Traidcraft: Helping farmers in the developing world trade with the UK

Date: 04 Oct 2013

Citywealth

“More than 30 years ago, a young Durham university postgrad student went to Bangladesh and discovered products made from Jute, which is a plant used to make Hessian.‚Äù So recounts Ram Gidoomal, Chairman of fair trade organisation Traidcraft, which helps countries in the developing world trade goods with the UK. Ram and a group of friends set up a small business and discovered the hard way about importing to the UK. After a further exploration into importing coffee, bought on ethical terms, he set up Traidcraft, which is now an organisation to marvel at, with a ¬£15m turnover and more than a million people supported by its work last year.
Gidoomal, who was born in Kenya, was formerly UK Group CEO for Inlaks, a global business with 7,000 employees that was working with countries like Nigeria back in the 1980s. Part of that business was seafood-processing in Scottish factories which were only working part-time because prawns in Scotland are seasonal. As any good entrepreneur would, Gidoomal saw an opportunity to buy from India to enable the company’s factories to work all year round. He went on a trip, set to increase the work and profits for his company. What he didn’t expect was a life-changing experience; when he visited the slums featured in Slumdog Millionaire he was taken aback by the poverty. Although Inlaks was an ethical company, he made the decision to resign when he got back so that he could devote his life to helping people out of poverty in the developing world.

Christmas Cracker
His first dip into the fundraising water was in 1986 with a project called “Christmas Cracker‚Äù where, over seven years and in various incarnations, he raised ¬£5 million. Gidoomal explains: “I got 50,000 teenagers to help me over a seven-year period. Four weeks before Christmas, we ran a restaurant and sold dahl and rice at Western prices with a hundred restaurants taking part. We called it ‘high street, high spend, high guilt’.‚Äù He smiles. “We also pulled the largest Christmas cracker in the world which appeared in the Guinness Book of Records. The next year we ran ‘radio cracker’, selling advertising space working in conjunction with youth leaders. The fourth year was selling fairly traded goods. We linked up with Traidcraft and Oxfam to run ‘the really useful present stores’. Our strapline was ‘buy a present and help the poor’. The ¬£5 million proceeds went to aid agencies like World Vision who work to stop the impact of poverty on children. They won one of the bids to receive the money.‚Äù
Traidcraft Plc, a Christian-based organisation, helps farmers in the developing world trade with the UK through long-term sustainable trading relationships. Britain, through organisations like Traidcraft, has led the way in pioneering fair trade markets and raising awareness among consumers about where the products that they buy come from. Traidcraft as an organisation chooses to produce each year a full Impact Report that openly and transparently assesses all the stakeholders and the work they are doing. “We have a social impact balance sheet for Traidcraft Plc and Traidcraft Exchange who have almost one million beneficiaries,‚Äù says Gidoomal. Traidcraft also chooses to ensure that its activities in Britain are run on ethical principles; for example, Gidoomal says the highest-paid person cannot receive more than six times the salary of the lowest-paid person in the organisation.
Geobar, a top-selling snack product from Traidcraft Plc, uses ingredients like fair trade honey and raisins sourced from producers that Traidcraft has worked with for many years. “We agree a fair price based on conditions locally and market prices,‚Äù explains Gidoomal. Despite all the activity, last year was challenging. The company made a loss as it struggled with the current economic conditions that many small UK retailers find themselves in, something Gidoomal will look to rectify.
“As an example of what we do,‚Äù says Gidoomal, “if, for instance, a grandparent dies and leaves a tea bush to each of his children, they may end up with so little tea to sell they can’t make a living individually. We ask them to work together so that we can buy from them. We ask for them to put in a governance structure to bring democracy to their group. This concept has worked so well that one co-operative has set up a factory and rented packing machines so their business has developed from simply supplying goods. Fairtrade means auditors to spot check the co-operatives and their governance process. We ask that they elect officials, have a constitution, keep books and take minutes of all discussions, agendas, notes and actions.‚Äù

Good business
The Plc’s turnover is ¬£15 million, with nearly 6,000 shareholders who are a mix of individuals and churches. Their shares can be bought and sold on ‘Ethex’ a not-for-profit broker in ethical investments. Traidcraft plc paid a dividend of 2p a share two years ago.
Traidcraft Exchange, the charitable arm of Traidcraft, operates to facilitate development work in the developing world, working with poor farmers on governance, training and setting up co-operatives.
Gidoomal became involved two years ago when approached by headhunters. “We exist to show business that you can work in a fairtrade world,‚Äù he says, “and we believe it’s the only solution.‚Äù He joined as non-executive Chairman. The board steers the organisation and has seven external independent members. “One of the ways that people support Traidcraft is to donate to our catalyst fund which, with ¬£10,000 in donations, can pilot an idea that can then be scaled up to deliver more impact to more beneficiaries.

What do they need?
• People to buy mindfully, buy fair trade, buy Traidcraft.
• Entrepreneurs to see the value in their catalyst fund.
• A ¬£10,000 donation to the fund means Traidcraft can use its people-centred Research and Development approach to work with local people, identify issues, invest in solutions and start to make a real difference.
• With a ¬£30,000 donation, there are truly life-changing effects for a whole community.

Traidcraft helped one million beneficiaries to flourish last year. “Our aim is to help lift people out of poverty through trade, rather than microfinance. Our model is very powerful and quite literally transforms lives.‚Äù