INTERVIEW with Santiago Paz – CEPICAFE
Short presentation
Interview with Santiago Paz Lopez, co-manager and sales officer of CEPICAFE (Peru). Santiago Paz has worked for CEPICAFE since its establishment and he has witnessed its growth.
CEPICAFE set out as a small group of coffee growers from the Piura region, an elevated region in the north of Peru. Today CEPICAFE is more than just coffee. The producers also produce cocoa, sugar cane and fruit that is turned into juices and exported.
1. When was CEPICAFE established and what was the main reason for its establishment?
In 1990 the international coffee market price was very low.Growing coffee was not profitable anymore for small coffee growers. First, we focused on production. Later we understood that it was not useful to focus only on production; we also had to find a market that valued our work.
In 1995 we established CEPICAFE. Its main focus was: financing, market access, production (still), especially increasing production.
2. CEPICAFE evolved from a coffee growers' organisation to a player on the international market with a range of products such as cocoa, sugar and jams. What was the main drive to diversify the offer?
There were several reasons. On one hand, we wanted to reduce the commercial risk, so we would not depend on one product anymore. On the other hand, we could work at different altitudes. In the beginning we produced coffee only in the medium range. We tried and looked for alternatives. We ended up with sugar which offers far more security than fruit. And it turned out to be a success. Now, we sell almost 1000 tons which are mainly exported to France and Italy. Later we started working with cocoa producers. In the beginning cocoa was considered a low-quality product which got us a low price on the local market. But we knew the cocoa in Piura was unique in its kind and that such cocoa with a unique aroma was interesting.
The Piura region varies between 30 and one thousand meters above sea-level. There are farms at various altitudes and so there is a variety of possible crops:
-cocoa: 30 – 1000 m altitude
The highest range is favourable to coffee and sugar
-coffee: between 1200-1800 m
-sugar: 1000-2000 m
We are currently into a new project: reforestation with a focus on farms from the highest range of the region (3000 meters above sea-level). These farmers are the poorest and are hit hardest by climate change. They hardly have an income and their farming is really subsistence farming.
We also think of a future project: industrial processing of chocolate in the first place.
This way we add value to the product and can generate larger volumes on the international market and guarantee a better price to our members.
Thanks to organisations like BTC we can develop such alternatives and are offered the opportunity to develop new ideas. BTC makes it possible for us to achieve our dreams.
3. CEPICAFE has been involved in fair trade for a long time. How important has fair trade been for de the development of CEPICAFE and its members throughout the years?
I believe the market is the most important. You must start from the reality of your producers. Most of them live in extreme poverty. The most important thing for them is to generate an income. They are busy surviving from day to day: what do we eat today, what do we eat tomorrow. The market can change matters.
In the beginning it was difficult for us; we did not always have the same vision as the farmers.
We started with fair trade coffee because of the price difference and we grew strongly, from exporting half a container to 100 containers.
Now we achieve similar results with cocoa. It was difficult at first because you have to start from a different reality and culture. For our cocoa we now get twice the price that we would get on the local market. The market urges us to get organised, to learn and to work on certain issues such as the position of women. But I do not mean to say that the market is everything. Yet, from the experience and the reality of the producer it is the starting point from where he can grow. For instance, for an extremely poor producer gender is not a priority.
But the market can put pressure on working at certain issues. If you are a producer and you have organic and fair trade certification, you do not just have to professionally work that way, but you also have to adapt your way of life and your household: Your wife is to have more rights, she must have her say.
4. In 2011 CEPICAFE won the national “Concurso nacional de Calidad de Cacao en Péru” contest with its Chulucanas cocoa. At the same time CEPICAFE started selling cocoa to European chocolate makers who are known for their high quality standards. It is obvious that CEPICAFE wants to position itself on the quality niche and obtain a higher price than the minimum price guaranteed by fair trade. Is fair trade still important for CEPICAFE?
Yes, because most of our customers are fair trade customers. For us, fair trade will always remain the basis. Fair trade may not be the solution or best market for all products, but the percentage that fair trade brings in allows the organisation to operate. And it helps us to enter into other market segments.
Our buyers remain fair trade.
5. Fair trade is still very much a North-South business. What potential does the local and national markets in Latin America hold for fair trade products?
This is something we are working on. But the volumes are limiting us to do so. Right now, there is a large demand in Peru for liquor, sugar icing and chocolate, but we do not have the necessary infrastructure for this.
The cocoa from Piura is very particular; it helps with promoting the image of Peruvian cocoa in general.
We actually see a boom in Peru right now: People who have studied and have money really ask for these products.
There is room for the fair trade approach: People want to help small producers. The concept is there; only people do not know the fair trade concept yet. For instance, there is a famous Peruvian cook, Gastón Acurio, who often talks about fair trade but he does not call it that.
6. Beside fair trade, CEPICAFE also work towards organic certification. What is the significance of organic certification?
Fair trade certification and organic certification go hand in hand. All our fair trade coffee is organic. Unlike Great Britain, the United States… where a fair trade market exists that is not organic. For us the fair trade label is a condition/requirement to obtain organic certification.
7. Each label has a price (certification, SCI...) and this stands for a major cost and often impedes market access for smaller organisations. What opinion does CEPICAFE have on this matter?
The high cost is indeed a problem and it takes much time to obtain certification. But a label can foster change. If you are fair trade certified, women must have certain rights. It is easier to explain this with economics.
A label makes operations more serious too: There is an internal control system and you have to prove that you comply with the rules, such as rules on child labour. You can discuss this through a market approach because producers look at it differently from their own culture: children help their parents after school in the field. In our culture this is considered positively because it teaches children how to work on the field. So, it is a sensitive topic and it has to be explained well to achieve change and avoid problems.
8. Recently, 2 major changes occurred in the fair trade world: Fairtrade USA left Fairtrade International and a new label “pequeños productores” appeared in South America. How do you look at these changes as a representative of an organisation of small producers?
We consider this a breaking point for fair trade. We think there is no reasonable argument for the decision of Fairtrade USA . This decision was taken in a time of economic growth, but meanwhile we are in a global crisis. There is sufficient supply of coffee and cocoa, but the largest part of cocoa is exported as regular cocoa (so not fair trade). The argument that there is insufficient supply is not correct.
We are also talking about two different realities: large companies on one hand and cooperatives/ producer organisations on the other hand. CEPICAFE believes our role is more than just selling products. We do so much more: providing training, making progress, dealing with gender issues and building confidence. Our role is much broader than just selling cocoa beans. If as an organisation you take on the role of the state in a community you must also show interest in these issues and not just sell. These are 2 distinct logics: You cannot help both large companies and producer organisations at the same time. If you help the big ones, you kill the small ones. A small organisation can never compete with a large one.
9. What message/piece of advice can CEPICAFE give to other small producer organisations with the same goals?
CEPICAFE's success shows it is possible to grow from a small producer to a respected actor/player on a competitive global market. I also think of producer organisations in Africa which are often not at the same level as the producer organisations in South America.
There are various keys to have an organisation function well. Important aspects are:
- The market
- International cooperation, as a catalyst: It can help achieve our dreams in a short time. CEPICAFE would for instance like to have a chocolate factory of its own, but with our own funds we cannot even estimate how long this would take us.
- Good partners. The room for decision-making that is given to the producers, who are to be the main actors of their own development . It is also important that the producers are willing to change.
- Ownership by the producers: It is important that the organisation is really owned by the producers. There are organisations that are producer organisations only by name but that are not managed by producers but by middlemen.
One of the success factors of CEPICAFE is that the organisation is democratic, with the producers effectively participating. The power and the control over the organisation is with the producers.
There are still a lot of matters we can work on and in which we can grow such as production, financing and added value. To a certain degree, these are also national goals for Peru.