Paul Rice fell in love with Nicaragua when he was there doing research for his senior thesis at Yale. But the more time he spent in the country, the more disillusioned he became with the traditional government-funded, top-down approach to economic development. He heard about the fair trade movement gaining steam in Europe and decided to try the model in Nicaragua, with great success. In this episode of Logistics with Purpose, Paul joins host Enrique Alvarez to talk about how fair trade supply chains work and the kind of change they can user in for participating communities and families.

Intro/Outro (00:02):

Welcome to Logistics with Purpose presented by Vector Global Logistics in partnership with Supply Chain. Now we spotlight and celebrate organizations who are dedicated to creating a positive impact. Join us for this behind the scenes glimpse of the origin stories change, making progress, and future plans of organizations who are actively making a difference. Our goal isn’t just to entertain you, but to inspire you to go out and change the world. And now here’s today’s episode of Logistics With Purpose.

Enrique Alvarez (00:34):

Welcome. Welcome to another episode of Logistics With Purpose. My name’s Alvarez, and today I have a really interesting human being. He has done amazing things and, uh, was honored with the Ethical Corporations 2019 Business Leader of the Year. He has a lot of things to share. He goes sometimes by Dom Pablo, but we’ll, uh, better known here in the US by Paul Rice, founder and c e o at Fair Trades usa. Hey, Paul, how you doing?

Paul Rice (01:00):

I’m doing great. Thank you so much for having

Enrique Alvarez (01:02):

Me. This is great. I’m excited to have you. Uh, you and I met at the Conscious Capitalism event a couple years ago, and we have had the opportunity to hang out for two years in a row. Hopefully you can make that three and four and five every time that, I mean, you have so much to, uh, offer and it’s always very interesting. But before we dive into your, uh, amazing career and, uh, changing people’s lives, just tell us a little bit more about you. Who, who are, who is Paul

Paul Rice (01:31):

<laugh>? We need a bottle of Nicaragua, Florida rum to, uh,

Enrique Alvarez (01:35):

I would take you on that offer. Next time we see each other, we’ll go, uh, through the rum route. But just briefly, I mean, where did you grow up? Tell us a little bit about your childhood.

Paul Rice (01:44):

Yeah, so I was, um, born and raised in Texas, actually born in Dallas, grew up in Austin, went back to Dallas for high school, uh, as a, as a high school student, started to get interested in issues of, uh, social justice and, um, um, my family traveled a lot, especially to Mexico. So I grew up kinda seeing the reality of other countries from a very early age. And so I went off to college, uh, went to Connecticut, uh, for, for college. And, um, ended up studying economics and political science, and got very interested in international development and, uh, and global poverty and how to fix it. And that became my passion from, uh, you know, age 18. And, um, um, had a chance to go to Nicaragua in, uh, 1982 for the first time to, uh, study the, the land reform and the cooperative movement there and, and, uh, fell in love with the place. And

Enrique Alvarez (02:41):

So it must have, must have been an amazing, uh, experience. And, uh, I’ll jump back a little bit to your earlier days before we jump into Okay. Nicaragua, but you, before we started recording, you mentioned that, uh, yeah, well, you mentioned that you were in Mexico. Before we started recording, you mentioned that you just came back from Mexico. Yeah, uh, an amazing, beautiful, uh, beach town that I didn’t know about. Uh, what was the name of it, just so we can have it. Uh, SA Mexico, if anyone is listening to this, um, SA Mexico Paul recommends

Paul Rice (03:12):

Great, great place. It’s just an hour north of, uh, Puerto and, uh, great whale watching, surfing. All the things

Enrique Alvarez (03:19):

Certified by Don Pablo.

Paul Rice (03:21):

Yeah, exactly.

Enrique Alvarez (03:22):

So, uh, going back, so tell us a little bit like a one story or two of your early years, something that kind of shaped who you are. I mean, you told us a little bit about your, uh, your upbringing and that you traveled a lot and your passion for, uh, changing the world, but any kind of story that kind of started showing you the man that you would later become.

Paul Rice (03:41):

Sure, yeah. You know, um, uh, my growing up years were, were, were hard. Uh, my father left our family when I was a year old and, uh, never returned. And so my mom at the age of 37, found herself with three kids, no education, no job, no money, and no man. And decided that she was gonna never depend on someone else for her livelihood again. She got a job, she enrolled in college, uh, got her bachelor’s, master’s in PhD over the next 10 years while, while raising me and my two sisters. And, uh, you know, so I I, I’ve always felt like I had a front row seat on the original Wonder Woman Show, you know? Yeah. My mom was, uh, my only parent, and she was amazing. And I feel so blessed to have had her as a role model, uh, a woman that worked incredibly hard, that had progressive values, uh, you know, in the sixties and seventies around things like race and gender and the word Vietnam, and all of those things.

Paul Rice (04:43):

And so I, I was imprinted with a very progressive, um, mindset, uh, from an early age and, you know, cause we were poor. I started working when I was 11, uh, first shining shoes, then mowing lawns, but I had an knack. I had an entrepreneurial streak. And so, um, um, a couple of years into lawn mowing, I figured out a way to penetrate the, the higher end neighborhoods and get paid much for the same amount of work. And then I hired some other boys my age and, you know, hi, had hired hands basically. And by the time I was 16, I had saved up enough to buy a house. And, uh, wow.

Enrique Alvarez (05:23):

With this landscaping, well, started like a lawn mowing, but guessing it became much larger down the road.

Paul Rice (05:29):

Yeah. I mean, it was mostly lawn mowing, man. It was, you know, that

Enrique Alvarez (05:32):

Is awesome.

Paul Rice (05:33):

Hard work. But I saved, and, uh, at 16 I bought a house, my mother cosigned, because I was a minor, became a landlord at 16. And, um, I flipped that a few years later and, um, was able to pay for, uh, the rest of my education at Yale with the profits that I made on that. Wow. From, from an early, learned the value of hard work, but I also exercised this entrepreneurial energy that, um, you know, was already bubbling up in, in me from an earn at early age. And which, you know, today in my current role as a social entrepreneur and, uh, and leader of the Fair Trade Movement, I find that my, uh, my entrepreneurial energy is still very much engaged on a regular basis. We can talk more about that in a minute.

Enrique Alvarez (06:16):

No, but that’s fantastic. And thank you very much for sharing. I mean, first and foremost, what’s your mom’s name? Amazing woman.

Paul Rice (06:22):

Ruth Rice.

Enrique Alvarez (06:24):

Ruth Rice. Wow.

Paul Rice (06:25):

Ruth Rice. Here’s my mama.

Enrique Alvarez (06:28):

Sounds unbelievable. I think that, uh, what she accomplished, uh, under such circumstances. It’s just something not everyone can, can pull off, right? Yeah.

Paul Rice (06:38):

Yeah.

Enrique Alvarez (06:39):

Yeah. That’s really good. And you’re the, you’re the el what’s, uh, you’re the older of

Paul Rice (06:43):

I’m the youngest.

Enrique Alvarez (06:44):

I’m the baby. So you’re the baby. So you had three moms, basically by, by then. Yeah,

Paul Rice (06:47):

Exactly. Yeah. And, um, yeah, my mama passed away three years ago at the age of 95.

Enrique Alvarez (06:53):

Wow. I’m sorry. Sorry to hear that

Paul Rice (06:56):

With me and my sisters at her bedside at home. So she had an amazing life and, uh, and she had a great dad. And I, I think of her every day. And I’ve got her picture looking at me right here on my desks.

Enrique Alvarez (07:06):

Well, I’m pretty sure she must be incredibly proud of, of you. And, uh, she sounds like a terrific mom. Uh, do you remember something kind of when you were younger, when you were at 11, kind of working your first job, anything that she probably told you? Something that, that you have probably extracted a lot of energy to keep up, or,

Paul Rice (07:25):

You know, she worked very hard and showed me by example, the value, the value of hard work and, and the value of saving and, um, and eventually the value of investing. You know, I, I think I learned all of those things from her in those very young, young years. And, uh, and it was not, you know, by talking, but mostly by doing. She was, uh, you know, she, she modeled, um, she modeled that behavior for me. And, uh, obviously, you know, she was, uh, very formative in my life.

Enrique Alvarez (07:58):

Well, uh, thank you so much for, for sharing that story. Uh, again, congratulations. Sounds like you had an amazing mom. Thank you. You received an MBA at Yale Economics and Political Science. So how, how did it

Paul Rice (08:10):

Happen? MBA was later. The MBA was later. My ba uh, my bachelor’s degree was at Yale. Yeah. And, um, and I focused on economics and political science. And frankly, when I, when I finished my four years at Yale, I was certain I would never go back to school for a master’s degree. <laugh> the FDA is later in the story. That was definitely, uh, a, a surprise for myself as well.

Enrique Alvarez (08:33):

Moving on to, to your career a little bit, tell us, uh, a little bit more. I know that you started this lawn mowing business very early on. What came next? After the lawn mowing? The flipping of the house, uh,

Paul Rice (08:45):

You know, after college, um, like I said, I’d been in Nicaragua for, uh, um, for a, a three month stint in between my junior and senior years in college. And was it like a mission, mission trip, or what was that thing? No, no. I was doing research. I was researching, uh, the land reform and food policy. And, uh, I lived on a co-op in, uh, in the countryside and did a lot of histories with farm workers who had received land, uh, during the land reform, uh, program, and, uh, and informed a cooperative. And so I was looking at, um, uh, productivity, uh, land and labor productivity on cooperatives versus non-cooperative farms. So there was an academic, this was for my senior thesis at Yale. There was an academic, you know, reason to be there, but, but really I was just there cause there was a revolution going on <laugh>.

Paul Rice (09:40):

I was, uh, very excited about that and, uh, wanted to learn. And, uh, I fell in love with Nicaragua. And so a couple months after graduation in 1983, I bought a one-way ticket to Nicaragua, and I went back. Wow. And, uh, and I ended up staying for 11 years. And it became, you know, the kinda the first chapter of my career. Uh, I spent that time way up in the mountains in northern, uh, Nicaragua in, uh, a region called the Segovia, uh, which is, uh, a coffee producing region. Some of the best coffee in the world is growing up there. And, um, I had a chance to work on a lot of different, uh, development projects, right. International development projects that were designed by very well-intentioned smart people, you know, in U S A I D and different development agencies and, and, and non-governmental organizations around the world.

Paul Rice (10:33):

Um, you know, usually involve millions of dollars in development aid to support these projects. And I worked on a lot of these projects for, for a number of years. And, um, it was a lot of fun. I mean, I got to, um, work with farmers, uh, you know, wearing blue jeans and cowboy boots and riding up into the hills on horses and motorcycles and visiting with farmers, helping to organize farmers, helping to, uh, teach, you know, basic management skills, uh, and, and budgeting and finance skills to, to farmers there. And, um, I met my wife, my, my wife, a beautiful Nicaragua woman who was also very involved in, uh, the social movement there. And, and, uh, Mari and, uh, we had our, our son Emiliano, uh, there in Nicaragua as well. And, you know, I, uh, it was a, it was a great life. And, um, uh, at the same time, over time, I, I began to feel increasingly disappointed and, and even discouraged with this, um, traditional model of, of, right, right. This top-down model where well-intentioned governments and agencies send millions of dollars to help alleviate poverty, um, through economic, grassroots, economic development. And yet, more often than not, in my personal experience anyway, uh, we didn’t really help farmers develop their own capacity to solve their own problems. I think more often than not, we, um, actually created dependency on corn. A

Enrique Alvarez (12:04):

Is that, is that, I’m guessing a little bit the reason why you started your first venture, uh, for the Cop Coffee export cooperative? Did I pronounce that as it pro pro depending on Spanish, English,

Paul Rice (12:16):

<laugh>? Yeah. So I, you know, I was, I was so, um, discouraged with that model of development a that I, um, started looking around at other, um, other approaches and kind of by accident, um, in, in, in 1990 I heard from a friend about the fair trade movement and, uh, fair trade at that time was big in Europe. Uh, there wasn’t really much happening in the United States. Uh, a couple of companies equal exchange and some others, but there was no real fair trade movement in the US the way there was in Europe. And, uh, it was interesting that, you know, the Fair Trade people had a slogan trade, not eight trade,

Enrique Alvarez (12:57):

Not, which, which speaks exactly to your earlier point. Right,

Paul Rice (13:00):

Exactly.

Enrique Alvarez (13:01):

Show us don’t like buy from us, don’t give us money.

Paul Rice (13:03):

People don’t need our charity. They just us to pay them a fair price, you know, for all their hard work and for the harvest that they, that they, uh, that they produce. And so that was a very compelling idea to me. I, you know, I’ve never met a farmer that wants our charity, farmers just want a fair return. Right. So, um, long story short, I ended up organizing Niro was very first fair trade cooperative, uh, with 20 coffee farmers. And we, that first year we filled one container of coffee. Wow. Uh, uh, one container with fair with coffee, and we shifted to a fair trade buyer who paid us, um, a dollar a pound after cost a dollar a pound for our farmers, uh, at a time when, uh, the local market price was 10 cents a pound. Oh,

Enrique Alvarez (13:46):

Wow. It makes such a huge difference. Plus there’s so much margin in the, especially coffee supply chain that it’s totally worth it. Right?

Paul Rice (13:55):

Yeah. I mean, we were literally getting our farmers 10 times more than what their neighbors were getting. And, and just to like break this down, I was working with very, very, very small poor farmers. People with one acre, maybe two acres of land. The average harvest volume was 2000 pounds of coffee a year. So one ton, 2000 pounds. So if, if they got 10 cents a pound, you know, they’re neighbor 10 cents a pound, that was $2 total cash income for the year. Wow. Not even a dollar a day. Not even a dollar a day. And our farmers that year got a dollar a pound, so on average they were getting $2,000. Most of them had never seen that much money ever in their lives. And so, uh, you know, I was a very popular guy that first season. Um, and I got a new nickname that year. People started calling me Pablo.

Enrique Alvarez (14:44):

Pablo. I like that

Paul Rice (14:47):

Paul. That was my mantra. Join the co-op and we can pay you a, a dollar a power. And, um, that led to, uh, over the next four years that I led the co-op that led to us organizing three families. We went from 20 families to 3000 families all over Northern Nicaragua, uh, who brought their coffee together. We milled it, uh, we controlled the quality and we exported it direct jumping over the middlemen. And by exporting direct to, uh, fair trade buyers, uh, we also went,

Enrique Alvarez (15:16):

Was that in Europe, I imagine? Right. The first container was going to Europe since Europe had already movement. Yeah. The US did not have this movement yet. Right?

Paul Rice (15:24):

Exactly. Exactly. Um, so, you know, we were able to develop a multimillion dollar copy business that was delivering, um, extraordinary income back to our family. Right. I mean, our families were getting so much more money by virtue of this direct form of trade. And by virtue of the fair trade, um, uh, premiums that we were getting, that they were able to stay on the land first and foremost and not have to immigrate. Uh, they were able to feed their families three times a day. Cause sometimes poor families skip meals cause they, you know, they have no choice. Uh, we dug wells in communities for the first time and brought, brought clean drinking water to the families, which immediately improved health. We created a scholarship program so that kids could go onto high school and eventually onto college. We started an organic certification program. And so many of our farmers became sustainable farmers, uh, and organic certified. We, we reforested Hillside that had been deforested by transnational lumber companies, a generation earlier. Um, you know, in short we did all of this really cool stuff. And, and here’s the punchline, thanks to nobody’s charity. Right,

Enrique Alvarez (16:38):

Right. It was just like a fair price for what they were doing. Certain thanks, yeah.

Paul Rice (16:43):

The fair return through a more direct connected supply chain and, uh, and through the fair trade movement. And so, you know, the, the thing that excited me the most was how proud people were, you know, the, the hope and the pride and the dignity and the self-confidence, uh, of people who previously had seen themselves as victims of globalization. And through this journey became a co-owners of a multimillion dollar coffee export company that was delivering extraordinary value and hope for the future.

Enrique Alvarez (17:18):

Wow. That’s, I mean, must have been incredible. Not only to be the catalyst of something so amazing, but then just to be there to witness it. Cuz you mentioned that you started, uh, in, uh, in 90, in the early nineties. And then you did this for how long? Like 10 years And at what point? Well, before we, so what point did you start? Uh, fair Trade usa

Paul Rice (17:38):

Well, lemme get to that. Yes. Um, so, so I led this co-op for the last four years that I was in Nicaragua, um, from 90 to 94. Wow. And honestly, you know, this experience completely changed my life and, and completely changed how I viewed the market and the world of business in the effort to improve the lives of the world. Before this experience, I really didn’t think the market had much to offer. In fact, I thought business cause it’s profit oriented was more the problem than the solution to the plight of poor coffee farmers. What I learned through this experience was that markets and business can actually be quite possibly the most powerful li for change and the power most powerful tool for enabling the world’s poor on a journey outta progress. And, um, you know, I witnessed it. I was a part of it.

Paul Rice (18:38):

It wasn’t theoretical. It was very practical. And so, you know, I think that was when I started to see myself as a conscious capitalist and as someone who had found a way to kind of harness the power of the market for social and environmental good. And so at that point, 11 years in Nicaragua, Nicaragua wife, Nicaragua’s son, I was Pablo. I didn’t think I was ever gonna come back to the us but at that point I had an epiphany. And then, and the epiphany was, I had a calling to see if I could take the Fair Trade movement from Europe and bring it to the US Right. To see, to see if I could adapt that model, which worked for the European market and the European consumer. No one had really tried to adapt it at scale to the us. So I came back to do that.

Paul Rice (19:21):

And you know, I, um, you mentioned my MBA earlier, when I first came back, I just, I felt like I needed to learn the tools of business, right? Uh, I’d been running a, a a, an export company in Nicar. So I kinda learned doing, but I didn’t feel like my depth of knowledge was enough to be able to build a fair trade movement in the us. So I came back to California. I got an MBA at, uh, uc, Berkeley’s High School of Business. Nice. Uh, it was an amazing ride. It really felt like coming home, coming back to coming to Berkeley. Um, cause there was a very strong entrepreneurship, uh, program here. Not so much social entrepreneurship. Uh, but remember this was like 2006, so the internet was taking off. A lot of my classmates were starting tech ventures. And so there was, there was just a, uh, you know, an environment of creativity and um, and, and risk taking and exploration, uh, uh, around, uh, entrepreneurial endeavor that, uh, I thrived on. And in fact, I wrote the business plan for Fair Trade USA in my second year entrepreneurship class. And, um, and then launched, uh, fair Trade USA in, uh, in 1998. And, uh,

Enrique Alvarez (20:35):

So for, and for people that might not know exactly what Fair Trade USA is, could you just tell us a little bit more about the actual organization and how it works and what you guys are set up to do?

Paul Rice (20:45):

Yeah, absolutely. So, um, fair Trade USA is, um, um, kinda the, the, uh, the hub of the US Fair Trade Movement. Um, we are a nonprofit organization, um, relatively small, 180 employees, uh, 25 million in revenue. Uh, but we, I like to think of us as the kinda center of an hourglass, you know, the skinny part of an hourglass. So above us, the market, we work with 1500, uh, major corporations, uh, from Whole Foods to Walmart, Safeway, Costco, all the major companies, and then lots of brands as well. Um, we have 66% consumer awareness of our Fair Trade certified Seal. Wow. You’ve probably seen our Seal Fair Trade certified on,

Enrique Alvarez (21:40):

I love that you have all this prompts by the way, that just show you’re the first, the, the only one that has done that course

Paul Rice (21:45):

Have props, bro.

Enrique Alvarez (21:46):

Amazing. That’s, that’s the way to, to go.

Paul Rice (21:49):

We, um, uh, you know, we, last year we were able to catalyze an 11 billion market, 11 billion in product sales here in the US with our label. And so that’s kinda the top of the hourglass. And then the other side of the hourglass are all the farmers and that we work with around the world. Of course, I started in Nicaragua, but today we’re in 51 countries in Africa, in Asia, in Latin America. Wow. Uh, we, we work in coffee, we work in tea and sugar and chocolate and fresh fruits and vegetables. We work in, um, uh, seafood and dairy and now apparel and home goods and other factory made goods. Um, and, um, uh, today we’re working with, yeah, like over a million, uh, just over a million farmers and workers in, in 51 countries. So what do we do concretely? What is Fair Trade usa?

Paul Rice (22:41):

Um, you know, our main role is to define fair trade, right? To define the Fair Trade Standard. Uh, yeah. Fair trade’s a philosophy. It’s a movement but also a standard like the organic standard. Correct. So we have a checklist of three compliance criteria that, that address labor issues on the farm or in the factory that address social issues, that address environmental issues. So all the stuff that you would imagine, right? Like living wage and no child labor and no slave labor and worker safety and health and environmental impact. All those things are in the Fair Trade standard. And our farms and factories and fisheries get audited every year. And if they pass the audit, then they’re certified and are eligible to sell with the Fair Trade Label on their package. And on the other side of the market, the companies we work with, all these brands, uh, and retailers agree to pay more money. So that’s the secret sauce of Fair Trade, you

Enrique Alvarez (23:39):

Know, and you would also open your network to them. So if a farmer somewhere gets certified, you’ll also funnel him through to the companies that you’re already working with you. Exactly. Which I’m guessing it’s a really, really win-win for everyone.

Paul Rice (23:51):

Exactly. Matchmaking supply and demand is a key part of what we do. Absolutely. Wow. It’s interesting cause there’s so many approaches to social, uh, uh, social auditing and, uh, you know, their codes of conduct. And, um, you know, most of the efforts out there, uh, are essentially asking suppliers to be more responsible, be sustainable, but the costs are your problem. The costs are the suppliers problem. Like most companies don’t say supplier. If you produce in a more responsible way, if you pay your workers a living wage, we the buyer will pay you more money. Right. We’ll reward you for that. Fair trade model does exactly that. And that’s what makes us unique. Our message to suppliers, to farm owners, owners is if you meet the Fair Trade Standard, the market will pay you more. And we call that the Fair Trade Premium. And last year we delivered a hundred million in fair trade premiums back to all the farms and factories. And cumulatively we’ve created over a billion now in fair trade premiums back to the communities that we work with over the last, now 24 years that we’ve been in business. So it’s, it’s a, it’s a really just a finishing idea.

Enrique Alvarez (25:08):

No, please.

Paul Rice (25:08):

It’s a really different idea than top down charity. Right. Our, our, our approach to improving the lives of farmers and workers and to protecting the environment and reducing, uh, the climate impact is by enlisting companies and consumers to reward those, those responsible suppliers. And, and, and, and, and so the, the, the end result is better livelihoods for hardworking families all around the world. And for us as consumers, we get to feel good knowing that, you know, one package of coffee at a time, here’s a leg. I love that one package of coffee at a time. We’re changing the world.

Enrique Alvarez (25:48):

Well, and, and on top of that, it sounds to me that it’s, uh, also profitable and, uh, for companies that are doing this because there’s a willingness to pay what you call the Fair Trade Premium already. So some of all of a sudden you’ll be able to not only attract better employees, better, uh, you’ll be able to attract better customers. You’ll become like a higher end brand you like. So it’s not, they’re just, again, paying more for the sake of paying more. I’m pretty sure that they see it by now, that paying more for this kinds of things will in return yield, uh, much, much, uh, larger profit for them as well.

Paul Rice (26:21):

Well, I’m really glad you raised that cause that speaks to our theory of change,

Enrique Alvarez (26:27):

Right?

Paul Rice (26:28):

My, my message to, um, you know, to Patagonia or to PepsiCo or to Whole Foods or to Walmart, my message isn’t take a profit hit in order to help your farmers and your workers. That’s not my message. My message message is anchored in a theory that Michael Porter at Harvard, uh, described as shared value. And the idea of shared value is that we go beyond the fixed pie mentality where we’re just fighting over the size of our slides, right. To an expansive mentality where new value is created through a different approach to business. And that new value is shared by the stakeholders in the model. And so my hypothesis at Fair Trade USA is that if companies do fair trade, it’ll be good for business. And so absolutely win, but business also wins as well. And so you, you just to a couple of the attributes for one, it gives the brand, uh, or the retailer a brand halo.

Paul Rice (27:26):

It gives them a message to tell the consumer. And, you know, overwhelmingly consumers say they want more responsible and sustainable products, especially Gen Z and millennial consumers. So that’s number one, right? That’s if you will benefit number one for the business community, um, uh, of fair trade number two. And your audience will really appreciate this supply chain resilience. Everyone’s worried about supply chains these days. Well, you know, if you’re Starbucks or Pete’s, you need to ensure a reliable supply of high quality beans. Fair trade helps you do that. Because guess what? When you pay the farmers a premium, they give you their best beans, they prioritize you and their deliveries. If they ever stock out, you’re not gonna be the one to suffer. I mean, it’s just logical. There’s a, a degree of loyalty in the fair trade transaction that makes supply chains more, uh, resilient and more reliable. We’re doing a pilot with Walmart right now on, on Fair Trade tomatoes. And it’s really interesting cause um, uh, when we design the pilot, and by the way, you know, a pilot for Walmart means Walmart today is the largest fair trade tomatoes in the <laugh>

Enrique Alvarez (28:38):

That that is. So that is incredible by the way. Congratulations.

Paul Rice (28:41):

But we’re, you know, we’re doing a, with Walmart on tomatoes and when we started it, we, they, they wanted design a dashboard of KPIs that we would be tracking and of it was looking at benefits to the, from the fair trade premium and all of those things. But then they, they wanted to, in some other things, they wanted to put in productivity. Like is a fair trade farm more productive than a non fair trade farm? They wanted to put in worker retention. Wow. You know, it is a fair trade farm, able to retain their workforce in higher numbers than non fair trade farms. And at one point in this early conversation, I said to them, why do you care? I mean, why do you care about productivity and worker retention? You don’t own the farm. Right? Right. You’re buying from a supplier who’s buying from the farm. If the loses its workforce and can’t deliver, your supplier will find another, another buy from.

Paul Rice (29:39):

We secure resilient supply chain, you know, to meet the growing demand that we project in the future. So we care about the farms, we care about productivity, we care about worker retention and all of these other, uh, attributes. Cause we want to identify farms that will work for the, for us into the future. We want to support them and we want to partner with them for the long term. And so that means care caring about the things that they care about. And that blew me away. Ok. So I’m gonna share a couple numbers with you.

Enrique Alvarez (30:11):

Well please do

Paul Rice (30:13):

From this pilot. Cause you know, we’re two years in now and so, and

Enrique Alvarez (30:17):

It was only tomatoes, right? Or there’s other things that are included. This was just for the tomato farms?

Paul Rice (30:23):

No, we do more with Walmart. Correct. Uh, Walmart, uh, does a lot of fair trade coffee, for example. But we do some other things with Walmart. But this was our first venture into fresh produce with Walmart. You know, obviously it gives us a template in the future to look at, you know, bananas and bell peppers and avocados and all the things. Okay. So we’re two years into the pilot and we’re seeing worker retention rates at 87% on these farms versus 60% industry average. And and what does that mean? Worker retention? It means, you know, at the end of the harvest people go home, uh, and then do they come back? And the reason why this is so important, number one, there are labor shortages throughout US agriculture and Mexican agriculture, which is where the farms are located, both in the US and Mexico. Um, so if a farm owner doesn’t get all the workers back the next season, it means their recruitment costs go up. They have to look for labor, it means their training costs go up. They have to train workers. And typically productivity is not as high. Cause those workers are just learning the business. And so what we’re finding is that, and it just makes sense, these workers are getting the fair trade premium, they’re getting benefits. Right.

Enrique Alvarez (31:33):

Why would, why would they leave you? They’re treating them fairly and they feel valued. And

Paul Rice (31:37):

So the worker retention rates are so much higher and the productivity is higher. And so, you know, that is a, a strong benefit both for the farm owners and then in Walmart size. Ok. These are stronger suppliers. This a more resilient supply chain. So we’re, you know, we’re so excited about this pilot cause Walmart has just told us, you know, we’re, it’s no longer a pilot. It’s a program and that’s great. How to ramp it up.

Enrique Alvarez (32:02):

Congratulations.

Paul Rice (32:03):

Thank you. Thank you. You know, that’s another, uh, attribute, you know, when I think about building a shared value model workers and the environment, but also helps the business world. You know, we talked about sales, we talked about supply chain resilience and then, you know, the reputational P piece, right? Cause there are no more secrets in the global supply chain. You know, if a, if a factory collapses, workers are crushed or if child labor is exposed on a, on on farms sooner or later, you know, cause every farmer and worker in the world has one of these, right? And so sooner or later that will be exposed and it’ll damage the reputation, right. Of the demand or the retailer this buying. And it doesn’t matter if you’re directly responsible, the public will hold you responsible.

Enrique Alvarez (32:47):

Especially now cuz you mentioned like new generations. And I think this has clearly been changing over time. And you have children, I have children as well for, for my children in particular, they’re not gonna see this as a nice thing to do. I actually, I argued the other day that they don’t see this as premiums. It’s not the fair trade premium, it’s not the sustainability premium for them. This is the only product that I have. There’s no, they’re starting to not even see or, or, or entertained products that are even though in the same category. Yeah. They are not fair trade, sustainable, good companies. Uh, responsible purpose driven.

Paul Rice (33:22):

Exactly. No, that’s so true. It’s so true. Reputation matters. I’m, I’m, I’m writing a book now, by the way.

Enrique Alvarez (33:30):

What, go ahead. What, what is the, do you have title

Paul Rice (33:32):

Yet? Trade, I figure, you know, I’ve been in this movement now for 35 years. I’ve earned the right to write a book about it. And uh, one of the chapters in the book is Reputation Matters. And it’s just about how, you know, maybe 20 or 30 years ago companies could get away with right? Not really paying attention to the conditions in their supply chain. Um, but today, um, you know, cause there’s more transparency

Enrique Alvarez (34:01):

And you can’t hide, right?

Paul Rice (34:02):

You can’t hide from what’s going on. And it will affect your reputation if you know bad stuff, uh, you know, becomes public. And so more and more, I mean, I think a lot of companies are joining kinda the conscious capitalism movement, right? Right. And are embracing sustainability and social responsibility for, for good reason, for values. But you know, other companies, um, for better or for worse, they’re also embracing better practices. Cause they don’t wanna beed by a, by a scandal, by a child labor scandal in their supply chain.

Enrique Alvarez (34:36):

No, definitely. It’s a, it’s a strategic, it’s a strategic competitive advantage, as you mentioned with a lot of, uh, upside for companies that apply this principle. So you’re, you’re absolutely right. I think it has come from being nice or social about something and it’s become like a key competitive, uh, driver that’s going to fuel, uh, your, your profits. Yeah. So fair trade u s a amazing story. 35 years in the making and growing fast. Uh, two things. So you have more now than 30 product categories that you certify, correct? Yeah. How do you think about, cuz you have everything from coffee to tomatoes to tr I mean, how are you thinking about adding the new categories? Uh, is there like a strategy process behind, behind that?

Paul Rice (35:21):

Yeah, there is, and and primarily it’s, um, it’s market driven. So, um, you know, our, our latest, uh, our, our latest n new categories are cosmetics and footwear. And it wasn’t because we, we woke up one day and said, Hey, the workers in the co industry are exploited and they need our help. Rather, it was a market leader, uh, elf, e l F, um, that, you know, is a multi-billion dollar brand and they sell in Target and Walmart and you know, it’s kinda, um, uh, anac accessible price point, uh, product, uh, especially for young women. And, um, so it’s a great match for us in terms of the audience that we wanna reach. Uh, it’s not a super elite brand. It’s um, you know, it’s it and it’s a, uh, targeting a younger consumer. And so we were excited when they came to us and said, we see what you’re doing in apparel and home goods with Patagonia and J Crew and Gap and Pottery Barn.

Paul Rice (36:21):

Can you take that model and adapt it to the world of cosmetics? And so, you know, we did the research, we developed the, uh, the, the, the module and extra module in the standard for, for cosmetics. And we launched with Elf, um, uh, I think we certified their factories last year and we launched with them last month. So actually the, you know, the, the, uh, the rollout is underway and that’s just hugely exciting to me. Cause I think that’s going create a ripple effect where other, uh, cosmetics brands are going to look at this lighthouse brand that has gone first, uh, and um, and then want to it. So that’s very much a part of our growth strategy is to identify the right grounds to partner with first and then to create a dynamic where other companies wanna come along and

Enrique Alvarez (37:06):

Join. Well, and it’s exciting to see, uh, you probably mentioned it, that companies, it’s not probably like it was 20, 15 years ago, like companies now are coming to you. So you’re, you’re really going from like this bringing deferred trade movement into the US to really just becoming the standard, uh, out there. And so a lot of companies are gonna continue to come back to you are gonna continue to ask you to help them. And I’m very must be very exciting to be part of that change. And of course, I’m very proud that I have the, the honor to speaking with you today. And I’m sure that a lot of people and companies out there will, uh, reach out to you after the interview. And of course as you finish your book, do you have any date to, to kind of finish any

Paul Rice (37:45):

Oh yeah, we’re early

Enrique Alvarez (37:46):

Stages and post deadline.

Paul Rice (37:48):

Yeah, we’re very early stages. We just got, uh, our publishing deal with, um, public affairs and, uh, so we’re just starting to write and, uh, target publication spring. So spring of 24. Alright. Right. Which will coincide with our 25th anniversary celebration.

Enrique Alvarez (38:06):

Well, congratulations for, for that as well. And before we kind of, uh, leave you, I wanted to ask you a little bit, and changing gears to the lessons learned, right? I mean, you have tell us a lot of things, but if you consider and now ask you this question, if you consider your, uh, current Paul Rice Don Paul, what advice? And usually it’s the other way around, right? It’s like what will your current self, uh, advise your older self? But let’s switch that around. What would the younger, um, advise the current Paul Rice? What would he say?

Paul Rice (38:44):

Always stay true to your values.

Enrique Alvarez (38:46):

All right, Paul, this is, this is incredible for people that are, that are listening to us.

Paul Rice (38:51):

I’m gonna add on that, you know, my younger self would be dismayed that I spent my time talking to, you know, Doug McMillan at, at Walmart, and, uh, you know, John Mackey at Whole Foods before he left. John really just retired. But that’s a lot of the work that I do. Um, working with CEOs of major companies and on their sustainability journey, being a thought partner to them, obviously providing services to their companies, but also being a resource and a thought partner to incredibly, um, influential leaders in the, in the American business community that are trying to figure out a way to overcome the historic trade off between being profitable versus being sustainable. Right? I think the mentality in the old way was either I can optimize profits from shareholders or I can be responsible and sustainable, but I can’t do both at the same time.

Paul Rice (39:49):

And that the smart business leader today, the emerging mindset is yes, you can be sustainable and support the success of the firm and be more competitive in the long term, um, by caring, by caring about responsibility and sustainability and baking that into the business model. And so I think we’re in, you know, the early stages of a 50 year transition in capitalism from, uh, you know, greedy capitalism to conscious capitalism. And many of the leaders of that are people who have embraced fair trade and who I have access to. And so I, I get to hang out with, um, and, and, and be a, a partner to some pretty incredible business leaders. And so, you know, my 20 year old self would’ve said, oh no, stay away from, you’re gonna get, you’re gonna lose your your compass. You’re gonna lose your moral compass. And you know, the reality is, the business leaders that I work with, they share our values.

Paul Rice (40:48):

They share a desire for the world to be more sustainable. They share the desire for the, the, the, the kids of farmers and workers around the world to be able to stay in school. Uh, American business leaders don’t wanna burn up the planet. They, you know, they, they believe in in growing numbers. Not everyone, but more and more business leaders believe that business can and must be, uh, a force for. And so I’m really proud that I get to bring my values to work every day and I get to help other business leaders do the same. And so I think, you know, my, my 20 year old self would be a little skeptical. And so I hear him all the time, <laugh>, you know, staying, staying as a values driven leader. And what I love is that, you know, I don’t feel alone at all. Quite the contrary. I feel like this is becoming the new normal in the business community where business leaders, you know, figure out a way to use their businesses for good.

Enrique Alvarez (41:49):

Well, I cannot think of a better way to end this interview. I mean, that was incredibly thoughtful and I completely agree with you. It’s refreshing to hear that companies and people that you work with on a day in and day out, uh, basis are starting to change. Some of them are already there, some of them are as I guess, advanced when it comes to fair trade as, as you are and your organization is. So Paul, for anyone that’s listening to us that actually want to learn more about, you want to learn more about Third Trade s usa want to maybe go through the certification process, where, where can they connect? What, what can they do to get to know you and your organization better?

Paul Rice (42:26):

Yeah, absolutely. So, you know, for, I I, I would love to connect with any of, of, um, your listeners, uh, who are interested in exploring Fair trade. Uh, our website is, um, www.fairtradecertified.org. Um, fair Trade USA is the name of the organization. I’m on LinkedIn, would be happy to connect with anyone, um, and, you know, and, and be, um, a source of support to businesses that are looking to bring greater sustainability into their supply

Enrique Alvarez (42:55):

Chains. Well, thank you very much. It’s been a pleasure, uh, for anyone listening to this episode. If you like conversations like the one we just had with Paul, please uh, don’t forget to, uh, subscribe. Thank you so much and we’ll see you on the next episode. Thank you.

Paul Rice (43:10):

Thank you.