Trade Versus Aid: Alter Eco Brings Prosperity and Dignity To Farmers Around the World
By Kat Schuett
The “cloud forest” of northeastern Peru offers ideal growing conditions for a variety of grains, fruits and vegetables. For thousands of years, Andean civilizations have carved elaborate irrigation systems into the jungle landscape for the cultivation of wheat, barley, rye, corn, peas, lentils, onions, squash, carrots, hot rocoto peppers, tomatoes and cacao, the seed used to make chocolate.
However, historically none of these commodities have equaled the allure and commercial value of the coca leaf, the material used to make cocaine.
Although the leaf has been a medicinal staple among the Andean people for thousands of years, in the 1970s Western demand for cocaine skyrocketed and nearly 300,000 hectares of arable land were dedicated to coca cultivation, leading to the clear-cutting of rainforests to keep pace. Peru became the world’s largest coca leaf producer in the 1980s and more than 200,000 Peruvian peasant families were caught up in the cultivation of coca. The influence of the cocaine trade quickly turned the jungle into a playground for drug cartels. At its peak, cocaine accounted for annual export revenues in the neighborhood of $2 billion, dwarfing Peru’s other legal export crops, which totaled $3.5 billion combined.
Fueled by the toxic mix of drug money, land skirmishes and political riots, bloodshed soared and tens of thousands of Peruvians died in clashes between the army, guerillas and drug traffickers. Eventually, to eradicate coca growing and stop the violence, the government—with funding and technical assistance from the United Nations and the United States—instituted land reforms, giving farmers ownership if they committed to growing alternative crops.
Farmers began switching from coca cultivation to cacao, and from 2001 to 2007, exports of Peruvian cacao rose 424 percent from $8.5 million to $44.6 million. But the catalyst that sustained this change wasn’t aid from the UN or the U.S. The change was driven by the market—by businesses, and ultimately consumers, who were willing to pay farmers fairly.
One of the companies driving the fair trade market in Peru—and in over 50 other developing countries around the world—is Alter Eco, a wholesale buyer and marketer of fair trade and organic products. The company’s philosophy is that through fair trade, rather than just aid, conscious capitalism can not only help farmers in impoverished areas of the world create more sustainabile economies, but also, in developing a healthy marketplace, can give these people something else just as valuable—a sense of dignity. The feeling that one gets when they are paid respectfully and honored for the fruits of their labor.
Working with over 60 cooperatives, and hundreds of thousands of small farmers, Alter Eco France has brought more than 150 fair trade products to the European market since 1998. Due to its rapid rise in France, Alter Eco launched in the United States in 2005 and is quickly becoming known as a leading fair trade brand covering multiple retail categories.
But for Alter Eco, conscious capitalism isn’t just about offering a fair price for goods and bringing products to market. It’s about continually looking for opportunities to use commerce to inspire change socially and environmentally as well. In Peru, Alter Eco is not only helping create a market for the farmers’ cacao, but also is providing additional income and helping rebuild the rainforest through its carbon credit program. Farmers in this program are paid to plant and maintain trees in areas ecologically devastated by past coca farming. So far over 75,000 trees have been planted resulting in 25,000 tons of CO2 sequestered from the atmosphere.
Alter Eco’s inspiring work with farmers in Peru is just one example of how the company is using the market to drive change in the world. In the West Bank, the cultivation of olive oil is promoting peace by building a bridge of commerce between Palestine and Israel. In Bolivia, red quinoa is preventing the hillsides of the Andes from eroding and providing more income for the poorest people in South America. In Thailand, purple jasmine rice is bringing back biodiversity. Across the world, Alter Eco is using its business model to drive change, inspiring consumers to find their “alter eco” and take part in “jubilatory activism,” by purchasing and enjoying foods that are helping create a better world.
Finding Your Alter Eco: The Beginning
Oftentimes inspiration for change happens when you are going the opposite direction of what your destiny was meant to be. Then fate steps in for a wake-up call. For Tristan Lecomte, founder of Alter Eco France, this wake-up call came when he picked up a small alternative newspaper in the Paris subway and an article caught his attention. The story was about a nonprofit organization trying to solve global poverty by selling products from all over the world. At the time, Lecomte was working as a project manager for corporate cosmetic giant L’Oreal, and feeling less than fulfilled. The job was a far cry from his career roots, which had involved founding an organization that built solar ovens and portable toilet facilities for farm workers in Nepal.
But the article reawakened his entrepreneurial spirit and his passion for social change. “Because I had a strong business background, I felt that there should be a way to scale up this concept of fair trade and make it something that’s both grass roots and a little more mainstream,” Lecomte said.
Lecomte launched Alter Eco in 1998 as an eclectic nonprofit, volunteer-run store in Paris’ Les Halles central market—selling fair trade furniture, handicrafts and a small selection of food items from around the world. Although the store was moderately successful, by 2002 he decided to shift his focus to food and began sourcing products directly from farmers, traveling the world in search of cooperatives that had great products, but needed access to larger markets.
To build a bigger marketplace for these products, Lecomte began to work with other retailers, selling Alter Eco products in local food cooperatives and later landing a major distribution deal with Monoprix, France’s leading food retailer with 267 stores in the nation’s largest metropolitan markets. Following Monoprix's lead, other chains picked up the Alter Eco line and last year the brand was sold in over 4,000 stores, bringing in over $30 million in sales in France alone.
Alter Eco’s U.S. debut came in 2004, when two of Lecomte’s long-time friends, Mathieu Senard and Edouard Rollet, offered to take the product to Natural Products Expo West to see if there was any interest. The show proved that the U.S. market was indeed hungry for change and soon the largest natural foods distributor in the country, United Natural Foods Incorporated, came calling. Rollet and Senard went to work building Alter Eco Americas, and by 2005 they were selling a product line created specifically for the U.S. market.
Both Senard and Rollet shared Lecomte’s passion for social change and had been involved in international development and social betterment efforts. Senard had operated an orphanage in the impoverished rural region of Siem Reap, Cambodia, while Rollet had worked with UNICEF in Dakar, Senegal and later served as an international trade specialist and senior trade attaché in the French Embassy’s Economic Department in New York City. This combined experience made them the perfect team to take Alter Eco to one of the largest markets in the world. Since 2005, the two entrepreneurs have developed 32 products and grown the U.S. company to over $2 million in sales. Although the development of the fair trade market in the United States is several years behind Europe, because of its sheer size America is already the number one fair trade market globally, with projected total retail sales of $1.25 billion by 2016 based on a conservative 10 percent annual rate of growth from today.
In addition to the United States, Alter Eco has been focusing on increasing its presence internationally and has launched regional initiatives in Australia, El Salvador, Brazil, Morocco and Japan.
Global Network of Co-ops and Family Farms
At the foundation of all this growth are the 60 co-ops—and over 250,000 farming families throughout the world—who grow “honest foods” for Alter Eco. It is the company’s top priority to nurture these farming relationships.
“One of the things that is very particular about Alter Eco is that each product we sell, we buy directly from the farmer,” Senard commented. “We meet with them, which enables us to discuss the methodology, quality control and various aspects of the performance of the co-ops. In many cases, they have never had this kind of support, this end-to-end relationship with the buyer.”
Because of this, Alter Eco enjoys extraordinary supplier loyalty and the partners assert the strength of the relationship translates into superior quality products. In addition to consulting with farmers on more sustainable growing techniques, the Alter Eco team also often assists in modernizing packing and shipping processes, streamlining operations. The result is fresher goods and less waste.
Overall, Alter Eco’s economic model is to maximize openings for small fair trade producers on three types of added value—economic, social and environmental, according to Senard.
This triple bottom line approach has led the founders to seek out opportunities to grow in each area. Economically, the company always looks for additional revenue streams and seeks to develop innovative products that can bring in higher market value for the farmers. Socially, this approach has meant the development of schools, health care clinics and social security programs. Environmentally, the company is using its business to drive change including reforestation projects like the one in Peru as well as bringing back biodiversity by reintroducing heritage crops, and promoting land stewardship through farming incentives. Here are some examples of how Alter Eco brings this philosophy to life around the world:
Bolivia. One example that illustrates the Alter Eco model, according to Rollet, is its work with Bolivian growers of quinoa. This tiny gluten-free seed packs more protein than any other grain (double that of rice), as well as high amounts of magnesium, iron and dietary fiber. Although not traditionally a staple at the American table, demand for quinoa in the United States has been growing at a strong pace.
Ranked by the United Nations as the poorest country in South America, Bolivia is highly dependent on its natural resources, which include silver, tin and natural gas, the proceeds of which are of little benefit to its general population. However, quinoa crops offer farmers an opportunity to emerge from poverty, especially with the higher prices offered through fair trade.
“Quinoa is a high-priced grain, retailing for $4 to 6 a pound in the United States, yet the indigenous people who grow the quinoa at 13,000 feet above sea level are the poorest people of Bolivia. These people don’t even have access to basic necessities such as health care and schooling,” Rollet commented. “It doesn’t need to be this way. We are trying to close this gap by making sure that the farmers get more of that profit. This is our core mission and what we set out to do.”
Besides paying fair trade and organic premiums and cutting out middle men, the company’s red quinoa project is another way it’s increasing revenue for farmers in Bolivia—and improving the environment at the same time. Traditionally quinoa was grown and harvested by hand on the hillsides of the Andes mountains. The roots from the quinoa helped keep the soil from getting blown or washed away. However, more farmers are moving their quinoa cultivation to the bottom of the hills so they can use tractors and as a result the hillsides are starting to erode. To prevent this, Alter Eco is implementing a program that pays farmers a premium to return to traditional farming and grow red quinoa on the hillsides. The program also encourages farmers to increase the number of llamas in the field to add organic material and enrich the soil.
Thailand. Alter Eco has also worked with cooperatives in Thailand to increase biodiversity by growing heirloom varieties of rice, including purple jasmine. For centuries, the locals have revered this slightly sweet variety of rice as a delicacy, and featured it during festivities and special occasions. But as the demand for white rice skyrocketed over the years—driven by Western culture’s hunger for cheap, refined goods—Thai farmers turned to cultivating the cash crop. Monoculture farms took the place of what was once a diverse patchwork quilt of colorful rice, and many varieties, such as the purple jasmine, were practically abandoned. With the encouragement of Alter Eco, the Organic Agriculture Cooperative of Surin began re-introducing these ancient, original and highly nutritious grains. “Before, there used to be over 3,500 varieties of rice being cultivated in Thailand and today there are only a handful of varieties grown,” said Rollet. “The idea is to have farmers replant varieties that have been forgotten about and introduce them to the mass market to support continued biodiversity.”
The novelty of the purple rice has proven a hit with consumers and provided retailers with a unique niche offering. By resurrecting a crop native to their habitat, cooperatives and other growers have restored a centuries-old tradition and benefit from the premium price the market will pay. In addition, the initiative has strengthened Alter Eco’s relationship with the Thai Alternative Agricultural Network, a local non-government organization, and helped fund a program that educates children about sustainable agriculture. The cooperative has also been able to add a mobile health clinic that travels from village to village, a social security program, a small rice mill and a new packing facility.
The West Bank. Through the power of commerce, Alter Eco is also part of an effort to foster peace between the Palestinians and Israelis—encouraging these warring neighbors to offer both a symbolic and a literal olive branch to each other. The 1700-plus farmers who grow olives for Alter Eco’s 100 percent organic, fair trade certified olive oil are part of the Canaan Cooperative in Palestine. Since the conflict between the two countries exploded in 2000, the farmers have had trouble getting their product to market. This is changing, however, through a project between the Palestinian farmers and the Israeli authorities which is opening the door for farmers to trade with major markets including the United States and Europe.
Tracking Progress—The AlterEcometer
With all its social and environmental efforts, Alter Eco has been tracking progress and looking for improvements each year, comparing these numbers right alongside the company’s own financial statements. Although more and more companies are touting a triple bottom line approach, Alter Eco takes this to the next level by incorporating a comprehensive auditing tool designed specifically for the company. This tool surveys Alter Eco’s cooperative partners to track economical, social and environmental gains, generating a 300- to 400-page report when all factors are taken into account. These factors range from how water is recycled at the plant to whether the farmers have social security. According to Rollet, this report is meant to be a market indicator much like what you would see on Wall Street, but taking in all aspects of the triple bottom line.
Then, rather than just keeping this information buried in a 400-page audit, Alter Eco condenses the findings into bullet points and puts these facts on product labels via something it calls the AlterEcometer. Each product has its own unique AlterEcometer, specific to the gains made in the farming community that grew and processed that particular product. For example, on the back of its Robust Olive Oil, the Alter Ecometer highlights that 1700 farmers benefited from the project with a 30 percent increase in farmers’ revenue and that the product financed a scholarship fund, microloans for women and olive tree planting.
According to Rollet, the Alter Ecometer is a way to help consumers understand the true effects of fair trade and the power of their consumer dollar. “Fair trade is often a hard concept for many to grasp,” he said. “By quantifying fair trade we are able to offer them not just a concept, but tangible facts. It also promotes transparency.”
By connecting shoppers in the United States with positive changes being made in developing countries, consumers can better understand the impact they have. They can also watch the AlterEcometer grow year after year. The more consumers realize they can make an impact, the more they will support the cause. The more consumers support the fair trade and organic movements, the more the world will change for the better.
This idea of changing the world through commerce, or social capitalism, gives many hope for a better future. “Equity and capital can be used in a virtuous way. Alter Eco has a vision of changing the world through business,” Rollet commented. “To do this we have to be profitable ourselves—but at the same time we have to look at our impact on the planet and the people who are creating the product. The triple-bottom-line model is the key to changing the world for the better.”
Kat Schuett is the editorial director for Organic Processing Magazine. You can reach her at email@example.com.