Responsible Sourcing Partnership Project: Brazilian Fair Trade Certified Coffee - Essay Example

Responsible Sourcing Partnership Project: Brazilian Fair Trade Certified Coffee Introduction On November 10, the winners of the Brazilian Fair Trade Cericoffee cupping competition were announced. The competition is a specialized tasting to assess coffee quality and is restricted to Fair Trade certified coffee. Denny Robertson, USAID Mission Director to Brazil, said "today we are celebrating the fruitful harvest of our collective work during three years of project implementation.” (PR Newswire, 2010) That work involved multiple organizations committed to improving the quality of Fair Trade certified coffee produced by small Brazilian coffee cooperatives. The following discussion will focus on this Brazil responsible sourcing project and the first three years of project implementation. Initially, the project will be outlined, then its organization and performance will be evaluated. Finally, a concluding section will assess its impacts and effects. About the Project The Brazil Responsible Sourcing Project partners are the United States Agency for International Development (USAID), TransFair USA, Walmart Stores and local Brazilian partner Sebrae-MG. Thus, the project unites the private sector (Walmart), government agencies (USAID) and non-governmental agencies (TransFair USA). It also includes a local (Brazilian) partner, Sebrae-MG a Brazilian agency dedicated to provide, through access to new knowledge, new business opportunities for micro and small enterprises. The three-year project was initiated in 2007. In total, project partners contributed $1.9 million. Of that amount, $144,000 were infrastructure upgrade grants. (USAID, 2009) By 2008, “eleven producer families [had] used the grants to build coffee drying patios on their properties so their coffee beans could reach proper quality,” according to Coopfam president Luís Adauto de Oliveira. Coopfam was one of five Brazillian cooperatives that received project infrastructure grants. (USAID, 2008) The project objective was “to help smallholder farmers increase exports of Organic and Fair Trade Certified coffee by 400% and 350% respectively.” (USAID, 2009) The concept behind the project was to provide farmers with better access to global markets, thus increasing their income. A second objective was to provide retailers in the United States with enhanced access to premium-quality coffee beans. (USAID, 2009) Analysis The most noteworthy organizational aspect of the project was the number and diversity of project partners. The local Brazilian partner agency, Sebrae-MG, specializes in organizing and coordinating interested parties in developing programs that are beneficial to Brazilian micro and small enterprises (MSE). They coordinated the three American partners and ensured that their money and efforts were deployed most efficaciously. USAID oversees American development aid throughout the world. This agency provided funding, experienced personnel and the authority and legitimacy of its long history of international development projects. TransFair USA is “a 501(c)(3) nonprofit organization, is one of twenty members of Fairtrade Labeling Organizations International (FLO), and the only third-party certifier of Fair Trade products in the United States.” ( “Fair Trade USA: About Us”) It provided third-party certification that the project complied with standards for fair trade products. Finally, Walmart provided the retail opportunity in the United States. In August 2009, Walmart announced the retail roll out of the first products from the project, two Fair Trade CertifiedTM Members Mark coffee brands in 600 Walmarts across the United States. Greeting the roll out, Jill Turner-Mitchael, senior vice president of Merchandising, Sams Club said, ““We are excited to be expanding our offering of high quality Fair Trade Certified coffee at clubs throughout the U.S..... This partnership falls in line with the companys mission of providing opportunity in communities around the world.” (Sams Club, 2009) This announcement in 2009 did not mean that the project had hit snags or pitfalls in its first years. Rather, it takes that long to grow a crop of coffee beans. In other words, the project ran smoothly and the product was on the shelves in the U.S. at the fastest possible moment. Together the project partners ensured local coordination, third-party certification and complete supply chain organization from the Brazilian farm to the American retail outlet. A low-cost project, in the context of USAID multimillion dollar development projects had products on shelves in the U.S. less than two years after the project was initiated. In international development terms the project was inexpensive and quick. Statistics indicate also that the project was successful in terms of its impacts on Brazilian coffee MSEs. In November 2009 PR Newswire announced that the project had benefited 6000 farm families and 30,000 people. The people were members of five separate cooperatives operating in three Brazilian states – Sao Paulo, Minas Gerais and E Santo. (PR Newswire, 2010) The numbers alone do not tell the whole story. Paul Rice, CEO of Fair Trade USA noted in November 2010, that the statistics are only the tip of the iceberg: These hard-working farmers have learned the skills to improve the quality of their beans. Higher quality beans will allow them to negotiate better prices and long-term stable contracts, and generate more Fair Trade premiums to invest in education and health care in their communities. This increased business capacity will support these communities for generations to come. (PR Newswire, 2010) The project did not only increase the income of the farm families through better prices, it also enhanced their economic stability with longer term contracts. It is also improved the quality of life in the cooperatives by improving infrastructure and investing in education and health care. Together, this developments all pay it forward and mean that the original investment of less than two million dollars will pay returns for generations to come. This project epitomizes sustainable development. Sustainable development was first defined by the Brundtland Report: "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts: the concept of needs, in particular the essential needs of the worlds poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organization on the environments ability to meet present and future needs. (World Commission on Environment and Development (WCED), 1987) The Brazil Responsible Sourcing Partnership advances each of these goals. By addressing coffee producing SMEs in Brazil it is a response to the essential needs of the worlds poor. It is increases the quality of their product and their access to retail markets thus, increasing their income. Further, the investments in education, healthcare and other infrastructure address future needs. There is also another category of benefits that relate to the involvement of Sams Club. Philanthropy and compassion do not alone explain Walmarts involvement. Involvement in the project also offers commercial or financial benefits to Walmart. Specifically, it is an aspect of Corporate Social Responsibility (CSR). CSR is defined as "corporate social actions whose purpose is to satisfy social needs".(Angelidis and Ibrahim, 1993) Clearly, as noted above, this project social needs. Involvement in the project allows Walmart to demonstrate that it is a socially responsible corporate citizen. Walmart is often referred to as a company that people love to hate. Critics of Walmart point to its low wages and adamant opposition to unionization of its employees. Others argue that its volume purchasing, low prices and big box locations on the outskirts of urban areas destroy downtowns and drive smaller, local competitors out of business. However, by becoming involved in projects like the Brazil Responsible Sourcing Partnership Walmart is able to address these criticisms and point to socially beneficial projects that it is involved in. Simply put, it can be seen as an aspect of the companys marketing campaign. It counteracts the criticisms that it is socially irresponsible and rapaciously committed only to he bottom line and profits. Further, it allows it to do it in a way that actually has bottom line benefits. Cause Related Marketing (CRM) is the term used to refer to the communications strategy that accompanies CSR. According to Bronn and Vrioni cause related marketing attempts to convert corporate social actions into improvements in the bottom line: “Basically, the concept entails firms’ communicating... their affiliation or work with non-profit organizations or support for causes. The point is to attract consumers wanting to make a difference in society through their purchasing.” (Bronn and Vrioni, 2001) Walmart is not shy about touting its involvement with this project as is evidenced by the press release that accompanied the introduction of the two Fair Trade CertifiedTM Members Mark coffee brands in 600 Walmarts across the United States. Walmart is involved in this project, committing time, energy and money because it believes that it will improve its image and, ultimately, its bottom line. Conclusions The Brazil Responsible Sourcing Project of the United States Agency for International Development (USAID), TransFair USA, Walmart Stores and local Brazilian partner Sebrae-MG was a very successful project on a variety of fronts. It benefited the producers in Brazil and their cooperatives and communities. These benefits were both immediate increases in income and long term infrastructure improvements. It also provided benefits to the corporate partner, Walmart. Finally, for USAID it provides a model of a successful responsible sourcing partnership and encourages other corporations and non-governmental agencies to partner with them in the future. Finally, it was a remarkably inexpensive project in terms of international development. Sources Cited Angelidis, J. P. and N. A. Ibrahim. "Social demand and corporate strategy: A corporate social responsibility model", Review of Business, V.15(1): 7-10. 1993. Bronn, Peggy Simcic and Albana Belliu Vrioni, “Corporate Social Responsibility and Cause Related Marketing: an Overview” International Journal of Advertising 20, pp. 207–222, 2001.Web. 4 Nov. 2010. http://home.bi.no/fgl96053/csrandcrm2.pdf. PR Newswire. (November 20, 2010). “USAID, Walmart, TransFair USA and SEBRAE-Minas Gerais Sponsor Brazil Coffee Cupping Competition”.Web. 21 Nov. 2010. < http://www.prnewswire.com/news-releases/usaid-walmart-fair-trade-usa-and-sebrae-minas-gerais-announce-winners-of-the-2010-fair-trade-certified-cupping-competition-in-brazil-107062193.html.> Sams Club. (August 18, 2009). “Brazilian coffee farmers link with mass market coffee consumers”. Web. 4 Nov. 2010. TransFair. “Fair Trade USA: About Us”. Web. 11 Nov. 2010. http://www.transfairusa.org/content/about/aboutus.php. Truthout. (November 16, 2010). “Made in Brazil: Confrontnig Child Labor”. Web. 21 Nov. 2010. USAID. (November 2009). “Alliances in action, Brazil Responsible Sourcing Project” Web. 4 Nov. 2010. USAID. (December 1, 2008) “Brazil”. Web. 4 Nov. 2010. World Commission on Environment and Development (WCED). Our common future. Oxford: Oxford University Press, 1987. Read More