Portrait of a businessman who wants to change the world!
We are spending the night on the bus to Uruapan, a small town in the heart of the Mexican mountains where we are going to meet a very unusual entrepreneur. After working as a chartered accountant with Deloitte, Patrick Stübi worked for ‘Glencore’ a giant in the mining industry.
As a member of a board of directors managing three mines in Peru, he was responsible for a ‘reorganisation’ as it is known in the business world… After a difficult night’s sleep, he realised that he could not continue what he was doing. ‘The money saved through the reorganisation was going directly to the parent company to enrich the shareholders who were already multimillionaires’. He had to choose between staying and making a fresh start! He packed his bags in the early hours, thanked the company he worked for, and bought a single ticket for Mexico one of the rare countries he had not visited…
He quickly realised that the main problems for small producers is the lack of access to international markets, a poor knowledge of their production costs and no understanding of market trends.
His attraction for fair trade, a system which enables a large part of these problems to be solved, and the problems of a small avocado pear export company were to become the two ingredients of Patrick’s new life.
Susanna and Rewi Illsey pioneered avocado pear exporting in Mexico. Their company (founded in 1982) used to employ over 200 people. Unfortunately, several importers went bankrupt simulataneously leaving debts totalling more than $450,000 behind them which forced Susanna and Rewi to close down. They began trading in teak to wipe out their debts which they had achieved in 2003 when they met Patrick.
Fair trade was growing fast at this time in Europe. The Fairtrade Labelling Organisation (FLO) which had had 221 producers in 2001 had over 590 in Africa and Asia and South America two years later. The market for fair trade products had increased from €831 million in 2004 to €1.1 billion the following year, a 37% increase.
The principle of fair trade is simple. Producers and exporters must be certified. The second pay the first a minimum price as well as a social bonus which will be used for the community. The aim is to provide small producers with the best remuneration. The FLO guarantees producers a minimum year-round price as well as a social bonus equivalent to 10% of the price paid. This bonus is paid to the community as a joint investment to benefit the whole population (schools, crèches, wells…).
Patrick succeeded in having his avocado pears certified by the FLO, and convinced Susanna and Rewi to begin trading in avocados again and started the FairTrasa (Fair Trade South America) adventure. Patrick was at the commands behind his computer, permanently connected to the international markets, fluctuations in exchange rates and to importers whilst Susana and Rewi re-established their network of small producers. The cooperative of 19 producers now has over 500 and has become a serious player on the international markets.
FairTrasa’s aim is also to increase the knowledge of small producers and to raise their awareness on their own strengths. A pre-financing service for harvest enables them to improve their year-planning. Their revenues increase thanks to access to international markets and these new management tools. They can send their children to school and have access to better health cover. Their attitude towards their trade is changing and they pass their know-how onto their children who themselves will be able to live decently from the farm.
A common practice in Mexico was to sell the production to ‘Coyotes’. These crooked purchasers come directly to the farm and offer cash to the producers to purchase their harvests immediately but at a very low price. The producers who only have a very vague idea of the market and their production costs are often tempted by the lure of an immediate gain.
We met Alfredo who like a lot of Mexicans had entered the United States illegally to find work. He worked on building sites for $15 an hour which was enough to live on and to send money to his family. His parent’s farm was on the point of collapse. He returned to Uruapan, met Patrick’s cooperative and regained hope. Thanks to the revenue guaranteed by Patrick he can envisage living here decently, taking over the farm, enlarging the house and giving his children an education. ‘I can plan my production a lot better today, I know that I have a customer, and I can count on a minimum price.’.
FairTrasa is still only a small structure with a turnover of US$10 million. However it is managed like a real holding company. The registered office is in Zurich, Switzerland, to facilitate transactions, and the Mexican office is a subsidiary. Patrick buys ‘options’ to hedge against fluctuations in the exchange rate, and his experience of the markets helps him to quickly find a place with the importers.
The cooperative exports avocados and grapefruits and soon mangoes. Over 20 tonnes of avocados leave the plant in Uruapan every month to end up in the plates of European and American consumers, and the flavour of FairTrasa products has turned them into loyal consumers. However according to Patrick, the FLO system does have certain limits:
- products which cannot justify a large international market are not certified,
- there is no flexibility over the minimum price which today is fixed for several years, although the markets fluctuate daily,
- there are fairly tough regulations to become certified which do not take local specificities into account,
- it takes a very long time for the product to become certified.
Nevertheless, Patrick succeeded in having the first fair trade grapefruits certified after three years of negotiation. Likewise, he launched the first fair trade wine after a two-year battle which he produces in the Mendoza Valley in Argentina. Patrick has found his path by using his best assets to give hope once again to small producers. When you listen to the extent of his plans, it is clear that he does not intend stopping here! Patrick just sent an email to let us know that he just became an Ashoka Fellow!