Mexico's Fair Trade Movement

The Mazunte Natural Cosmetics cooperative in Oaxaca is one of Mexico’s fair trade success stories. Photo courtsey of Red Bioplaneta.

Fair Trade Objectives
Taking Action: Making Fair Trade Work in Mexico
Building a Movement & Changing Policy
Local-Global Linkages
Fair Trade Resources

In Mexico, a growing number of coops, nongovernmental organizations (NGOs), microenterprises, and campesino groups are proving that fair trade offers a viable alternative to communities struggling to cope with globalization.

Little more than a generation ago, Mexico was the classic example of a protectionist, shielded economy; over the past 25 years, however, it has become a leading global free trader, boasting commercial accords with some 30 countries worldwide. The terms of these agreements favor large corporations and put Mexico’s numerous campesino farmers, artisans, small producers, family establishments, and independent service providers at a serious disadvantage. Local economies in Mexico have suffered under the free trade model and thousands of Mexicans have been forced off the land or out of business, taking low-wage jobs in the cities or crossing the U.S. border to find work.

Mexican artisans, farmers, campesino cooperatives, nonprofit organizations, and small locally owned operations are responding to the challenges of trade liberalization by coming together to establish support networks that give them access to start-up capital, product development, marketing assistance, and foreign distribution outlets. Largely based in the countryside—and many of them indigenous—these entrepreneurs have until now been passed over by Mexico’s insertion into the global economy.

Beyond securing incomes for themselves, participants in the fair trade market are also promoting a working alternative to current commercial practices, one grounded in the principles of social equity and sustainable development. Their efforts offer an example for other communities in the Americas struggling with the challenges of economic integration.

Fair Trade Objectives

Frequently, free trade means maximized profits for large companies based in the developed world and minimized benefits for producers in developing nations. Fair trade seeks to establish more equitable economic relationships between consumer markets in industrialized countries and producers in the developing world.

For example, Central American coffee farmers selling through regular channels in 1999 were paid an average of 38 cents per pound by intermediary buyers. That same year, coffee growers commercializing their product via the international fair trade consortium TransFair earned no less than $1.26 per pound. They received a better price, in part because TransFair passed on more of the profit to producers than most coffee brokers do, and in part because TransFair has identified a consumer base that is willing to pay more for fair trade-certified coffee. The coffee is certified not only because more of the profits from its sale are passed on to small farmers in Central America, but also because those farmers grow it in ways that are not environmentally destructive.

Fair trade is driven by a market in which supply and demand are guided by social conscience. A number of organizations in Mexico have adapted fair trade principles to the Mexican context. For instance, in 1998, Guadalajara, Jalisco-based environmental NGO Colectivo Ecologista Jalisco convened a workshop with European fair trade organizations in order to define a set of fair trade objectives and principles. Their conclusions: The needs of local and regional economies should be a priority in business decisions; environmental costs and social criteria should be taken into account in every activity; undesirable intermediaries should be eliminated to maximize financial benefits for producers; product and producer diversity should be supported; and local and regional goods and service providers, as well as consumers, should cooperate to organize themselves; consumer education should be promoted through reliable labeling, communication, and publicity.

Other Mexican groups add that fair trade should increase opportunities for women, especially in rural and indigenous communities. One such group is the San Cristobal, Chiapas-based Foro para el Desarrollo Sustentable, a nonprofit project made up of more than a dozen NGO specialists in fair trade that since 1997 has been providing consultation and credit mechanisms to grassroots enterprises working for improved living standards.

A key Mexican organization engaged in the fair trade effort is the three-year-old Mexico City-based Bioplanet Network. Bioplanet is in the process of refining a checklist of fair trade practices that its producer members should follow. Currently, for enterprises to receive the technical, marketing, and financial support that Bioplanet has to offer they must be located in a priority ecoregion, demonstrate a commitment to conservation, be organized for social benefit, and offer goods or services of special commercial interest.

Fair traders like Bioplanet also acknowledge that principles alone will neither turn a profit nor lead to national and international policies more supportive of fair trade regimes. On the demand side, consumers want high-quality, easily accessible products guaranteed to comply with free trade principles. On the supply side, producers must be trained in standard business techniques, quality control, and marketing to meet consumer requirements.

Taking Action: Making Fair Trade Work in Mexico

So far, BioPlanet has connected 55 small business in 12 of Mexico’s 32 states, to 10 consultants and funding agencies, making it Mexico’s best-organized fair trade network.

According to founder Hector Marcelli, Bioplanet was established to respond to the needs for greater horizontal integration between small businesses in rural communities and for their vertical integration with environmental and fair trade marketing experts. This cooperation helps provide the quick return on investment that small, cash-strapped companies need to make it. So Bioplanet set up a system in which producers purchase inputs from one another, share expertise and even earnings, add value to agricultural products through refining or processing, and effectively target appropriate consumer markets.

Bioplanet technicians train producers in converting their raw materials into finished items that are retailed on the open market. Meanwhile, Bioplanet also encourages producer members to trade both unrefined and value-added products among themselves, knitting an expanding supply chain. Network advisors help producers achieve high quality and establish diversified product lines, allowing them to offer consumers more choices and to capture a larger market share.

For example, with Bioplanet’s coaching in Oaxaca state, the Mazunte Natural Cosmetics factory buys sesame oil from Tomatal Ecological Producers and periodically expands its line of bath and beauty items. Another fair trade outfit participating in the Bioplanet network, Quali Traders of Puebla state, has expanded the products it makes out of its high-protein, native amaranth grain crop to include flour, cookies, beverage mixes, and snack foods. The May First Local Agricultural Association of Vanilla Producers, a group of 200 indigenous Totonacas in Veracruz state—among the first cultures to harvest vanilla beans—is acquiring equipment and expertise that allows them to distill vanilla extract, rather than selling unprocessed beans.

Bioplanet conducts analyses of demands and international standards, which allows network members to better identify market niches and interface with foreign economies. The organization also helps member firms with labeling, marketing, international trade show exhibits, and contracts with big buyers. For instance, under the Bioplanet label of organic, shade-grown coffee, cooperatives in all five of Mexico’s coffee-producing states are now selling to the offices of the federal government’s environmental secretariat.

Meanwhile, Bioplanet’s online marketplace (www.bioplaneta.com) profiles goods- and service-providers, and it offers an efficient online ordering system similar to those used by other rEtailers. In addition to penetrating markets, finding clients, and selling goods, the network is helping members win development grants, locate seed money, and enlist volunteers. When Bioplanet invests in a new startup, it does so on the condition that the new business earmarks an equivalent amount of investment to eventually back another new fair trade venture.

For instance, Mazunte Natural Cosmetics—established with $10,000 of international public and private aid—set aside a portion of its income for the San Rafael Toltepec Producers Union, also based in Oaxaca, to build a chocolate processing plant and another portion so that Ventanilla Ecotourism Services could construct a visitors’ center at its crocodile nursery near Mazunte. Like Mazunte Natural Cosmetics, the Ventanilla endeavor became profitable, so now it is providing tourism courses to entrepreneurs in the Tuxtlas Community Ecotourism Network.

Building a Movement & Changing Policy

Most of the fair trade operators in Bioplanet started up in the late 1990s. Still others date back as far as 15 years ago, when Mexico’s environmental NGOs began to work with them. One of these NGOs was EcoSolar, which provided the capacity building that got businesses like Mazunte Natural Cosmetics off the ground.

In addition to EcoSolar and Bioplanet, various other networks are helping forge a fair market base in Mexico. Figuring prominently among them is the nine-year-old, nonprofit Network of Self-Determining Sustainable Growers (RASA), a coalition of 28 cooperatives and other groups in Guerrero state that are applying a nine-point Alternative Sustainable Development Model to control the production, processing, and marketing of the fruits of their labors, mainly organically grown coffee beans.

Also an important actor, the nonprofit Asociación Nacional de Empresas Comercia-lizadoras de Productores del Campo (ANEC), formed in 1995, consists of 62,300 small-scale basic grains producers located in more than half of Mexico’s states. In the past couple of years it has been working with Greenpeace Mexico to provide Mexican-grown, nontransgenic corn to domestic tortilla makers.

The 60,000-strong Huichol indigenous population, with a four-state territory, is conducting a fair trade experiment of its own. It is undertaking organic garden sales and ecotourism as part of the Project for the Integral Reconstitution of the Wixarika Territory and Habitat, designed to reestablish control over ancestral lands and maintain cultural cohesion.

Examples of smaller networks include a regional committee of the Eco-Stores Network founded in 1998. Some of its members also participate in The Circle Network, and others are part of the Healthy Harvest Network inaugurated in 1999, which in turn is a member of Bioplanet.

In one of the most recent manifestations of these networks’ progress, Bioplanet is on the verge of getting the signature of Mexico’s Economy Secretariat on an important covenant to provide federal money and logistical support for exports of fair trade goods.

EcoSolar, Bioplanet, and other Mexican fair trade boosters form part of the larger Rural Sustainable Development Network. This umbrella coalition of 90 institutions was established to seek consensus and coordination regarding proposals and government outreach efforts intended to spark policy and structural changes that will help fair trade prosper in Mexico.

The Commission for Environmental Cooperation (CEC), while part of the official free-trade bureaucracy created under the North American Free Trade Agreement (NAFTA), has responded positively to citizen pressure for a fair trade opening. Headed by the three top environmental authorities of Mexico, the United States, and Canada, the CEC has supported fair trade by allocating seed money to Mexican producers of green goods and services and by conducting some of the best research publicly available on the finance, market, and public/private sector partnership mechanisms that could be incorporated into national policy to support Mexico’s incipient fair trade movement. Among the mechanisms that the CEC has explored are the creation of government procurement guidelines, government guarantees of loans to fair traders, targeted subsidies, and labeling regimes.

But Bioplanet’s 55 members report selling only about $100,000 worth of products annually and, so far, fair trading remains on the fringe of Mexican national development policy. Much more capacity building is necessary for incipient fair traders to realize their potential, enhance market impact, and affect policy.

Meanwhile, dozens of additional organizations are seeking admission to the Bioplanet Network. In Oaxaca, 30 small producers already work with Bioplanet, but its technicians have identified some 3,000 rural production initiatives in the state that could stand to benefit from the tools the network provides. Many thousands more goods- and service-providers around the country have aspirations to enter the fair trade market, but their projects have such modest outputs and organizational strengths that they cannot even reach the bottom rung of the ladder.

Greater impetus is required for toppling the formidable barriers that these entrepreneurs confront. Besides lack of training and institutional capacity, these include: market distortions engendered by subsidies to big, foreign-owned corporate agriculture; unequal access to quality certification and inappropriate certification schemes; serious inconsistencies in the way that funds are distributed by the federal Social Development Secretariat; community infighting engendered by competition for resource control between local factions; the high costs of advertising and marketing; lack of consumer education regarding fair trade goods and lack of access to those goods; and higher product prices resulting from including environmental costs in expenses.

Local-Global Linkages

The small businesses that form the base of the fair trade movement in Mexico have established alliances with other nonprofit organizations, both in Mexico and outside the country.

Contributing to the gathering momentum of Mexico’s fair trade movement is a broad range of NGOs organized under the umbrella of the Red Mexicana de Acción Frente al Libre Comercio (RMALC), which conducts research and advocacy related to Mexican trade policy. Also supporting the effort are alternative Mexican media outlets taking advantage of internet technologies, notable among them LaNeta, Planeta.com, and the Centro de Investigaciones Económicas y Políticas de Acción Comunitaria (CIEPAC).

In turn, groups based in Mexico and the NAFTA-zone are hitching up with a number of larger, transnational organizations and networks operating at the global level to forward the fair trade agenda. Ashoka: Innovators for the Public is a worldwide grant foundation that supports many fair traders in Mexico and other countries. The Max Haveelar Foundation in Holland has been instrumental in establishing direct-sales markets for products grown and manufactured with environmentally friendly processes. These fair trade pioneers have since been joined by the likes of TransFair, Global Exchange, Environmental Defense, and the Center for a New American Dream, among others.

Some of these international organizations focus on business models and strategies that allow fair trade operations in developing nations to penetrate first world markets. Others, like the International Institute for Sustainable Development, conduct research and analysis that clarify perspectives on trade and development, much of which is specifically oriented to the Americas. Taken together, this broad spectrum of organizations operating both locally and globally is pointing the way toward a different style of globalization, one that is more grounded in principles of sustainable development, social justice, and South-North equity.

Already, entrepreneurs based in small, traditional, or underserved communities across the Americas are mirroring the efforts of fair traders in Mexico. (For more information, see resources list on page 7.) These efforts create the potential for a viable fair trade network spanning the Americas that could strengthen local economies, increase security for residents, raise living standards, foster healthy communities, contribute to political stability, and diminish migration pressures.

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