Growing the Wealth of the Poor - World Resources Institute

PRIVATE SECTOR ISOs: THE EXAMPLE OF DEAN’S BEANSThe private sector can play a crucial part in supporting CBNRM and itsassociated enterprises in rural communities. In many instances, privatesector companies from outside the community can provide market outletsfor nature-based products. The markets for Fair Trade items such ascoffee, cocoa, and bananas or for Forest Stewardship Council–certifiedwood work in this way, with retailers specifically advertising the socialand environmental benefits of the products as selling points.In some cases, this marketing link turns into a more direct and substantivepartnership between the rural enterprise and the outside retailer. Forinstance, Alter Eco, a fair trade company headquartered in France, hasdeveloped a close relationship with quinoa (a specialty cereal) producersin Bolivia and is helping them to obtain organic certification to furtherdistinguish their crop. Alter Eco pays an NGO with expertise in organiccertifications to train the producers’ cooperative to adhere to thesestandards (Alter Eco 2007). Similarly, The Body Shop, a high-end cosmeticscompany, has developed a Community Trade model in which it buysshea butter and other cosmetic ingredients directly from 36 communitiesin 23 countries. As part of the Community Trade model, the Body Shopoffers communities a long-term market for their products along with a“fair price” guarantee (Body Shop a, b).Some companies go even farther in their engagement with communityenterprises and actually assume the role of an intermediary supportorganization, providing a range of services such as technical advice,training, finance, and political advocacy on behalf of a community enterprise.Dean’s Beans, a coffee and cocoa Fair Trade retailer based in theUnited States, is one example. In addition to its role as importer, theB U I L D I N G O W N E R S H I P, C A P A C I T Y , A N D C O N N E C T I O Ncompany has played a political role, supporting indigenous communitiesfighting oil pipeline development in Ecuador and Peru. It has helped thecommunities to negotiate among themselves and with oil companies, andits coffee purchases have broadened the economic opportunities availableto the communities.Dean’s Beans also supports development projects within the communitiesin which it works. In Ethiopia, the company is providing coffee-producingcommunities with the materials and technical support to build water wells.Elsewhere, it has assisted with health clinics, linking its coffee growers totechnical and managerial know-how for these centers and supplying thecommunities with an extra premium above the Fair Trade minimum price fortheir coffee to help pay for the clinic. The company even helps to developother forms of financing for farmers, including a microcredit program forcoffee cooperatives in Papua New Guinea (Dean’s Beans 2008).In spite of—or because of—its outlays on social programs and capacitybuilding,Dean’s Beans’ business model has proved quite successful, withthe company attaining a 14-percent profit margin on US$2.6 million insales in 2006. The success of Dean’s Beans and similar firms shows thatsocial activity and support services—the traditional work of the nonprofitsector—can find their way into commercial business models, benefitingboth community enterprises and corporate interests. Dean’s Beans arguesthat its support services and community advocacy are essential elementsin controlling its supply chain and delivering consistent quality in itsbeverages. It acts as an ISO not only to uphold its corporate principles,but also to serve its quality-focused but socially conscious customer base(McFadden 2007).CAPACITYipation criteria in order to qualify, such as the equal participationof women in the group activity and in management decisions.Likewise, ISOs can help communities craft schemes for moreequitably distributing benefits, such as granting poor familiespreferential access to water or pastures in restored watersheds.ISOs are also well placed to encourage communities to establishconsistent monitoring and reporting regimes, as well as bookkeepingand auditing practices, so that members know the results oftheir management efforts and can track expenses and the distributionof profits. While these may be outside values at first, theyquickly become important to the success of nature-based enterprises,which are predicated on continued support and confidenceby community members.Intermediary organizations can also perform a critical“watchdog” function in places where interactions betweengovernment, the private sector, and local communities have littleformal oversight. They can help communities monitor and evaluategovernment actions and compare them to what thegovernment has promised, and they can serve as a repository forinformation gathered across a larger scale. For governmentprograms they are directly involved in, ISOs can work to build inadditional mechanisms for downward accountability. Clearly, thismonitoring function needs to be performed deftly so as not toimpair an ISO’s ability to partner or intervene with governmentagencies at other junctures in the enterprise process (Kolavalliand Kerr 2002:232).Sometimes ISOs can put additional weight behind existingefforts of marginalized groups to gain resource rights orcurb abuses of power by government. In one rural district ofOrissa, India, local activists in nine villages wanted to initiate a“social audit” of local government—a participatory process forholding gram panchayat officials downwardly accountable.The activists collaborated with the national branch of Action-Aid, an international NGO, to implement the process.Although the right to conduct an audit has been a statutoryrequirement for state-led development projects since 1993, fewlocal groups have sufficient information on how to conduct oneor are in a position to confront local elites. The NGO was ableto provide information and organizing capacity to local organizers,which brought additional credibility to the process(ActionAid India 2002:14–17). 93