Spotlight on Smallholders: Creating Shared Value in Global Supply Chains

By Paul Rice

fairtradeusa.org

paul rice headshot (3)

Paul Rice is the founder, President & CEO of Fair Trade USA, the leading certifier of Fair Trade products in the United States. Since launching the Fair Trade Certified label in 1998, Paul has pushed to innovate and mainstream the Fair Trade movement to deliver more impact to more farmers around the world. Partnering with 800 U.S. companies, Fair Trade USA is rapidly expanding in both food and manufactured products, building sustainable supply chains that create shared value for industry, farmers and workers. With 55% consumer awareness, Fair Trade USA and its partners have helped return over $350 million in additional income to farming families in 70 countries across the globe.

Smallholder farmers are the backbone of our global food systems. According to the FAO, small-scale family farming accounts for 80% of all farms in Latin America and the Caribbean.  Yet most smallholders are living in conditions of extreme poverty. Though they’re the most valuable contributor in global supply chains, they’re also the least valued and least understood. That’s why the AgroLAC 2025 platform is unique. It’s a way for multiple players—from lenders to businesses to certifiers—to join together to bring voice and focus to the invisible majority.

Anyone involved in AgroLAC knows key challenges in smallholder farming:  lack of access to markets, lack of access to finance, low productivity, no technical support, vulnerability to middle men, market volatility, and climate change. The climate change factor is especially significant. A new study from CIAT concludes that as climate change worsens, less and less land will be suitable for growing things like Arabica coffee. Who are the primary producers for Arabica? Millions of smallholder farmers.  Right now, climate change is rendering lower altitude coffee lands “unsuitable” for production, putting strain on smallholder growers already struggling to cope with market volatility, decreasing yields, increasing pest activity and natural disasters, and inter-generational cycles of poverty.

The time to find meaningful solutions for smallholders is now, and in many cases Fair Trade can be an important starting place. Though Fair Trade is by no means a panacea for all challenges in agriculture, it is a proven market-based approach to deliver financial resources directly into the hands of farmers, for supporting long-term community development, and for convening actors across entire supply chains. This happens in a few key ways:

  • Market Access: Earning Fair Trade certification allows smallholders to access vibrant, global markets of conscious consumers. Not only do smallholders get connected with buyers looking for sustainably-sourced products, they also gain access to a vast network of experts to increase quality, production, and forward-thinking stewardship of natural resources.
  •  Financial Stability: Fair Trade farmers always earn additional income. This happens through the Fair Trade Minimum Price and the Community Development Premium.
    •  The Minimum Price is a safety net—a guaranteed floor price that ensures a minimum payment when the market dips too low. It also serves as collateral to anchor lending to cooperatives, which is a big deal in small-scale agriculture.
    • The Fair Trade Community Development Premium provides additional income to farmers with every sale. In coffee, it’s $0.20/lb. In cocoa it’s $200/MT. A democratically elected farmer committee then decides how to spend the money on needs identified by their home communities.
  • Improving Production Practices: To become Fair Trade Certified, smallholders must meet and adhere to a rigorous set of social, environmental, and economic standards. These standards create meaningful change in the lives of growers and on the land they work. As incentive, their Fair Trade certificate opens doors to markets & buyers, finance, and a long-term strategy for development.

We know that Fair Trade works best in collaboration with all players in supply chains including consumers. By working closely with NGOS, lenders, and service providers, Fair Trade growers can truly maximize the impact of certification. In this sense, Fair Trade can be thought of as a network, a convener, and an access point to millions of smallholder farmers who are eager to engage in innovative new initiatives. I envision AgroLAC operating in a similar way—a platform for cross-sectorial collaboration, creating an environment where smallholder farmers not only survive, but thrive. Fair Trade USA looks forward to being part of this journey with AgroLAC.