The Fairtrasa Story
How a small startup in rural Mexico scaled into a global social enterprise impacting thousands of small-scale farmers
Fairtrasa was founded in 2005 by Patrick Struebi, a Swiss-born social entrepreneur. Patrick had been an executive for one of the largest commodities trading companies in the world, but an epiphany inspired him to leave his corporate career and pursue a life devoted to social impact.
In search of a mission, Patrick sold or gave away all of his belongings and bought a one-way ticket to Mexico. While traveling there, he sought clarity about his path in life. He knew that he wanted to put his talents to use for the good of the world, but he didn’t know what shape this desire would take.
One day, in the state of Michoacán, Patrick met a group of small-scale avocado farmers whose story moved him. Farming was their only source of livelihood, but the prices they received on local markets were very low, and they didn’t see a way to grow their farms and improve their future. Patrick believed that he could use his knowledge of international trade to help them grow their avocado business.
He studied the condition of small-scale farmers in Latin America, and traveled through the region to meet more of them in person. International buyers were unwilling to work with these farmers because logistical costs were too high to make it profitable. As a result, many farmers remained marginalized from local and global food supply chains, stuck in a vicious cycle of poverty.
In 2005, the Fairtrade and Organic markets had begun to take hold in Europe. Patrick understood that small-scale farmers could gain international market access and better prices for their products by obtaining these certifications. He explored this opportunity with the avocado farmers he’d met in Michoacán, helping their cooperative become Organic and Fairtrade certified and managing the logistics of a first container shipment to a European buyer. It was the world’s first container of Fairtrade Organic avocados.
The farmers received more income for their avocados than they’d imagined possible, and their family farms were back in business. So was Patrick. He named his new company Fairtrasa — a social enterprise that would empower small-scale farmers to lift themselves out of poverty.
Innovating a New Model
Patrick had struck on a powerful way to increase farmer income through Organic and Fairtrade certification. He began building a team in Mexico of passionate, local leaders who shared his mission, and they replicated the initial venture with other farmers. The results were immediately impressive, with incomes increasing by as much as ten times what farmers had earned before.
But Patrick soon realized that relying on certifications alone was not enough to help the most marginalized farmers escape the vicious cycle of poverty.
There were two basic reasons for this: First, applying for and managing Fairtrade and Organic certifications required a relatively advanced development level on the farmers. Consequently, these certifications were only accessible to select farmers in developing countries, while the vast majority remained marginalized from the system. Second, even those small-scale farmers who did improve their income through certifications did not necessarily know how to reinvest it effectively and sustainably.
What was needed was a comprehensive development program that would help subsistence farmers reach the level where they could obtain certification and export high-quality fruit, and help all small-scale farmers reinvest their income in business and community development.
Based on this understanding, Patrick and his team created Fairtrasa’s Three Tier Farmer Development Model. The Model is based on an important fact: In the developing world, not all small-scale farmers are at the same level of development. Instead, there are 3 basic tiers: subsistence (Tier 1), post-subsistence (Tier 2), and developed (Tier 3). While Fairtrade-certified food comes from small-scale Tier 3 and some Tier 2 farmers, hundreds of millions of Tier 1 and Tier 2 farmers remain excluded from the global food supply chain.
Fairtrasa’s Three Tier Farmer Development Model addresses this gap, providing small-scale farmers in all 3 tiers with support and resources according to their specific needs. Dedicated Fairtrasa teams give technical training in orchard management and organic farming techniques, administrative and logistical support, and financial resources. The goal is to help all farmers become independent agro-entrepreneurs, empowered to improve their businesses, communities, and lives.
The innovative Three Tier Farmer Development Model helped Fairtrasa establish itself as a pioneering force in the farmer development and Fairtrade and Organic food sectors.
Replicating the Fairtrasa Effect
After creating an impactful model in Mexico, Fairtrasa’s next step was to bring that model to more small-scale farmers in other developing countries. In particular, Patrick wanted to bring Fairtrasa to Peru, where he’d experienced the epiphany that inspired him to change his life.
In 2009, he traveled to Peru and met Jim Ruiz, a local leader with vast experience as an organizer of small-scale banana farmers. In Jim, Patrick recognized a kindred social entrepreneur who shared his mission and passion. He asked Jim to join the Fairtrasa team and replicate the Fairtrasa model in Peru.
Fairtrasa Peru launched in 2010 with the country’s first container shipment of Fairtrade Organic avocados. Since then, Fairtrasa Peru has expanded to export bananas, limes, mangoes, and ginger, while implementing and improving on the Three Tier Farmer Development Model. As in Mexico, incomes have gone up significantly for Fairtrasa farmers. Fairtrasa Peru now works with 14 farmer cooperatives in Peru and has supported close to 4,000 farmers.
The challenges farmers face keep them in a vicious cycle of poverty. Fairtrasa works to break this cycle and provide small-scale producers with development opportunities. This is my passion and my motivation for working with Fairtrasa. By leading Fairtrasa Peru, I can help my country find a path to sustainable development. — Jim Ruiz, Director of Fairtrasa Peru
Integrating the Supply Chain
Between 2005 and 2009, Fairtrasa established not only a new model for farmer development but a new business model to fund and support that development. Before Fairtrasa, support for small-scale farmers had traditionally come from NGOs and philanthropic donations. But Fairtrasa had created a for-profit model that harnessed market forces to generate sustainable impact over the long term.
Because of its intensive investment in farmers, however, Fairtrasa’s business generated a slim margin, which left it susceptible to a shock in the market. That shock came in 2009 with the fallout of the global financial crisis. The Fairtrade and Organic markets abruptly went down, as many consumers were no longer able to pay the premiums for these products. Fairtarsa’s business was suddenly at risk, and Patrick was forced to reconsider his company’s business structure in order to rescue it.
He understood that Fairtrasa’s importers were essentially “middlemen,” receiving a decent margin on Fairtrasa fruit without taking any substantial business risk. As Fairtrasa was already cutting out the middlemen on the export side side by sourcing directly from partner farmers, Patrick decided to take the same approach on the import side: He would establish Fairtrasa import companies, to which Fairtrasa supply companies could export directly.
Besides the economic benefit, import companies would also benefit Fairtrasa’s farmers and customers: By bringing its fruit directly to market, Fairtrasa could ensure better deals for its farmers, better traceability, and better quality control. In particular, the direct feedback to farmers would be a vital tool in helping them improve quality. The company’s mission and commitment would be reflected throughout the supply chain.
Between 2010 and 2015, Fairtrasa acquired or founded 5 import and sales companies in Europe — transforming itself from a farmer-development operation in Latin America into a global enterprise with a vertically integrated supply chain and a large-scale sales network. To lead these companies, Patrick chose partners who were not only fruit industry experts, but passionate social entrepreneurs who shared his mission of using business to generate social impact.
Integrating our supply chain by opening direct sales companies is one of the most important decisions I’ve made. It not only helped us continue prospering during a global economic crisis, but it also improved our quality control and feedback loop to the farmer. And most importantly, it helped us grow our farmer base considerably and continue to increase our impact for small-scale farmers and their communities.—Patrick Struebi
As of 2016, Fairtrasa is a global Group consisting of 15 companies in 12 countries, all working together to empower small-scale farmers while delivering healthy, high-quality fruit to customers. Fairtrasa has impacted the lives of over 40,000 people, including farmers and their families, and is one of the largest providers of Organic and Fairtrade fruit from Latin America. Fairtrasa and Patrick Struebi have earned recognition, awards, and invaluable support from major organizations and institutions in the fields of sustainable development and social entrepreneurship, including Ashoka, Endeavor, the World Economic Forum, the Schwab Foundation, the abc* Foundation, Yale University, Fordham University, and the Clinton Global Initiative, among others.
Meeting One of the Great Challenges of Our Time
The global challenges that inspired Patrick Struebi to found Fairtrasa in 2005 remain with us today: There are more than 2 billion small-scale farmers worldwide and more than a billion of them live in or near absolute poverty. Empowering these farmers through sustainable agriculture and fair inclusion in the global food supply chain can help us eradicate poverty, improve environmental sustainability, and increase accessibility to healthy food.
Certification schemes like Fairtrade and Organic have been very impactful for certain small-scale farmers, and so has the work of dedicated NGOs. But in order to reach the millions of farmers that remain marginalized and impoverished, we need true innovation in the global food supply chain — a new system that harnesses the enormous and growing consumer demand for healthy, sustainable food and empowers small-scale farmers everywhere.
In its first decade as a social enterprise, Fairtrasa has developed a model that has proven effective for thousands of farmers and their families, establishing itself as a leading social enterprise in the space of farmer development and sustainable food. In the years ahead, our objective is to scale this model into a truly global solution to one of the great challenges of our time.
Fairtrasa is a global social enterprise that empowers marginalized small-scale farmers to lift themselves out of poverty. Learn more about our model, our impact, and our fruit products at www.fairtrasa.com.