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Business with a better bottom line

Anna Soref

April 24, 2008

8 Min Read
Business with a better bottom line

Along the red-earth trail winding through El Yaguarete farm in northeastern Argentina, the stout yerba mate trees are often hidden by adolescent bushes and skinny young trees that give the farm an unkempt look. Though growing wild, each plant species was placed meticulously by hand to reintroduce the rain forest to the previously clear-cut fields.

This reforestation project is just one aspect of Sebastopol, Calif.-based Guayaki's fair trade business model.

To many, fair trade means artisans and farmers getting a decent wage for their products, but it's much more than that, says Carmen Iezzi, executive director of the Fair Trade Federation in Washington, D.C. "It's a holistic approach to development that tries to use business as a way to create positive change." Iezzi says in order for a company to be a member of the Fair Trade Federation, it must not only offer fair compensation, but also promote environmental sustainability, be democratically or cooperatively run, and respect cultural identity, among other criteria.

To better understand fair trade and in honor of Fair Trade Month, The Natural Foods Merchandiser offers readers an in-depth look at Guayaki, a tea company dedicated to a fair trade business model.

Alex Pryor and farm foreman NelsonGuayaki has its roots in Argentina, where yerba mate tea is the national drink and where co-founder Alex Pryor grew up. When Pryor left Buenos Aires in the early 1990s to study food science at California Polytechnic State University, he brought his yerba mate with him. In his senior year, Pryor introduced the healthy coffee alternative to business student and friend David Karr, and a seed was planted. "Healthy beverage, the rain forest, indigenous farmers—it had all the right ingredients for a great business model," Karr says.

As much as Pryor and Karr wanted to turn on Americans to this energizing tea, they also wanted to do it in a way that would bring fair compensation to the South American producers of yerba mate. In addition, they wanted rain forest preservation to be a priority for their company.

"The model of saving the rain forest at the time was not working," Pryor says. "It focused on buying at-risk areas of the rain forest, but it did not involve working with the [locals] living around those areas. So these [people] were stealing rain forest wood to sell, and hunting [protected animals in the reserve]—they didn't have any alternative."

To offer another form of income to these people, Pryor and Karr founded Guayaki using a principle they call market-driven restoration, combining a triple-bottom-line business model. They added the idea of restoration to the standard fair trade practices of offering living wages and protecting the area's environment and culture. "The restorative business model [uses] the consumer to drive restoration processes in South America by paying people a good price to grow this product in their native forest, but you make stipulations: They must reforest and farm organically, for instance. So life is brought back into the forest, and it's all driven by the consumer dollar," Karr says.

Eleven years later, Guayaki is using its restorative business model to work with indigenous people and farmers in Argentina, Brazil and Paraguay to export more than 8,000 tons of fair trade, certified-organic yerba mate. With a sales increase last year of 50 percent, it appears to be working.

This model is in full practice at El Yaguarete farm. Farmers Alfonso and Gladys Werle had been clear-cutting their land to grow mate, the traditional practice in Argentina. After meeting with Pryor, the Werles learned that by reintroducing the rain forest to the bare fields and using organic, shade-grown yerba mate farming methods, they could increase profits while helping the environment and their workers.

El YaguareteWith the help of Guayaki, El Yaguarete is on its way to re-establishing the rain forest on its 16 acres. In a small wooden nursery, a variety of rain forest plants get their start before they are planted among the mate trees. Although shade-grown mate has about 20 percent less yield than its traditionally grown counterpart, it saves about 20 percent in weeding costs, Pryor says. And by reforesting, the rain forest plants' root systems help evenly distribute nitrogen, carbon dioxide and minerals throughout the soil.??"All of these different plants contribute different constituents to the yerba mate," Pryor says.

An Ache family in front of their home.Along with reforestation, Guayaki is helping the Werles make working conditions better for their farmhands. The mate fields now have bathrooms and showers for the temporary workers who harvest the leaves in May and June. "Often, these workers are treated horribly" at many other farms, Pryor says. "They are forced to go to the bathroom in the fields and can't bathe for days." Guayaki also ensures that its workers are given health care and appropriate work clothes, and limits shifts to eight hours, with a half-hour break. In addition, workers must be at least 18 years old. On other Argentine yerba mate farms, "some workers are 6 years old," Pryor says.

In neighboring Paraguay, Guayaki is bringing fair trade and market-driven restoration to an indigenous rain forest community, the Aché Guayaki tribe, the last hunter-gatherers in the area. The Aché have lived in this rain forest for 10,000 years but have struggled tremendously in light of deforestation and genocide by Paraguayans who wanted their land or believed they were hostile. "Before Guayaki, they had few ways to make money. Their living conditions were terrible, and they were often hungry," Pryor says.

When Guayaki initially met with the tribe in 2002, the members were enthusiastic to work with a company that would allow them to make money but also preserve their independence and the surrounding rain forest. "They had been made false promises by so many missionary and aid groups; what they really wanted was to be independent and survive on their own," Pryor says.

Four years ago, with the help of Guayaki, the Aché planted 40 acres of yerba mate in the rain forest surrounding the tribe's hut village. Next May, the Aché will harvest their first crop and will receive a fair price for it.

Bringing fair trade to an indigenous tribe is not without its challenges, though. "[The Aché community] has lots of needs—nutrition, health, education, but that's not the role of Guayaki," Pryor says. "We are not a foundation; we are not Santa Claus. What we do is supply one thing. But we can help them connect all the parts; we can connect them with foundations that can help them."

To help navigate its role with the Aché, Guayaki consults with anthropologists. "The anthropologists have taught us that we are an opportunity for [the tribe] to grow up and become independent. From us, they can learn to do business with the outside world, to manage money, to be sustainable," Pryor says.

In addition to getting ready to harvest their first crop, the Aché are being asked by a foundation to teach neighbors to plant organic, shade-grown mate. "They are experts at it now, and they will get a salary to show others how to do it. It's a perfect example of how you empower people. And that is happening in less than four years, and it is incredible, incredible," Pryor says.

Guayaki is not alone with its fair trade success story. Last year, global sales for fair trade products were $2.6 billion, the highest they've ever been, FTF's Iezzi says. "Consumers are definitely choosing fair trade over other options; it's seen remarkable growth in both consumer awareness and sales."

Anna Soref is a Lafayette, Colo.-based freelance writer.

Natural Foods Merchandiser volume XXVIII/number 10/p. 22, 24

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