The Importance of Being a Cooperative: a Fair Trade Leader Reflects on COVID-19

These days most of us are learning to live with uncertainty.  What might have been true for last week, or even yesterday, is not necessarily the reality today.  Everything from the state of our health, employment and the economy, to our knowledge of the coronavirus, our government’s response, and the measures we should be adopting:  everything has been and continues to shift at a startling rate.

Living with uncertainty and factors beyond one’s control is nothing new for small farmers and small farmer cooperatives. Price fluctuations, volatile markets, consumer whims, unfair trade practices, and competition from big agriculture are just some of the many factors creating constant instability.  Add the challenge of erratic weather patterns and unpredictable changes in climate. Then add the anxieties that arise from the uncertainties created by the pandemic.

Over the past two weeks, I’ve spoken twice to Alex Flores, the general manager of Aprainores.  The tone of the two conversations couldn’t have been more different, and so clearly illustrate the uncertainty that small-scale farmers and their organizations face daily, pandemic or no.

Small-Scale Farmer Cashews Provide Critical Jobs

Located in the southern coastal area of El Salvador, the majority of Aprainores’ members live along the banks of, and on an island in, the Lempa River.   The Isle of Montecristo is a nature preserve and protected estuary; home to roughly 20 families who fish and do subsistence farming.  Cashews are their primary source of income, mostly sold to fair trade buyers in the U.S. and France.

Despite many challenges, Aprainores has earned itself a global reputation: both for having some of the highest quality cashews on the market, and for the determination and commitment of its members and staff.  Recognized by the Salvadoran government as one of the leading cashew co-ops in the country, Aprainores also plays a vital role in the local economy. Cashew sales provide critical income for the farmers, and the processing plant offers the only source of employment in the region; providing jobs to 70 nearby residents.

In recent years, climate change and unpredictable weather patterns have created new challenges.  One year, an unusual three-day windstorm swept through the region just as the cashew trees were flowering. Winds knocked the flowers off the trees, reducing their annual harvest by 40 percent.  In the ensuing years, they suffered from a severe drought during the rainy season and heavy rains during the dry season.  The rains caused the Lempa River to overflow, destroying farms, crops, and homes, killing livestock, and damaging the processing plant.  In 2016, a particularly wild storm caused the ocean waves to rise far onto the farms. The salt water destroyed 50 acres of cashew trees and the soil, made replanting impossible.

Through all these years, it has been Aprainores’ relationship with fair trade buyers that has provided the co-op with the extra support, higher prices and pre-harvest financing that has helped them weather the storms. Underlying all of this is the most important factor: in a food system increasingly controlled by big players, both in processing and at the grocery store level, it is the relationships between small farmer co-ops, authentic fair trade organizations, and committed activists that make the difference. On both sides of the equation, what matters most are the honest, and often very tough, conversations that happen when each partner discusses their economic, political, and organizational challenges they face: together, they problem-solve the most effective strategies for all parties.

How COVID-19 is Impacting El Salvador

On April 2^nd, I reached Alex who was just finishing up a meeting with his staff and board members. It was the first time he’d been to the office in two weeks, but had traveled the 2-½ hours there because they needed to make decisions.  How were they going to handle the harvest, which was just beginning?  Where would they get the money to loan to the farmers as they do each year at the start of the harvest?  How could they do social distancing and still operate the processing plants so that they could export the cashews?

The country had been on lockdown since March 11^th.  “But, I have a letter from the government giving me permission to be on the roads,” Alex told me.  “Those working in agriculture, gasoline stations, supermarkets, etc. are allowed to work. But the police are out; there are many check-points, and it isn’t easy to get around any more.”

“The situation here is very bad.  We are starting to hear of COVID-19 cases in Jiquilisco (a nearby city).  At the moment, there are 43 cases reported in the country.  But the government says that next week, things will peak. Things are very chaotic and people are scared. Our medical system is so vulnerable that there is a lot of fear.  People are obeying the quarantine because they know that if they get sick, they are going to be in trouble.”

Quarantine Makes Cash Flow Complicated

“The harvest has just begun and the farmers need money to carry it out, but we don’t have any money to loan them.  The only way we can give them advance pay is for us to sign contracts with the buyers.  And the buyers are in such a state of chaos themselves that they are not yet prepared to discuss contracts.”

Typically, Aprainores signs contracts with its fair trade buyers well before the harvest begins in March.  The contract sets a price and gives the co-op what they need to get critical pre-harvest financing. This financing provides the cash that  Aprainores then loans to its members so that they can make ends meet until the cashews are shipped and the buyers wire the money in full.

“We need money.  The situation is very tight; work is behind schedule.  The harvest had just begun when the government announced the first 14-day quarantine.  [The quarantine is now extended through April 30^th.]  The farmers are afraid to do the harvest.  They can’t hire people to help them on the farms.  We don’t know how we can open the processing plant and do social distancing.”

“More importantly, we’re not yet sure if we will have a market for our cashews this year.  Our buyers are also feeling the impact of the pandemic and face uncertainty in their own markets”

Fair Trade Financing Makes a Difference

Two weeks later, Alex was in a much lighter mood.  One of his fair trade buyers had come through with a contract and the financial institution had already been able to wire an advance.  Alex was heading back to the co-op on Monday and they were going to start the harvest.  “Our main focus will be to stay safe, but to pick up as many of the cashews as possible.  We’ll start on the island where it’s safer because no one has been allowed on or off, and get them to our warehouse on the mainland.”

“Our intent is to follow the government’s guidelines as closely as possible.  Tecoluca (the capital of San Vicente where their processing plant is located) just reported their first case of COVID-19 yesterday, so we want to be very careful and work very fast.  We won’t open the plant because there’s no way to work with social distancing; but we can keep the cashews in the warehouse and hope that by July the situation will have changed.”

“Once we have gotten all the cashews off the island, we will begin collecting cashews from the remaining producers.  We are thinking to rent a house so that one by one, the farmers can bring in their own cashews for storage.  Then we can just go to the house and pick them up.”

“They Need Money to Buy the Basics”

“We really have no choice.  The farmers can’t go another month without any income.  No one is coming to buy their mangos; they can’t take their cattle to market.  It’s very difficult for them to sell any of their crops; no one wants to leave their houses.  And yet, they need money to buy the basics:  corn, beans, some sugar, and cooking oil.”

“So this contract we signed with our buyer came just in time.  We can start to give out small loans to each member.  We will just have to take good care to not be our usual friendly selves!  We will be very business-like, very quick, come, take their cashews, pay them and leave.”

“It was critical for us to show the farmers that the co-op is working; that we will take care of them.  This will help keep their confidence up.  Because if we don’t work now; when this crisis is over, hopefully in a couple of months, we will have nothing for the year.  The harvest is now and we have to collect it.”

“And even if we can’t process until the fall, our buyer and the lender are part of the fair trade system and understand our situation.  If it takes until December or January to ship their cashews; they know us; they trust us; and we work well together.  It will be okay.”

Stronger Together: A Cooperative Approach to COVID-19

“This shows again, the importance of being a cooperative. Unorganized farmers are going to have a very hard time right now.  People are afraid to leave their homes.  Even cooperatives that are not well organized may not survive this moment.  Our job right now is to communicate well with all our members; to assure them that we can do this; and to encourage everyone to have patience.  That’s how we’ll get through to the other side.”

I told him I was relieved to hear him sounding optimistic again.

“Yes, this is how things change from one week to another.  We will just have to pay a lot of attention to hygiene.  We will wear masks and change gloves after every cashew pickup.  We will take all precautions possible. The idea is to stay healthy but to overcome this challenge.  Last time we spoke, I just didn’t know how to get out of this corner.  Now, I have a very clear view of how to move forward. ”