Paul Rice, the CEO and founder of Fair Trade USA, has spent his career making a huge difference in the lives of farmers and growers. In this episode, he sits down with Bree Jenkins to share his learning journey dedicated to social change, which includes buying a one-way ticket to Nicaragua, where he started and led the country’s first fair trade co-op and ended up staying for 11 years. He discusses how sustainability and social responsibility are the real drivers of success, and he calls us to find any and all creative ways to bring purpose into business, what some call conscious capitalism.
On Fair Trade:
“And here’s the secret sauce of fair trade. We require that brands and retailers pay more money back to the farm owner or the factory owner. We’re not saying be more sustainable y’all, and the cost of that is your problem. That’s not what we’re saying. We’re saying more sustainable. Treat your workers right. And take care of your environment, and the consumer is going to help pay for that through the retailers.”
On his experience with projects funded by international aid:
“I worked on a lot of really well-intentioned projects that were funded by international aid. And I’ll tell you, I got really disillusioned with it. It wasn’t really very effective, in my experience, in helping farmers develop their own capacity to solve their own problems and helping them to think about markets.”
On Social Change:
“I think about social change, not in terms of years, but in terms of decades. We’re definitely playing the long game.”
(Transcripts may contain a few typographical errors due to audio quality during the podcast recording.)
Bree Jenkins: You are listening to the OneHaas Podcast. I am honored and excited to introduce you all to Paul Rice, the CEO and founder of Fair Trade USA, who has spent his career making a huge difference in the lives of farmers and growers and calls on all of us to be more conscious consumers. Just preparing for this interview has caused me to think differently about my own consumption. So, thank you so much for coming, and welcome, Paul.
[00:00:28] Paul Rice: Thanks, Bree. I’m so happy to be here.
[00:00:30] Bree Jenkins: So, I’m really curious to just begin with, what is your origin story pre-Nicaragua. We’ll talk about you going to Nicaragua and what that experience was like for you, but I haven’t heard a lot about that part. So, I’m really curious.
[00:00:42] Paul Rice: Well, I was raised by a single mom. And, we didn’t have much money growing up. So, I started exercising my entrepreneur entrepreneurial spirit a young age, more lawns and saving up. And I bought a house when I was 16, became a landlord. And went off to Yale to kind of get a change of scenery from Austin and Dallas, Texas, where I grew up. And, at Yale, I got interested in international development and poverty and social justice and decided basically halfway through that. That’s what I wanted to spend my life doing.
[00:01:14] Bree Jenkins: Was there something specific there that happened?
[00:01:16] Paul Rice:
[00:01:39] Different countries were approaching that, and they started to get interested in agricultural economics and in co-ops as a way to get farmers together to start a journey out of poverty. And that kind of led me to decide toward the end of college that I wanted to go do some fieldwork and get some hands-on experience with farmers.
[00:01:56] So I, I bought a one-way ticket to Nicaragua. And then summer of 83 and went off to, um, work with farmers, thought I’d stay for a year or two and ended up staying for 11 years.
[00:02:07] Bree Jenkins: 11 years. Wow. And was it almost a renewable contract for you? Like, Oh, it’s been a year. I want to keep staying, or did you know pretty quickly?
[00:02:16] Paul Rice: No, just like the one-year plan when the two-year plan and, then I got married to, a local gal and we had our, son there and, about halfway through that time, I ended up, doing some really cool, innovative work, and that kept me there for a while longer too. So, you thought you were interviewing Paul today, but Pablo.
[00:02:38] Bree Jenkins: Perfect. I love it. I think my Spanish name was Bertha for a while, so, and so tell me the origin story than a fair trade USA and how that grew from your experience working with those farmers in Nicaragua.
[00:02:51] Paul Rice: Yeah, thanks. So, most of the early years in Nicaragua, I spent working on various international development aid-funded projects, right? So, we’ve got this multi-billion-dollar international development industry, right. With USA aid and other bilateral and multilateral agencies and great NGOs in the space trying to alleviate poverty.
[00:03:12] And, the driving force of that is, is not the market. It’s aid. And so I worked on a lot of really well-intentioned projects that were funded by international aid. And I’ll tell you. I got really disillusioned with it. It wasn’t really very effective in my experience and helping farmers develop their own.
[00:03:30] Capacity to solve their own problems and helping them to think about markets. And so, I ended up kind of stepping out of that and pivoting to market-based approaches. I, I heard about fair trade by accident. It was up and running in Europe, and their whole philosophy was trade, not aid. It was just a simple idea if we pay farm.
[00:03:51] Fair price for their harvest, and then they can improve their own lives without having to depend on government intervention or international aid.
So, in the summer of 1990, I started Nicaragua’s first fair trade co-op. I led the co-op for four years. We organized 3000 families by the fourth year. We were exporting over a hundred containers of coffee a year these world coffee farmers.
[00:04:11] Bree Jenkins: Wow.
[00:04:12] Paul Rice: We were able to get farmers an extraordinarily higher price for their product, which allowed them to keep kids in school and bring clean drinking water into their villages and invest in health and women’s empowerment and reforestation and all this cool stuff. Thanks to a market-based approach and that that changed my life.
[00:04:29] And it changed my view on capitalism, and it turned me from an anti-capitalist into a what some call a social capitalist and and a believer that the market. Well, it can certainly victimize smallholders around the world. It can also be an incredible force for empowerment and wellbeing for a marginalized family. And that’s what I’ve been doing ever since.
[00:04:51] Bree Jenkins: Thank you. I love this story because I think it’s a nice pivot for you personally, but also changing people’s lives, as well. I’ve always been curious about one part, which is that you kind of getting fair prices. There was a cutting out in some ways of a middleman. Is that correct? Am I understanding that right?
[00:05:10] Paul Rice: Exactly. Yeah. With one acre of land, they’re only producing a few sacks of coffee a year, so they’re never going to be able to export directly. Right? So, they typically sell at the farm gate to a local middleman who pays pennies on the pound. And they’re really victimized by virtue of their lack of direct market access and their lack of market information.
[00:05:31] But of course, if they band together like we did 3000 families, then they can create economies of scale. They can add value to the product. They can go direct to international markets and capture all of that value that other people historically have been capturing.
[00:05:44] Bree Jenkins: What is the hardest part about getting them to start collaborating and working together and to those economies of scale? What was the most challenging part of that?
[00:05:52] Paul Rice: Honestly, the biggest barrier was the barrier of disbelief. The barrier of self-identity, our farmers, knew that they could wear the hat of farmer, but they never imagined themselves wearing the hat of exporter, owner. So, the very first year, we only got 20 families to make the leap and say, okay, we’re going to deliver ten sacks of coffee each we’ll export one container, and we’ll see what happens.
[00:06:20] Right? And so those ten pioneers, those visionaries who thought of themselves, not just as farmers, but maybe also as international exporters. They proved the point. And the second year we had a couple of hundred families, and the third year we had a thousand families, and the whole thing snowballed, it was the power of a positive example, but someone had to take the leap, the leap of thinking of themselves as more than just a poor farmer victim of the market.
[00:06:43] Bree Jenkins: What kind of education or additional resources that they need as time went on, as more families joined, as more people had to start getting into that mindset and actually living that out in terms of their business practices, what kind of education did they need and how did you all help provide?
[00:06:58] Paul Rice: Well, one big thing was training in how to run and participate in a cooperative, co-op is. It’s kinda like a shareholder situation. I mean, the members of the co-op are co-owners of the co-op. They elect leadership. They elect, board of directors, the board of directors’ hires, professional management.
[00:07:17] There’s just a whole organizational framework that. Typically, farmers around the world aren’t, familiar with. And so, we did a lot of training around that. How farmers could hold their managers accountable to a level of transparency around the numbers. We also did a lot of training around product quality because what we discovered on the market side very early on was that consumers were not going to buy our coffee if it sucked, just because we were promising to help farmers.
[00:07:44] Right? I mean, People like us people who you might call conscious consumers who are looking for products that are responsible and sustainable. We want quality right coffee if it doesn’t taste good. Right. And so, we had to train the farmers in how to add value to the product by focusing on product quality so that it was a true fair trade. Not only for the farmer in terms of the price but also for the consumer in terms of getting to enjoy a delightful product.
[00:08:09] Bree Jenkins: Okay. Do you then have to partner in any way with other organizations in terms of like, this has to be organic, or we have to be doing this sustainably in some way?
[00:08:19] Paul Rice: Yeah, totally. Totally. Yeah. Partnerships has been very much the secret sauce of the fair trade journey because there are so many great groups out there that focus on farmer training or that focus on sustainable agriculture. And so, we’ve formed strong alliances. Both when I was in Nicaragua and now today at fair trade USA,
uh, strong alliances with allied organizations who are really excited about our model of change and who see the market leverage that we’ve been able to create as a way to advance a holistic model of sustainability.
[00:08:52] Bree Jenkins: I mean, that’s incredible just to hear that there’s already so many partnerships you have in sustainability, but I imagine there’s also a whole nother branch of convincing, which is the businesses. Who have now said, Oh, I think I care about buying things that are fair trade and not just individual consumers, but also these larger businesses who had to make that pivot. What was that like to, uh, convince, to teach?
[00:09:15] Paul Rice: Businesses that joined fair trade do so in some cases because they’re led by values or purpose-driven leaders. And in some cases, because they see a stronger value proposition in fair trade supply chains, either because there’s less reputational risk, right? Because a fair trade supply chain, a fair trade co-op, or a fair trade farm or factory has to meet a rigorous, 300 point checklist of social, environmental, and labor criteria.
[00:09:46] So, it means you’re less likely to have a child labor scandal and a fair trade supply chain. So, companies join fair trade to mitigate reputational risks. They joined fair trade because is one way to make their supply chain more reliable and resilient. And then, in an age where consumers are increasingly asking, where does my food come from?
[00:10:06] Fairtrade and things like it give companies a way to answer that question and to say this product. Not only is high quality or tastes great, but it also brings these environmental and social benefits to the world. So it’s something that you can feel proud about.
[00:10:20] Bree Jenkins: Which companies are you most excited or proud of having brought on to care about this as a mission?
[00:10:26] Paul Rice: Well, before I answer that, maybe I’ll, give the, from Nicaragua to here, story. Cause after leading this co-op in Nicaragua for four years, I realized that my calling wasn’t to stay. My calling wasn’t to continue being Pablo. My calling was to come back and become Paul again and see if I could take the European fair trade model and plant that seed in the US.
[00:10:51] And so I came back in 94. I barely spoke English at that point. And so, I enrolled in the Haas school of business because I wanted to get the tools to launch fair trade here. I think that’s the only reason why Haas led me in because I had a really clear, bright sense of what I wanted to do with the degree, and to their credit, they thought, okay, this is cool. Let’s see if we can help him along his way. And so, yeah, I wrote the business plan, fair trade USA in John Freeman’s entrepreneurship class second-year MBA, and it took me years to raise startup capital. And then, I launched Fair Trade USA in 1998, which is the first fair trade certification and the leading fair trade certification seal here in the US market.
[00:11:31] So I’ve been doing that for 22 years. It’s been a long journey. I kept thinking for years. I would go back to Nicaragua, back to the mountains where I belong. But, what I have loved about leading this organization is the learning journey and really, being a part of the rise of, what some called conscious capitalism where business leaders are overcoming this old school trade-off mentality that either you’re profitable, or you’re sustainable, but you’re not both. To a new way of thinking where we are seeing that sustainability and responsibility are actually drivers of success for the firm.
[00:12:26] So Fair Trade USA is a certifier. We develop the standard that defines what is fair trade. And then we audit and of certify farms and factories against that standard. We work with 1400 brands and retailers. We work with 1.6 million farmers and workers, around the world, mostly in Africa, Asia, and Latin America.
[00:12:43] But we just recently started certifying farms here in the US too. And so, you asked me like, what are some of the cool companies, we work with major multinational company. We work with Walmart. We work with Costco work with, Kroger and Safeway, and Patagonia PepsiCo work with big companies.
[00:12:57] And then we work with smaller local companies like Equator Coffee out of, of Marin or, some are cool small upstart brands, around the country who see an impact sourcing as it’s becoming known, a way to create shared value for, uh, not only farmers or workers in the supply chain but also, consumers shareholders as well.
[00:13:18] Bree Jenkins: Thank you for taking us back to Haas, too, because I’m also curious. It sounds like it was a big part of you, writing your business plan and all of that. Are there resources or things that you really enjoyed having while you were at Haas as well that helped?
[00:13:30] Paul Rice: Going to Haas changed my life. I knew who I was already, and I knew what I wanted to do. So, it wasn’t about finding myself. It was about finding community. And getting tools in order to be able to realize my dream, and Haas was already very much committed to entrepreneurship and creativity and innovation.
[00:13:52] There was less of a social entrepreneurship program. There was less of a nonprofit program in 1995 than there is today. And so, one of the things that I love so much about this community is that it has evolved and really taken on a leadership role, I would say, across business schools, around the country, and around the world in terms of elevating business, with purpose and combining not just innovation, but social innovation.
[00:14:17] Right? That’s why if you look at. Your class and like in the last decade, you see a higher and higher percentage of Haas, students and alums talking about social purpose, talking about using the knowledge and the skills and the networks that they’re developing at Haas to make the world better, not just to create wealth for shareholders, but to make the world better in the process. And I love that. I love that about our community.
[00:14:40] Bree Jenkins: Yeah, something I definitely love to. That’s why I went to Haas, and it’s an interesting thing that’s not typically what you see in business schools maybe have this huge care of social purpose, but it sounds like generally, even across businesses, as you’re saying, there is more focus on at least having socially conscious consumers.
[00:14:58] And so maybe businesses need to adjust to that as they go forward. How many or what percentage of consumers would you estimate to be those conscious consumers who are making choices based on those things?
[00:15:10] Paul Rice: Yeah, great question. It depends on whose data you believe. Some studies identify around 20 to 25% of US general population that are either on a regular or occasional basis choosing products that speak to their social or environmental concerns and values. Other studies place that number more 50 to 60%. When we look at fair trade and consumer awareness, our awareness numbers are up to 63%.
[00:15:40] So, when you show people the fair trade certified label, 63% can actually give an accurate description. Say they sent it and can give an accurate description of what it means about half of them. So about 30, a little over 30% say that they regularly buy Fairtrade products.
[00:15:57] Those numbers may not be spot-on accurate, but 30% of general population. that’s a hundred million people. And even if it’s only half that to think that 50 million people on a regular basis are looking for that fair trade seal voting with their dollars or poverty alleviation around the world, that’s pretty exciting.
[00:16:13] And like I said, I think about social change, not in terms of years, but in terms of decades, we’re definitely playing the long game So, I’m super excited. I’m super excited about where the business community is evolving and our role in that.
[00:16:26] Bree Jenkins: Say that I am a business and, I’m like, Oh, I really want to make sure that I’m doing things the right way. I want fair trade certification. I want to think about my, you know, how I source in my labor practices. Can you walk me through a company navigating that and what that looks like? Maybe even some of the smaller startups that you work with. How does that work?
[00:16:44] Paul Rice: Yeah. So, it’s sometimes varies by category. We started here US certifying coffee and coffee to this day is still about 40% of all fair trade certified products in the US, but we quickly expand it to tea and chocolate and sugar, and then 20 different kinds of fresh fruits and vegetables from bananas to asparagus and so on.
[00:17:04] Then we launched fair trade apparel and furniture. So, we’re working with Patagonia and J crew, and we’re working with Pottery barn and target on factory-grown goods. We launched fisheries a few years ago. And we’re about to launch fair trade dairy with Chobani. So Chobani is going to launch yogurt actually this month, first fair trade dairy products. Let’s take, Chobani as a great example. So, they had their supply chain. They already had the dairies that are in their supply chain. They came to us and said, look, they said, we know that farmworkers in our supply chain are at risk. We know that there are bad labor practices at times.
[00:17:41] We know that there are health and safety issues that need to be addressed. We know that there are wages and living standard issues that need to be addressed. And, the ag sector is exempt from a lot of us labor laws. And so, often just requiring farm owners obey the law. Isn’t enough to really lift farmworkers out of poverty.
[00:17:58] So Chobani came to us and said, could we implement a third-party voluntary system in our supply chain? I E fair trade that would raise the level of both social and labor and environmental practices. So, we said, hell yeah, so we put boots on the ground. We visited their farms. We talked to the farmworkers.
[00:18:16] We talked to the farm owners. We talked to activists. We talked to retailers. We crowdsourced knowledge from all the stakeholders that touch this product to really understand what the fair trade standard should address beyond the core boilerplate standard that we’ve implemented elsewhere.
[00:18:30] And so that allowed us to tailor the standard to the specifics, the situation in the dairy industry. And then, we launched auditing and certification, and we’ve already certified a bunch of their farms and, we’ll be certifying the rest of Chobani’s farms or the next two years.
[00:18:44] So they’re going a hundred percent fair trade. And, so really, it’s about not asking them to switch suppliers from a bad buyer to a good supplier, but rather working with them with their existing supply chain to create greater transparency, greater accountability, to social and labor conditions, and then rewarding them.
[00:19:03] And here’s the secret sauce of fair trade. We require that brands and retailers pay more money back to the farm owner or the factory owner. We’re not saying be more sustainable, y’all, and the cost of that is your problem. That’s not what we’re saying. We’re saying more sustainable. Treat your workers right. And take care of your environment and the consumer. Is going to help pay for that right through the retailers. Retailers, on average, pay about a 5% premium back to the farm or factory that gets managed by the workers they invested in community projects. And that is what really drives the growth of the fair trade model. The fact that we’re actually the only certification out there that make sure that the certified farms and factories that we work with get more money.
[00:20:05] Paul Rice: I’m a lifelong social justice warrior. And I read your LinkedIn bio. I know you’re all about empathy. That’s where it starts for me. It starts with empathy. My mama grew up on a farm in Oklahoma and, her dad lost his farm and the great depressions. I grew up hearing those stories, and I’ve just always felt a deep sense of empathy sympathy for farming folk.
[00:20:26] And the incredible struggle that they have to undertake every day against market forces and bad weather, and you name it. It’s not easy being a farmer out there. So my mission and calling kinda is anchored in that feeling of deep empathy for, um, all those hard work and folks around the world.
[00:20:44] Bree Jenkins: Yeah. To everyday get up to, feed the rest of us, feed the rest of world, and make sure that we can keep sustaining and living. So, yeah, big shout out to farmers and people who devote their lives to bringing not only something that helps us live every day but bring us joy a lot of times our lives. So, is there anything that you would want me to ask you, Paul? That you haven’t talked about yet?
[00:21:07] Paul Rice: For 22 years, we have been serving. Farmers and workers and primarily in Latin America, Africa, and Asia. So, a hundred percent of the beneficiaries of our work, on the other side of the world, and for whom we’re building bridges of opportunity are people of color and. Because we were focused overseas.
[00:21:29] We never really looked at the situation in our own country until just a couple of years ago with whole foods and Costco. And a couple of other partners said, Hey, what about farmers and farm workers here in the US? And so, we started a journey of looking at issues of poverty and race in this country a few years ago, which accelerated after George Floyd was killed last year.
[00:21:50] And so, we have started to look at how we can do more for the farming and working community here in the United States. In particular, looking at black-owned farms. So, a hundred years ago, there were over 2 million black farm owners in the United States today. There are only 52,000 left.
[00:22:07] And so, we are looking at how we can ally with other organizations that are working with black farmers. I dare say many of our retail partners are kind of eager to figure out how they can take talk to action and figure out how we can support black-owned farming. So, that’s something that we’re very curious about.
[00:22:26] And then obviously diversity equity and inclusion is something that we’re thinking a lot within fair trade USA. We have a large Latino and Asian workforce that mirrors and part the the constituents that we serve overseas. But it doesn’t necessarily mirror the society in which we’re based. And so that’s what we’re talking about and, trying to have open, harder conversations about who we want to be and how we practice, what we preach.
[00:22:52] Bree Jenkins: That’s amazing to hear, and I had no idea about the huge loss of number of black farmer-owners over time. Do you have any historical context for what happened over the last hundred years?
[00:23:01] Paul Rice: A lot of it was land theft, pushing people off land because they didn’t have the right kind of title. So, a lot of it was legal. Then market forces as well. We’re just learning, and I’m, really humbled to just start to get to meet some of the amazing activists that live in this space and that have been ambulating this cause years, for decades. So, you know, if ever there was an opportunity for us to show up as allies, this is it because there are great folk doing great work in this space.
[00:23:32] Bree Jenkins: Yeah. And I, I love how at Berkeley there’s a huge focus also on food right now, generally. And so, I hope that, and I think that a lot of the emphasis of thinking about diversity inclusion, who are we serving in our communities who gets access to healthy foods who gets access to foods that are produced in a sustainable way? It’s something that We care about a lot and are trying to work on.
[00:23:56] Paul, it’s such a pleasure talking to you and learning about your organization. And I wonder two things first if you were not doing this, if you were not doing fair trade USA, what do you think you would be doing? Would you be back in Nicaragua? What would you do?
[00:24:12] Paul Rice: Oh, I totally be back in Nicaragua. I mean, sometime, right. It’s a little delayed in my mission, but no, I still have strong roots in Nicaragua and usually go back every year for me. Having worked with farmers there since the early eighties and into the nineties kind of makes me a walking, talking longitudinal study of the effectiveness of fair trade because the people that I organized back in the eighties and nineties, they are now the grandparents of kids who are getting college degrees and becoming leader’s community and totally transforming their lives. And Fairtrade isn’t the whole story, but fair trade is important part of that story of giving girls and women in particular, in these rural communities the chance to dream and see their dreams come true as leaders in the community and as professionals, and to see farming kids that want to be something else, become something else.
[00:25:11] So I love it. And, someday, I’ll go back, but for now, I’m really happy here in Berkeley. I mean, this is going to sound like a commercial for Haas, but I don’t care. I’m going to say it anyway for any listeners that are thinking about coming to Haas. If you care about this intersection of business, And social change. This is the place for you because of the curriculum and because of the community. There’s no better community that I know of. I get to speak in business schools all the time that have social entrepreneurship programs and this and that. But, Berkeley Haas is pretty unique and, I’m very proud, very proud of our community.
[00:25:46] Bree Jenkins: I feel the exact same way. For my last question, it’s kind of a call-to-action question. What would you ask us to do? What can we do in this space right now, and what can we continue to do in the future?
[00:25:58] Paul Rice: Well, of course, you got to go out and look for that fair trade label now on coffee and t-shirts, look for the label and buy the product because you can change the world one cup of coffee at a time. That’s my first call to action. I think the bigger call to action for me is wherever you sit, wherever you work, whether you’re inside a big company or starting something of your own. The next ten years, I believe, are going to be all about really manifesting and proving the business case for social responsibility for sustainability. What Michael Porter calls shared value, right? This notion that we’re moving past the zero-sum or trade-off mentality. The past are really engineering business models that serve society as well as shareholders. And I think we’re all blessed to live in a time where what we do makes a difference. So, that’s my call to action. Be bold, be courageous, seize this moment and find, any and all creative ways to bring purpose into business.
[00:26:59] Bree Jenkins: Thank you. Thank you so much, Paul, and yeah, listeners, any ways that we can to bring purpose, to bring change, to make this world better for all of us into business, do what you can. Thanks for joining us, and we’ll talk to you next time.
[00:27:14] Paul Rice: Thank you, Bree. You’re amazing. So glad to be here.
[00:27:18] Bree Jenkins: Thank you for tuning in to this episode of the OneHaas Podcast. If you enjoyed our show today, just remember to hit that subscribe or follow button on your favorite podcast player. We’d also love it if you could give us a five-star rating and review. You can check more of our content on our website, Haaspodcasts.org. That’s podcasts with an s at the end. Where you can subscribe to our monthly newsletter and check out some of our other Berkeley Haas podcasts. Go Bears!