The Achilles' tendon of many development projects is the lack of a market connection or a malfunctioning one. For Jos Algra (working for many years with small producers) and Bert Beekman (first director of the Max Havelaar Foundation for seven years) this was the reason to found Novotrade Consult b.v. in 1995 in alliance with Twin Trading Ltd of the United Kingdom. Both agreed that Max Havelaar was a serious and innovative attempt to find an answer in market connection for the weakest in the trading chain, proving its success by its actual role in the market and the expansion of the model to over 13 countries in and outside Europe. However, the experience with the Max Havelaar model showed that there were far more commercially based development opportunities that could be developed outside this model. Thus NovoTRADE found birth.
To create product and trade development opportunities for small-scale producers and their families from the African, Asian and Latin American continents on the world market, including the fair trade market and the dynamic organic market.
More than a consultancy agency, NovoTRADE also acts as an initiator, engages actively in business, and can represent producer interests on their request. If and when possible, NovoTRADE's market-oriented activities will be linked to existing initiatives like Max Havelaar, but this will not limit our scope of action.
Two examples are given in order to illustrate this approach. One, below, is a cashew project in Benin. The other is a business venture in which NovoTRADE has assumed direct management responsibility. NovoTRADE has the role of initiator and business partner in .
Cashew project in Benin
In 1995, the Netherlands and Benin signed an Agreement for Sustainable Development, together with Costa Rica and Bhutan. In 1997 NovoTRADE was invited to analyse sustainable trade relationship development options between the Netherlands and Benin. The result of this analysis pointed towards cashew nuts for the following reasons:
There were reasons to intervene in the cashew trading chain, aiming at the reconstruction of cashew processing capacity in Benin in the strategic interests of the small cashew producers as well as of the country itself. The main problem, however, was the virtual lack of producer organisation in the face of the highly organised, cartel-like Indian organisation of the supply chain of their industry and the total lack of support services, capital resources and risk-bearing capacity.
For that reason, it was decided to intervene first in the “simple” raw cashew trading. This was done through the creation of a Beninese, professionally managed, company called Anfani Garbi Sarl, with its equity supplied by external agents, including NovoTRADE (25% indirect shareholding). The first task of Anfani Garbi Sarl was to offer an efficient alternative to the Indian buyer network, carry out the export of raw nuts to India, Vietnam or other destinations and, most importantly, create a feeling of ownership of the company by the producers.
The first trading year (1999) passed with reasonable success, collecting and exporting 600 tonnes of raw nuts. For the current crop we aim at a total volume of exported raw nuts of 1250 tonnes, with the participation of about 2000 small producers. If this runs more or less smoothly, we will move on to the next stages of the programme. These include the construction of a farmer-owned processing facility, the development of a credit scheme and the design of an agricultural development plan. During this stage, shares and corresponding decision power will be transferred progressively to the producers themselves, as their capacity to guide and control the management grows. We anticipate that the new elements of the Anfani project will be operational from the time of the harvest in 2001.
It is clear that for this type of development, with a time horizon of at least 7 to 10 years, success can only be secured on the basis of stable and sustainable alliances with trading partners as well as funding agencies. Developing and maintaining this network of alliances is one of NovoTRADE's main tasks. The main partners in this project and process alliance are, apart from NovoTRADE:
Producer Support Network
NovoTRADE and TWIN Trading, our associated company in the United Kingdom, have a longstanding experience in supporting producer organisations in the South. Emphasis is on small-scale producers of coffee, but we are also engaged with producers of cocoa, tropical fruits, nuts and other commodities. TWIN is partner of Cafédirect, the leading Fair Trade brand in the UK, and supplier of Alter Trade Japan and others.
As part of the global liberalisation, coffee exports were privatised since the late 1980s and in 1989 the International Coffee Organization (ICO) quota system was suspended, triggering a profound price crisis. Small producers had to create their own market access, both an opportunity and a challenge. Fair Trade was renewed, entering the main stream market outlets and creating a small safeguard for producer organisations learning to export. Support was concentrated on access to markets and credit.
The 1994 frosts in Brazil turned the coffee market highly volatile and showed the lack of organisational and management capacity of many producer coops. Access to markets and financing alone showed to be insufficient and the complementary support activities needed to be systematised. TWIN and NovoTRADE started a producer support programme and built up a team, closely related to the trading team.
Fair Trade premiums and pre-financing are important for producer owned export business and transfer income to poor farmers. To assist them in managing the market efficiently and become sustainable businesses is a necessary complement that can broaden the impact of fair trade substantially, for which Cafédirect, TWIN, NovoTRADE and others made a large investment.
Central in our approach is a long-term accompaniment, organising the support and business relationships that are needed. The case of Kuapa Kokoo (now a leading cocoa trading operation in Ghana) is a clear example of the success of this approach.
The support a small team based in Europe can give is very limited. Therefore TWIN - NovoTRADE are facilitating local support structures and activities, providing resources and backstopping and linking them into a wider network of traders, banks and support agencies. Through mutual support between producer organisations the impact is extended to a wider group of producers on a cost-effective basis.
We participate in local support pilots like the Gumutindo project in Uganda and Rainforest project in Peru. A larger programme in Mexico and Nicaragua - based on our current support activities, endorsed by the ICO (International Coffee Organisation) and with contributions of the Common Fund for Commodities, the Mexican Government and Triodos Bank - is expected to initiate in 2001. Apart from servicing the participating producer organisations, this is to further develop the methodology and to put the interests of producer owned business on the international agenda. We have been asked to explore the possibility to extend the programme to Rwanda as a next step.
On behalf of NovoTRADE Jos Algra (firstname.lastname@example.org) is the lead person and he is based in Mexico to co-ordinate the pilots in Mexico and Nicaragua. Jos Algra has a longstanding experience in managing and advising producer owned companies, trade, financing and the coffee business.
last updated: 20 october 2000