Shop for Change to bring fair trade to domestic markets
The ThinkChange India staff is committed to providing our readers with interviews with people we believe are at the brink of something special but have for the most part been overlooked by the mainstream media. Readers will be able to see other conversations under our TC-I Changemakers tag.
In this edition TCI-Changemaker focuses on Shop for Change, an organization looking to certify and promote the idea of fair trade for India’s domestic markets. TC-I’s Vinay Ganti spoke with Seth Petchers, Shop for Change’s CEO to learn more about this venture. You can learn more about Shop for Change on their blog, Facebook page or follow them on Twitter.What is it exactly that Shop for Change aims to do?
Our goal is to bring the fair trade model to the domestic market in India. Fair Trade today primarily focuses
on products being grown in an emerging market but exported to a developed one. However, we believe that there is a definite opportunity to expand this model to products be produced for the domestic Indian market. The principles driving fair trade still apply. Often times many players do not benefit along the value chain, specifically farmers. Our goal is instead of redistributing existing value, we help players capitalize on new value.How do you go about accomplishing this goal?
Shop for Change developed a set of standards that allow for consumers, companies and farmers to show the other the quality of their products. Right now there is high awareness but a lack of confidence of their own ability. We provide two key components to add value to the chain — certification and consumer marketing.
In Phase I, we are focusing on cotton farmer certification and garmet certification. Currently we are working with 5,300 farmers in Gujurat, Maharashtra, Andhra Pradesh and Orissa. On the consumer side the focus is anywhere and we launched with the first partner brand in January. They are selling in Bombay, Bangalore, Calcutta and Delhi. With regard to our partner companies, it largely depends on the companies we work with, but they will likely fall in line with where organized retail operates, which for now is in the major cities.
What sorts of unique challenges are you facing in expanding the fair trade model to the Indian market?
Our fair trade standards were developed in-house but at the same time are a part of international fair trade movement. We wanted to be sure that they are able to address the specific context of Indian market. If we simply applied international standards immediately, many farmers would not be able to meet the criteria. So we allow for them to progressively ramp up their standards over time to eventually achieve that goal. We provide assistance in producing transparent transactions, environmental sustainability, better income, better relationships and better training for farmers.
How do you go about engaging farmers and getting them on board?
Certified farmers are members of farmers organizations whose goals are to help them market themeselves. A 15% premium goes to the organizations to explicitly help farmers improve productivity, lower costs and improve profitability. This premium is also there to help reduce costly inputs. While we cannot speak to the exact amount by which a farmer’s income improves, one additional advantage we provide is increased predictability and transparency.
Working with farmer’s organizations allow us to not only engage thousands of farmers at at a time, but also makes reinforcing the right incentives that much better. On one hand we try to not make the standards too onerous but the benefits arise from organizations that have been specifically setup to take into account the welfare of the farmers. Many of these farmer organizations exist and hopefully we can build the incentives to make them even more prominent across the country. For example, even though it is not a requirement a lot of farmer and farmer organizations have chosen growing organically.
On the consumer side then, what is your role?
Our job on the consumer side is direct certification of the consumer products and try to cut out the middle
man. Many Indian companies recognize the need have a strong social responsibility strategy but are struggling to figure out what that really means and what they should be doing. Our offering provides them with a direct and measurable connection with farmers, and also a consumer awareness benefit. Over time to, we believe it is in the best financial interest of the companies as through promotion and awareness consumers will prefer to purchase those goods that they trust have been made responsibly.What is your revenue model?
We received startup funding from two Dutch foundations. However, our revenue model is to license the use of the certification based on the market success of the product. In other words the more the product sells int eh market the more we benefit, and also it serves as a positive incentive for the companies to benefit themselves and the farmers. Accordingly we are focusing a strong effort on promotion.
In the short-term we are only looking to bring on new farmers as we build market demand. Right now we have the cotton we need and are looking to partner with brands and get these to market. We want to carve out an awareness of fair trade. More importantly with regard to the farmers, it is up to us to prove to them that we can provide a benefit to them and so we do not want to engage more farmers until we can be confident that there is enough demand for them to benefit from.