 5 “whys” for identifying the “tripping stone.”
Why was COMUCAP on the “brink of a cliff” –debts, poor administrative management and a hold on their assets? The members and aid organizations listened to information in the annual assemblies, but it was information that was not telling them what was really happening. The staff was subordinated to the family that coordinated COMUCAP and the board of directors relegated to being “only for show”, to sign checks; even a leader turned into an employee for two years signed checks as if she were the president. In other words, they would produce information in a disloyal way for the organization and in a way subordinated to the coordinating family.
Why did they not have access to the real information. A good part of the 256 women had been trained for 10, 15 and 20 years in negotiating their rights, managing funds for groups, political advocacy and values like transparency and equality. Why then did they not demand the real information? “Because we fell asleep”, said one of the historic leaders: they stood by. Ther trust in the coordinator was blind and total, because since 1993 she had trained them in women´s rights, and used to tell them that “she worked for the women”, she was from a family with resources and they nearly worshipped her: “having what she needs to live and she works for us” they would say with gratitude, feeling themselves blessed. One member could not be mistrustful when the reports would be presented before the international aid organizations, who would repeat “everything is in order”. One member could not prove that she did not receive the organic nor fair trade premiums for her coffee when the fair trade and organic certification audits would conclude “that everything was in order.” If everything was in order, it was logical to conclude that the information that they were being presented was correct, and it was obvious that if a member dissented, she was running the risk of not being a beneficiary of the next project. It was like feeling like an ant under a transnational elephant that grew and grew.
Why did they stand by? Because they left the decisions in the hands of the coordinator who had an administrative role, and was part of the staff of the organization, not elected by the assembly, as were the women on the board. The decisions that should have been made in the cooperative bodies (board of directors, committees and assembly) and supervised (oversight board or auditing body), were taken on by the coordinator. For the members the coordinator was “the gate” to the market and to international aid projects, and for the fair trade buyers and the aid agencies, the coordinator was the gate to the women leaders and the members. If a aid representative would visit a member, she would say marvelous things about the coordinator, and if a member visited Germany, the buyers would say wonderful things about the coordinator. So COMUCAP functioned as if it were a private enterprise where the 256 members were the poor beneficiaries, defined as such by the coordinator herself: “the women of the board are not capable of administering even 100 lempiras ($5).” This woman who did training on rights saw them as ignorant and those who financed projects and bought coffee saw her as the “Honduran Che Guevara.”
Why did they leave the decisions in the hands of the administration? Because the millennium institution of “we always need a patron” absorbed them. The women had been trained to defend their rights in their homes and to seek equality with their husbands. And this they were doing, supported by an office of COMUCAP itself. Nevertheless, they did not expect that “the patron” would appear in the “new guise”: who would subordinate the staff with loans and salaries, control the members on the basis of projects, and the leaders through travel allowances, and ran COMUCAP as something independent from the members. Like a large estate owner who believes that the land and everything on it is his, or like the holder of an encomienda in the colonial period that would receive land “including the indians that lived on it”, she would repeat to them: “without me COMUCAP would not exist, everything that is here is because of me” – meaning that everything was hers.
Why did the old “patron-client” institution absorb them? Because even though the women woke up about their rights and the importance of generating their income to sustain that awareness, COMUCAP was an external product with members dispersed in several municipalities, started on the basis of external resources and not on the basis of the contributions of the members; and because they did not learn to lead the organization through its organs (assembly, board, oversight board), and in accordance with its rules (statutes), because “we felt it was far away, someone else´s”. That is why they would hold an assembly once a year, as if an organization would have so few decisions that merited meeting only once a year; the board members were content to sign checks and travel every now and then; the groups never met with their boards; a member who needed something from COMUCAP would not propose it in the group meeting, nor to her group board, she thought it was not her right but a favor, which is why she would go directly to the “big honcho.” This lack of ownership and effectiviness in leading the organization left COMUCAP in conditions where the proverb “in an open treasure even the just sin” became a reality. COMUCAP had become a “factory” where a member would become a beneficiary, a leader subordinated, and a coordinator with a social vocation would become the big honcho (patron). Here is the root of the problem – “the motor” as Aristotle would say.
The energy to get out of the crisis
The member assembly in 2012 heard the results of the audit. There was a mixture of everything: silence, murmurs, rage, impotence, feeling of having been betrayed…Some returned to their homes, and recalling the sacrifices that they had made for so many years, cried wanting to hear an echo in the universe. Others moved to defend the offices and the coffee and aloe business of COMUCAP, because the coordinator, her family and allies did not even want to turn over the assets with liens on them. They spent 3 years in hard legal battles, negotiating with the banks, getting the aid agencies and the buyers to see the obvious facts of what was happening, getting the members to trust again, looking for money to buy coffee, looking for markets for their coffee, their aloe, their shampo and juices.
On this path they continued to wear themselves down and had financial losses. The interest and arrears for the debt grew year by year, even though negotiating they were able to get considerable relief. They lost the best coffee areas to the labor lawsuit from the ex-employees, and had expenses on lost trials. They had international coffee buyers who decided NOT to buy their coffee under the logic that “COMUCAP without the “big honcho” did not exist, and because, as one leader said, “a dozen stars will fall from the sky before they ¡recognize that they were mistaken.” And a star did fall! The representative of an aid agency recognized: “I believed in her (the coordinator); forgive me because I did not believe in what you were telling me.”
What really caused the beginning of the change in COMUCAP? Each year an audit would be done, fair trade and the organic certifiers also did audits. There were more than 17 bank accounts because the aid agencies wanted their money to be administered separately. The results indicated that none of that ensured good administration. It is very possible that without the support of two people who worked in 2 aid agencies, who detected the problem, recommended an independent audit, and accompanied the board for some time, and without the awakening of the new board, COMUCAP would now have fallen off the cliff or been completely privatized by the coordinator and her family.
Crisis happens when what should die, does not, and what should be born, does not. After 5 years COMUCAP has been able to grab ahold of some “rock” and not fall off the cliff, in contrast to the prophesy of those who opposed it. Nor has it moved away from that “cliff”, the risk that it might trip over the same “stone”, described in section 2, and fall even harder off the cliff is real. In other words, that which should die still has not died. How can it move away from the cliff, or build a bridge to cross it? For what needs to be born to happen, we suggest three steps (see attached Figure) under the sequential order that follows: awareness and vision of the members as a reference point, looking inward where their roots are, and looking outward to be accompanied.
First step, start from the awareness and vision of the women members. Awareness: “everything that exist is there because we sweated with our fellow members with the sacks of fertilizer planting coffee, aloe, cooking, leaving the family on their own.”; as Jesus would say, if they keep quiet, the stones from the aloe and coffee business and the orange and coffee farms, WOULD CRY OUT. The original vision of dozens of women: COMUCAP started to sell the products of its members and accordingly built equity in their homes and communities. To sell whose products? The products of ITS members!
Second step, finding a solution to the root of the problem, ownership and operating within the democratic mechanisms of COMUCAP. There is their new “motor”. Their “break even point” is not buying coffee from whoever and however, it is not adding new members as best as possible. It is going back and building trust in each family, each group, the board of each group, the asembly, the board of directors, the oversight board and the staff that they have. COMUCAP now has 505 members. Let us recall popular wisdom, the stronger the daughters and sons are, the stronger their parents will be – in other words, the stronger the families are, the stronger the groups will be, the stronger the groups are, the stronger their board and their staff will be, and COMUCAP will be stronger.
Third step, weave alliances with people (and organizations) like those who helped them to begin the change in 2012 and who left them the secret for getting ahead: study the reality itself, wake up to what the study finds, and be accompanied in the process of change.
For these three steps the notion of stewardship helps us: our lives are a breath in the life of the universe, our participation in an organization like COMUCAP is at the most a tenth of a human life: a leader who lives for 90 years will hold posts for less than 9 years, a salaried worker will not be there for much more than that. In other words, while we hold positions of responsibility we must give the most of ourselves serving the 505 women, many of whom are single mothers taking care of their grandchildren, assuming the roles of mother and father. Stewardship, according to Block (2013, Stewardship: Choosing Service Over Self-Interest), is “the willingness to be responsible for the wellbeing of the organization, working in service of those who surrond us, instead of controlling them. It is responsibility without control nor compliance”.
Can the 505 women and the organizations that consider themselves to be their allies let die what needs to die, and give birth to what need to be born? The lionesses of Marcala are roaring: this movie has barely begun.
Utopia is on the horizon. I walk two steps, and it moves away two steps, and the horizon runs ten steps further. So what good does utopia serve? For that, for walking. Eduardo Galeano (1940-2015)
Once they discover the strength of the community, they will be able to do anything. Priest Héctor Gallego (disappeared in Panama in 1971).
The myth of the “harmonious” community was held by anthropology (see: Redfield R., 1930, Tepoztlan, a Mexican village: A study in folk life) until the 1950s, when Lewis (1951, life in a Mexican village: Tepoztlan restudied), restudying the same village that Redfield did, found that communities are disputed spaces mediated by power relations. In spite of the fact that this myth was debunked, it continues to attract followers: “living community”, “autochthonous community”, “peasant community”, “indigenous community”…; and they idealize it again as “harmonious”, at times as “exotic” to be directly visited, and other times as opposing globalization (Pérez J.P. Andrade-Eekhoff K.E., 2003, Communities in Globalization, the Invisible Mayan Nahual). In this article we describe a peasant-indigenous community in Honduras and argue that, following Gallegos, their disputed processes indicate steps with their diverse forces, this time in glocal (global and local) spaces, and that this path shows the utopia and horizon of Galeano, which the allied organizations of the communities –also conflicted – pursue.
Glocal economic transformation
Events in the community
Los Encinos Peasant Store
Alcoholics Anonymous (AA)
Juan Bautista Community Store
Introduction of vegetables and marketing (IAF: Honduras Foundation for Agricultural Research)
APRHOFI: Intibucá Association Of Vegetable and Fruit Producers
Los Encinos Store joins the COMAL Network
Introduction of irrigation systems (USAID, State agreement, EDA)
EMATE: Los Encinos Thread Craft Enterprise
Recovery of APRHOFI
Introduction of Ecological Agriculture
ESMACOL:Lenca Alternative Community Multiple Service Enterprise. (7 stores are the owners of Esmacol)
Introduction of greenhouses
The community of Encinos, with a population of 500 and Lenca roots, emerged at the beginning of the XX century. In the last 42 years this community has experienced big changes in their agriculture, forms of organization and access to markets, one part with national and international aid organizations, and another part based on their own funds. It is the product of a millennial indigenous culture and globalization, as ideas and resources came to this place. How did this transformation happen? See the above Table .
The 1960s and 1970s were marked by changes in the social doctrine of the Catholic Church with the II Vatican Council (1962), through which radio broadcast schools came to the rural areas that taught reading and writing and encouraged people to organize. And the Alliance for Progress of the United States came in to prevent the contagion from the Cuban revolution, pushing governments to permit the emergence of the National Association of Peasants of Honduras (ANACH) and the National Union of Peasants (UNC). In that context, a group in Encinos envisioned a store in and for the community, while in other places they envisioned a piece of land to leave to their sons. It was a time when they introduced potatoes and began to plant by “ploughing” their cornfield. It was when they built leadership coordinating families using their own resources.
The decades of the 1980s, 1990s, and 2000s were times of international conservatism in religion and economics, and a boom time for international aid. The struggle for the land was blocked by the law for farm modernization (1992), and the protection of the agro-food basis for the country was removed with the free trade agreement (CAFTA, 2004). The arrival of Popes John Paul and Benedict made the priests return to their parishes. Projects from organizations with physical investment and training crossed the rock and barbed wire fences. In this context organizations multiplied, and a group of leaders from various organizations envisioned “if we already have land and are producing on it, we need markets to sell our products”. Thus the COMAL network emerged in Honduras, and another additional store opened in Encinos. It was a time when vegetables and irrigation were introduced to Encinos, and the tug of war with the markets began. It was when they built leadership based on negotiating external resources.
The decade of 2010 found Honduras under the coup, additional reforms to the law of agricultural modernization, the approval of the anti-terrorist law that criminalized social protests, international aid withdrawing from Central America, a Catholic Church that seemed to be reanimated with the arrival of Pope Francis to the Roman Curia, and a world concerned about climate change. It was a period in which the COMAL Network saw itself forced to end mediation as a wholesaler of products, while the leaders of Encinos envisioned organizing enterprises to improve their stores and sell their products. Accordingly, along with 5 other stores from other municipalities of Intibucá, they bought ESMACOL as a distributor of products, recovered APRHOFI to sell their potatoes and vegetables to supermarkets, introduced greenhouses and sustainable agriculture practices to increase their productivity and lower costs, and organized another associative weaving enterprise in a decentralized fashion. It was a time when they built a leadership connecting the resources that they had (stores, distributor, renovated agriculture and commercialization enterprise) and cultivating relationships with the few aid agencies.
Circular dynamic in process
This description appears to be an expression of a virtuous circle between technological change, markets, organization and financing. It is more than that: see the figure inspired by a 4 layer onion. The organizations (stores, distributor, commercialization enterprise, weavings), the introduction of potatoes and vegetables and investments in irrigation systems and greenhouses, reveal that there is an interaction between the technological, social, economic, cultural and spiritual aspects. In other words, new crops and greater productivity (technology) implies more cooperation between families (social), which generates costs and income (economic), which requires changes in habits (cultural) as agriculture intensifies and deals with the market, this has repercussions in the spiritual-religious life of families, and this in turn on technology…
This network of organizations and changes creates prospects for improvement. There is a technological change (farm), business change (administration and entrepreneurial initiatives) and change in social relations with external actors. Multiple perceptions can be appreciated in this dynamic: in the business administration staff, in the members of the producer families, in the consumers in – and outside of – the community, in the aid agencies determined to “manage and execute”, and the leaders moving about in various “waters”. What explains this 42 year old circular process? In addition to what is described in section 1, we point to two facts. First, after several decades of cultivating the same areas, in the 1970s the weariness of the land began to be felt (decrease in fertility), due to that institution of “I will sow as I have always sown”, handed down for generations. It gave way to “ploughing”, at the same time that they organized the peasant store as a way of getting closer to a market that they could control. Second fact, like in many communities, in Encinos alcoholism reduced them to “measuring the streets”, and put the very existence of the store at risk. So Professor Jenny Maraslago saw this, suggested a solution and created the conditions for the change. This is how Bernardo González remembers it: “The professor in 1966 said,”it makes me sad to find these intelligent young men in the gutter”. Then the professor brought us the rules of AA and introduced us to a professor friend from AA. Encouraged by my older brother, we would meet continuously, and look, we quit getting drunk, from that day on everything changed.” 20 years later we find those young people no longer in the gutter, but leading the organizations.
These two changes contributed to creating the conditions so that Encinos in the following years would multiply their organizations. Nevertheless, seen from our times, the changes that occurred emphasize the technological-social-economic-cultural-religious elements that are the first layer of the onion (See Figure), while the changes in the other layers of the onion – on the level of the individual, family and community – are slight. On the community level, it is estimated that half of the population is outside of the described organizations, which means that there is exclusion and internal dispute: “they are conformists” vs “they do not let us in, only they eat”; in fact, 4 or 5 last names in the community underlie all the organizations, they are families whose commitment has generated organizations and benefits, and at the same time are the “bottlenecks” of local power, the door to external organizations. On the family level, the stores in the last 10 years have not included even one new member, not even their own sons and daughters, which is not strange given that the institution of land inheritance favors the sons, and does not discharge the inheritance “until the pig sheds it lard”; in addition a quick survey shows that the existence of children outside of marriage is similar in both organized and unorganized families. On the individual level, centuries-old beliefs have nested in their minds: “there are children outside of marriage because the women allow it”, in other words, following the mentality that “the man has the rights”, and “the woman is to blame”, something tremendously discriminatory. At the same time, all these points are in silent dispute: daughters who work in agriculture demand their rights, and wives who raise their voices against unfaithfulness (“if he does it to me, I will do it to him”).
The changes in the first layer are unsustainable without changes in the communal, family and individual areas. It is like “learning to fish” assuming that there will always be water in the river, and if the water is diverted for mono-cropping, held back by dams, or dries up from deforestation? In 1975 they woke up to the possibility of bringing in a store for the community, and in 1996 the rules of AA and the discipline of not drinking liquor for 24 hours renewed indefinitely, showed them a path for waking up to harsh realities. How can that capacity for change be expanded on the individual, family and community levels in synergy with the different initiatives achieved so far? Once again the image of the onion helps us to respond to that question: all the layers appear to be separate, but they are united by the root of the onion. In the next section we identify that root.
Mobilization of forces under democratic mechanisms
The elites of the world predict that “economic growth generates democracy”. Encinos shows that is not true. It is important to “manage” the economy with democratic mechanisms where the entire community moves and cultivates a capacity to awaken their consciences in the face of each new reality.
These mechanisms include that the rules (statutes) of each organization be respected, their organs (board of directors, oversight board, assembly) make decisions, there be interaction between the associative side (organs) and the business side (administrative and technical staff) without any side replacing the other, the rotation of leaders be done and the fact that one person would take on various posts be avoided. As they study their realities, the corresponding bodies include policies so that sons and daughters of the members might join the organizations, and exclude those who fall into gender violence, and/or after forming their family, have children outside of marriage. That part of the mission of the organizations be to help the other half of the community, that has been left invisible for the aid agencies, to organize their own initiatives. That the external organizations contribute to the communities being vigilant about compliance with these mechanisms, and coherent in their democratic processes, overcoming the neoliberal institution of “managing and executing” that goes along the lines of the idea that “the economy generates democracy”, and that instead listens to the forces in the communities and translates them into ideas that are backed by other organizations.
This reminds me of the dilemma of the pons asinorum (bridge of asses) of St Thomas: the asses cannot cross the river because they cannot find the bridge. In our case the “bridge” are these democratic mechanisms interlinked in different spheres – individual, family, community and global – interacting with the economic, social and religious organizations. This is the mobilizing circular dynamic. Nevertheless, many times what happened to the asses happens to us, in spite of the fact that we see the bridge, we do not cross the river on it; and other times we say we did cross it, without really moving from the side of the river where we are. In contrast, the professor alluded to above saw the challenge of crossing, saw the bridge (AA) and brought them to the community of Encinos, and they crossed over!
The priest Gallego said that when people discover “the strength” of the community, people can “do anything.” The writer Galeano said that utopia “serves for walking.” The community of Encinos teaches us that utopia is on the other side of the river, and reveals its strength in the “bridge.” Can we see that bridge and cross the river on it? Here is the dilemma.
Son to his Father: old man, you are not making money on the blocks of sugar; you are just doing it to work.
Father: Yes, I was raised in this and I miss it.
Mom: And where do you think our clothes come from, this roof … and part of the food? From sweating over these blocks of sugar!
(Conversation with peasant family, Yoro, Honduras, 2017).
Sugar cane was domesticated 10,000 years ago on the island of New Guinea. It came to the New World based on slave labor and environmental degradation between 1425 and 1493. Slavery began to be stopped in 1807 when England prohibited the slave trade which happened through the purchase of slaves in Africa with sugar itself; at that time more than 11 million slaves had been brought in, more than half to sugar plantations (R. Cohen, “Passion for Sugar” in: National Geographic). These plantations were established at the cost of dispossessing the indigenous populations of their land. With sugar cane we see that “a lot of water has passed under the bridge” – more than water, human blood.
In Central America part of the elite continues in the sugar industry with enormous human and environmental costs (see case of Guatemala: Labrador, Villagrán, Sánchez y Alvarado, “El cartel del azúcar de Guatemala” in: El Faro 25-4-2017, https://elfaro.net/es/201704/centroamerica/20091/El-cartel-del-az%C3%BAcar-de-Guatemala.htm). In the face of this reality, peasant and indigenous families have included sugar cane in their family strategy for self sufficiency and income generation. Does sugar cane allow them to resist? Is this sugar cane, that has planted so much death, also an instrument for life? We argue that if families organize to add value to their sugar cane, they can resist dispossession, remain in their communities without being driven to migrate, and at the same time contribute to environmental sustainability. Consequently, in this article we describe the peasant perspective on sugar cane, the dispossession that they have suffered, their viability, and the challenges that accompanying these processes of repossession imply.
When peasant families see themselves forced to migrate, they tend to take with them some sugar cane plants, and other families even take the sugar mill. The families get to the mountains or places where they can buy less expensive land. There they start to produce corn and beans, they establish their banana plants and sugar cane, they preserve patches of forest for wood and firewood, and they raise small livestock (poultry and pigs) and 2 or 3 cows. Their strategy is to diversify and reduce risk: the forest for wood (home construction, fence posts) and firewood for the kitchen and the oven of the sugar mill; they plant corn, beans and bananas to ensure their food; they grow sugar cane that they turn into blocks of sugar for their own use (to sweeten coffee and natural juices, make honey, pastry, coconut squash, mangos with honey, fritters, corn bread, and liquor – and as young D. Mejía tells us “the recipes of my grandmother are the best with brown sugars”- and for selling it. The sale of the blocks of sugar during a good part of the year, and the sale of 2 to 3 cows a year, is cash to cover other needs (salt, soap, matches, etc) and to buy “new clothes.”
Due to their distance from the market, the idea of the peasant families is to depend as least as possible on outside products. That is why it is easier to take blocks of sugar out to sell in the towns to generate income, than bunches of bananas or corn. Taking 100 lbs of brown sugar blocks generates a little more than double the income of 100 lbs of corn. In addition, sugar is one of the crops that are least affected by diseases or insects, and once established, requires little work and can resprout year after year for more than 50 years. So it is that wooden mills and then iron mills emerged, along with the sugar cane, powered by a team of oxen, and in some communities by a motor. In some communities the blocks of sugar are the only way to connect to the market and get some cash.
Table 1. Transformation of brown sugar block (20 tons / mz)*
L / block
$ / block
Sale (load of blocks)
Weeding (1 mz)
Guide for oxen (load)
Team of oxen (load)
Cutting cane (mz)
Transporting cane (ton)
* 20 tons of sugar cane in 1 mz (0.6988 has) = 33.33 loads of blocks, 1 load = 48 blocks, 1 block= 3 lbs. ** L750/load of blocks; price varies between 700 and 1000/load. L = lempiras, currency of Honduras
Source: based on family producers of cane and with/without mill (Yoro, Honduras)
Table 1 shows its profitability. A family with sugar cane, a mill and a team of oxen could generate income of 13,533 lempiras (balance of 9,600 + 2000 transportation + 3,333 team of oxen – 1,400 for weeding). A family with sugar cane, but without a mill and oxen, that turns in their cane so that it gets processed and they get half the value in return, gets L10,500 (half of L25,000, minus 2,000 for the transportation of the cane). If that same family with a mill takes on the cost of the weeding, leading the oxen around the mill and the cooking, their income increases. Both families get more income as they produce more than 20 tons per manzana.
Pressure combined with dispossession
Living in these communities for 25 to 30 years, families now feel pressure on their economic strategy (income diversification and generation), social strategy (sharecropping relations and sharing labor – mutual support) and political strategy (decisions and autonomy). The “domino effect” of the so-called agricultural frontier is being felt (see: Maldidier, Ch., 2004, “agricultural pioneer fronts, the crest of a far-reaching wave”). The land is tired and its productivity is declining, it needs to be fed, which in turn creates pressure for financial resources to buy fertilizers. Because of world sugar demand and how lucrative it is for the oligopolies, large sugar cane, african palm, rice, and extensive ranching plantations require more land and more water, and that pressure is being felt in the communities whose families at times of greater economic fragility (e.g. sickness of a relative, indebtedness, lack of water), or when the pressure suffocates them (e.g. plantations that close off the road to a community), are left with no choice but to get rid of their land. The sons and daughters who form their own homes press for their inheritance, with the consequence being that the areas per family are getting ever smaller. And the milling of the sugar cane begins to suffer from a scarcity of labor: the work of the ox guides and the cook is hard, from midnight to 9am, because the workers, with the passage of time, take advantage of other opportunities like working in sawmills, coffee fields or migrate in search of other opportunities.
Slowly the sharecropping relationships get eroded and the capacity to decide gives way to the force of the market that comes in with different consumer products, with different labor relations, with credit that finances mono-cropping, with the “deadly embrace” of expensive farm inputs and low prices for peasant products; this is when the population murmurs, “our money doesn´t go very far”. Also state law imposes taxes and restricts the use of their forest areas, while the laws do protect the sugar industry. So human groups, like an ear of corn that shells itself when it loses one kernel, cede their places and go off to other land or become workers. That is why we do not find mills close to the cities; they get farther away tas the “domino effect” intensifies. That is when the profitability of Table 1 gets complicated, because it begins to operate less frequently.
In the last 15 years this practice of establishing oneself, and being forced to migrate to the mountains, appears to be facing drastic changes. Practically speaking there are no more mountains to go to, which is why that escape valve is now being shut down. So increasingly the population migrates to the cities and leaves the country. But at the same time countries like the United States are closing their doors to migrants. The paradox is that that “domino effect” that starts from the demand for sugar mediated by oligopolies, on the one hand expels the peasant families from their land, and on the other hand, they are rejected by the metropolis. This is the second “deadly embrace.”
Adding value to the product in an associative way
How can you resist for more than 25-30 years and stop the “deadly embraces?” The COMAL Network is trying one way, where the peasant families organize into associative enterprises to add value to the sugar cane, producing granulated brown sugar (See: “Eco comal, una marca campesina que cobra auge” in: Diario Tiempo, 4-8-2015).
Table 2. Transformation of granulated brown sugar (20 tons / mz)
Granulated brown sugar
Purchase sugar cane (ton)
Labor (hrs work)
* 1 ton sugar cane = 240 lbs (60% granulated brown sugar 40% crumbs). Exchange rate $1 = L23.3
Source: Records of the granulated brown sugar processing plant of APROCATY (Yoro, Honduras)
In the municipalities of Taulabé, Jocón and Yoro in the last 5 years 100 peasant families that have sugar cane on their diversified farms have organized into 3 associative enterprises. With the support of international aid, they have established 3 processing plants on their farms. Even though their yields vary between 60 to 72% of granulated brown sugar, the calculations in Table 2 are encouraging, even based on the lowest yield. Let´s take a look, a member family sells 20 tons of of sugar cane at L8,800; and then, depending on the policies of the organization, that member family has the possibility of accessing part of the remainder of L5,753 that their sugar cane generated in the organization. In only 3 years, on average in these experiences, the difference of the “value added” is noticeable.
The outlook that they offer us is even more interesting. According to the table the costs are 81.8% of total sales, and to the extent that they grow in volume and yield (let´s say from 60% to 70% of granulated brown sugar), those costs drop from 81.8% to 70%, then the remainder will go beyond L10,000 and also $0.10/lb. This is the commitment of the three organizations.
Going back to the communities, specifically Laguna de la Capa (Yoro) which was already on the outer limit of the 25-30 years, the impact of the processing plant made itself felt. When the APROCATY organization began, the prices for the blocks of sugar were falling below L500/load (48 blocks), the cane fields were being lost and all the symptoms described in section 2 began to appear. “The ear of corn was beginning to lose its kernels” . The entry of the production of granulated brown sugar helped raise the price of cane and blocks of sugar to L700, 800 and even L1,000/load of blocks, because a good part of the sugar cane was turned into granulated brown sugar, which put sugar blocks into short supply. This slowly began to re-energize the production of sugar cane as part of the diversification systems of the families, promoting the consumption of an alternative product to refined sugar, and a production alternative to the human and environmentally degrading practices of the sugar industry.
In spite of the short time line of these experiences, they teach us that it is not just a matter of adding value to the sugar cane and generating profits, but learning to cooperate under associative and business rules. For example, knowing the principle of accounting identity, where the expenses of a business are accounted for separately, understanding that the more effective the organs are (board of directors, committees, assembly) the more efficient the business is that transforms and sells the products, and regulating the use of the profits so that they contribute to the sense of ownership of the members of their organization, and that at the same time allows the equity of the organization to increase. They also teach us that there are risks in the future: that the aforementioned initiative might end up promoting monocropping of sugar cane and erode the peasant-indigenous resistance strategy; that a group might take over the business; that the administration might run the organization behind the backs of the members…
The challenge of accompanying these processes
To manage the risks and create conditions to make the expressed goal viable, it is important to start from the experience of the peasant-indigenous families themselves. They have learned that they are going to make the changes IF they have long term allies – in the good times and in the bad times. The COMAL Network is an expression of that commitment. That committed role, nevertheless, faces enormous challenges, three of which we will introduce here.
For centuries peasant families have counted on the organization and self sufficiency of their extended families. Getting this commitment to scale up organizationally for an effective resistance that would take them beyond the threshold of the 25-30 years implies overcoming centuries-old, deeply rooted institutions. “Yes, I was raised in this and I miss it”, the phrase from the Father quoted at the beginning of the article, means that the practices that he learned and the institutions (e.g. extended family, exclusion of women from the inheritance and from organizations) in which he was raised are going to persist, and even “will be missed.” In this dialogue, the son as well as the father ignored the fact that making blocks of sugar is profitable, as part of a diversification strategy, for 25-30 years. How to understand those perspectives in their contexts in order to accompany them is a monumental challenge for any external ally, because you have to study those realities and ask about alternatives, something difficult when we are accustomed to provide standardized solutions for any situation.
Peasant distrust toward outside actors, particularly merchants, is another institution deeply rooted because of centuries of plundering. Now that distrust is expressed as: “we will go to the meetings if they call us.” This assumes that the one calling the meeting is the external actor or a local person with the aura of being the representative of the external actor, and that they are not going to take the initiatives to call their own meeting and meet on their own. Getting the rules (statutes) and democratic mechanisms of an organization to be followed and used, as a way of “calling your own meeting”, is another challenge for any organization accustomed to going out to the communities and being “the big man” with resources in hand.
Member families in organizations with important physical investments tend to hunker down and prevent the entrance of new members. They do not allow even their sons to join the organization, much less their daughters. It will be difficult for organizations to respect their democratic mechanisms in their statutes if there are no changes in the heart of their families, changes in equity in terms of inheritances and in decision making where the mother and the offspring participate like the father. Without members that are experiencing changes in their families, it will be difficult for the organization to make progress. This is the third challenge for any ally organization.
In conclusion, sugar cane came into Latin America spurting human blood and subduing nature, a practice continued today under “modern clothing.” In the face of this, as the Mother at the beginning of this article would say, granulated brown sugar is more than the block of sugar, and the block of sugar is more than sugar cane, it is “sweat”: work and life. Behind it are peasant-indigenous families that are organized around blocks and the granulated brown sugar, while at the same time they are going deeper into their logic of “not putting all their eggs in the same basket.” Will it be possible that they might begin to express a path for transforming peasant-indigenous products as they transform their families and their organizations toward greater equity?
 René has a PhD in development studies, is an associate researcher of IOB-Universiity of Antwerp (Belgium), a collaborator with the Winds of Peace Foundation (http://peacewinds.org/research/) and member of the COSERPROSS cooperative; email@example.com. Hector is an agronomist, coordinator of the Technical Unit for Business Consultancy of the COMAL Network, and technician-expert in the transformation of granulated brown sugar; firstname.lastname@example.org
Eve left the Garden of Eden over chocolate! Anonymous.
Life is like a box of chocolates, you never know what you are going to get. Forrest Gump
The exodus of the people of Israel from Egypt to the Promised Land, the Bible says, had a decisive moment when, pursued by Pharaoh and his Army, they arrived desperately to the sea, and then Moises raised his staff and the sea opened up; so they turned a page and wrote their history. The chocolate industry predicted that by 2020 they will need 30% more chocolate; nevertheless, the cacao supply does not seem to be responding to the demand. Said figuratively, the state institutions, the market and society, like Moises, are raising the staff of productivity, quality, inclusive businesses and fair trade so that there might be more cacao and Eve might have a reason to not go back to Eden, but the sea is not opening up! Why? What “staff” is needed for the sea to open? This article deals with that question.
 René (email@example.com) has a PhD in development studies, is a collaborator of the Winds of Peace Foundation (http://peacewinds.org/research/), an associate researcher of IOB-Antwerp University (Belgium) and a member of the COSERPROSS Cooperative RL. We note that the name of the municipality “Sasha”, the Dalila cooperative, the ABC and RDA NGO, Flesh company, and the last names Konrad, Peñaranda and Peña, mentioned in this article, are ficticious. We did this to protect those identities from any inconvenience that this article might cause them.
I have written here often about some of the cooperatives with whom we work and, especially, the remarkable people encountered in these organizations. Along the way, I have shared descriptions of some of the tools that we have shared with Nica partners (like Open Book Management and Lean principles), because many rural producers have become convinced of the need for organizational strengthening. It should be no surprise that Winds of Peace Foundation regards these tools, and others that encourage inclusiveness and participation, as key to sustainable organizational strength. So do many Nica partners. But thinking that something is true does not automatically prove that it’s true. So I decided to share some data about ownership that has recently been published.
The National Center for Employee Ownership (NCEO) has published a new study of employee-ownership in the U.S. Now, the U.S. is not Nicaragua, and employee stock ownership is not cooperativism. But the results cited in the report focus on enterprise ownership, owning the business and social equity of an enterprise, and that definition encompasses an entire spectrum of stakeholder models. And this is a portion of what the study has found:
*Enterprise-owners in this dataset have 33% higher median income from wages overall. This holds true at all wage levels, ranging from a difference of $3,160 in annual wages for the lowest-paid employee-owners to an extra $5,000 for higher-wage workers.
*Median household net wealth among respondents is 92% higher for owners than for non-owners. This disparity holds true for the great majority of subgroups analyzed, including single women, parents raising young children, non-college graduates, and workers of color.
*Enterprise-owners of color in this data have 30% higher income from wages, 79% greater net household wealth, and median tenure in their current job 36% over non-employee-owners of color.
*For families with children ages 0 to 8 in their household, the ownership advantage translates into median household net worth nearly twice that of those without employee ownership, nearly one full year of increased job stability, and $10,000 more in annual wages.
The report is full of additional data which supports the organizational value of ownership; take a look at it for lots of details. But the picture being painted here is one of many colors: organizations that involve their workers as owners are more successful; greater opportunity comes from ownership; greater participation through ownership yields greater strength and organizational growth; there is a central tendency in us as human beings to nurture and protect that which we own.
Concurrent with the publication of this groundbreaking study was the publication of Fortune Magazine’s 2017 100 Best Companies to Work For. Of the 73 corporations recognized for their outstanding workplaces, more than half of them (35) incorporated ownership plans for their members. It’s hardly a coincidence that many of the best companies to work for are companies owned, in whole or part, by the employees or members themselves. (The Fortune list is traditionally weighted heavily toward technology and healthcare providers; the preponderance of ownership would presumably be even higher in a more representative sample of U.S. businesses.)
There is no mistaking the fact that Nicaraguan cooperatives are owned by their members, in at least the structural, legal sense. But like their U.S. employee counterparts, Nicaraguan owners need the understanding of what ownership is, of what their ownership obligations and rights are, and how their success truly rises or falls based upon the members taking responsibility, collectively. Successful ownership is not reliant upon heroes or the efforts of the few or the presence of a beneficent patron. Success follows a basic understanding of how their cooperative works, how A+B=C, and importance of each member to the whole.
So when the third Certificate Program is convened in August, there will be modules about family strategic planning and access to markets and means of improving production and quality. But at its core, the Program will be about ownership, seizing the opportunity for self-improvement by embracing both self and collective responsibility. We’ll be there to help conversations about Open Books and Lean, but the days will really be about our partners’ futures, and their appetite to own it….
I’ve been thinking about a blog post written by my colleague, Rene Mendoza, and posted here last month. The title of Rene’s article was, “Can the Youth Fall in Love with the Countryside Again?” It’s a provocative idea, in that the data suggests the Nicaraguan youth see little hope in remaining on the family farm, their conclusions relying on analyses of family farm economics as well as, ironically, their own education. (My apologies, Rene, if I have over-simplified or simply missed their outlooks!) Rene goes on to offer an alternative and hopeful conclusion, one that I’ll affirm here, though for different reasons.
I’ll first need to acknowledge the “elephant in the room.” The independent producers in rural Nicaragua are, for the most part, extremely poor. They have little margin for error in their production cycles, whether the difficulties are the result of natural calamity, market gyrations or corruption. At best, farmers face incredibly difficult logistics: availability of crop inputs do not always coincide with available finances, most producers rely on mill services at other locations, the roads are often little more than unimproved paths, and transport of the harvest to a reliable marketplace can be a game of chance. So, yes, let’s acknowledge the very real and complex issues facing the grassroots producers.
Next, I guess I should recognize the “rhino in the room,” the seductive “siren call” of modern society. Though rural Nicaraguans lead lives far-removed from the technologies and industries of large urban populations, they do not live in solitary confinement. Televisions, smart phones and Internet access provide an all-too-clear depiction of conveniences and gadgets that are sleek and enticing enough to beckon even the most resistant young person, even those who are prone to remain in the countryside. It’s a call that reaches nearly all youth these days, with amazements that have names like Twitter, Instagram, Facebook and Google. The names even sound like a playground.
Then, there’s also the “hippo in the room,” that vast and universal gulf between one generation and the next, where the elders are seen as archaic and the youth as inexperienced children. Although Nicaraguans do not have an exclusive monopoly on this circumstance, they do endure the contextual reality of being called the second poorest country in the Western Hemisphere. That’s more than just a bad name, it’s a brand, and one that any new generation would not appreciate receiving from an older one.
So, locked in a small room with the beasts of the wild, is it realistic to really believe that the youth can fall in love with the countryside again? I think the answer is yes, and for reasons that transcend the presence of the beasts which prowl there. The beasts are capable of being tamed. It’s part of the reason Winds of Peace and others are there, in the effort to at least tame the wild game.
The beasts are not immortal. While their visits can be life-threatening and sometimes long, they can and do move on. What’s required is the chance to eliminate their feeding grounds: despair, lack of education and a forgetfulness.
Our partners in Nicaragua have never lost hope. Despite battles with natural disasters and man-made troubles and sometimes fickle and deceiving markets, some Nicaraguans are seemingly impervious to despair. It’s a critical matter, because where despair is denied roots, hope grows, confidence takes hold and what was once old becomes new.
New. It’s what seems to attract youth no matter what the context. The next generation is always focused on charting a new way, their own way, and even if the way is remarkably similar to the way of their elders. The education of the youth permits them to experience the countryside and its character in ways very different from their parents. Education of the youth is the fundamental building block for the progress of the country; ability to read and write and conduct basic math are the keys to doors long-closed for many in rural Nicaragua. But sometimes what the youth learn in class contradicts what they have experienced in the fields: the taskmaster of economics and the glamor of a technological revolution can quickly mask the solitude of the morning, the presence of neighbors, and the strength of community. Economics might suggest that money is made by selling off components of life, by trading what is inside them for things that will never be truly part of them. The Internet allows access to virtually everything that is fantasy and fact, but sometimes overlooking that which is really of value. The education of the youth is the essential ingredient for their development, but only when they are taught within the context of all of life’s values.
The real hope for the youth falling in love with the countryside is perhaps not so much found in the technical and operational teachings derived from their education, nor in their search to separate themselves from the known; children eventually come to recognize the wisdom of their parents. Maybe it’s as much dependent upon the youth remembering what it is that they have loved before, in the days when they climbed trees and fetched water and helped in the fields with family things. Maybe it’s in the recollection of a history wherein basic dignities of life were worth a family’s struggle, and where human compassion and decency outweighed the heavy obligations of a competitive modern life. Maybe it’s the discovery of liberation that comes from truth.
Can Nicaraguan youth fall in love with the countryside again? Yep. And maybe a good place to start would be for them to talk with those of us who actually search for a love of countryside ourselves, seeking capital in its non-financial forms, hoping to satisfy a longing for honest self-sufficiency, and to remember life in its most basic components….