|Name:||The International Nut Producer Co-operative|
|Country / Territory:||Bolivia (Plurinational State of), Brazil, El Salvador, India, Malawi, Mozambique, Nicaragua, Peru, United Kingdom|
|Date of publication:||October 15, 2012|
|Last update:||January 13, 2015|
The International Nut Producer Co-operative (INPC) is a consortium of nut farming and gathering groups incorporated in 2007 in the United Kingdom (UK). INPC has an international membership representing nut producing co-ops from three continents: the Americas, Africa and Asia.
Indeed, the consortium represents the socio-economic interests of farmers and nut collectors in eight countries: the Federative Republic of Brazil (Brazil), the Plurinational State of Bolivia (Bolivia), the Republic of El Salvador (El Salvador), the Republic of India (India), the Republic of Malawi (Malawi), the Republic of Mozambique (Mozambique), the Republic of Nicaragua (Nicaragua) and the Republic of Peru (Peru).
INPC farmers have joined forces with other industry partners to become the biggest shareholder in their own nut sales and marketing company – Liberation Foods CIC (Liberation Foods). Established in 2007, the company has facilitated international market access for the co-operative's farmers by manufacturing their goods in the UK and marketing them internationally.
Liberation Foods, moreover, will share its profits equitably among shareholders, which include the producer groups themselves, when a dividend is paid. The INPC, meanwhile, has representatives sitting on the company's board of directors.
Since INPC and Liberation Foods were established, nut farmers and collectors in the three continents have seen their international market access developed, their product quality improved, and their incomes and standard of living increased.
Due to a worldwide economic liberalisation process, smallholder farmers and nut gatherers in developing countries have become vulnerable to fluctuations in the price of nuts. The result for many of them has been a diminished share of the international nut market.
In the 1970s, for instance, most peanut exports in the world came from the United States of America (USA), the Argentine Republic (Argentina) and, later on, the People's Republic of China (PRC). African and South American nut exports, on the other hand, were often marginal. Southern Africa's global groundnut market, for example, dropped from 77% to 4% in this decade.
Extreme and unpredictable weather events have also taken their toll on small-scale farmers in underdeveloped countries. Food insecurity (due to flooding and pests), moreover, had become a financially debilitating problem for many small-scale farmers. The upshot for some of these producers was increased financial debt, destabilized incomes and a lowered standard of living.
To address some of the risks involved in these natural and financial imbalances, INPC was established with two overlapping aims. Firstly, the co-operative was to be an instrument for focusing the collective bargaining power of marginalised nut producers who were seeking entry into a competitive economic environment. By uniting thousands of farmers across the world under a single umbrella, INPC sought to unify their voices, increase their ability to negotiate prices and strengthen their entry into the international market.
Secondly, the consortium sought to empower farmers by creating a farmer-owned company. With the establishment of such a company, the farmers would gain reliable market access and their own integrated value train from farm-gate to retail shop. In addition, the farmers would better understand the market and plan for future growth.
Between 2000 and 2003, the charity Twin, which works with the poorest producers in the value chain, conducted a feasibility study which focused on three points: the viability of an adequate Fairtrade nut proposition; the possibility of establishing a value chain for the proposition; and to gauge whether producer groups would be interested in a collaboration to establish Liberation Foods.
To lay the groundwork for INPC, Twin Trading (the trading arm of Twin) and Equal Exchange, an alternative trading company in the UK, joined forces with nut farmers in the three continents together with other ethical investors including the Catholic Organization for Relief and Development Aid, an international development agency based in the Kingdom of the Netherlands (Netherlands). Via this collaboration, several potential partners were identified including warehouses, processors, packers and supermarkets.
To facilitate this process, four group discussions were convened and secondary documents including annual market reports were discussed. Using information gained from supermarkets and market reports, it was established that supermarkets in the UK had 73% market share for their own in-house nut products. During these discussions, the state of the international nut market and level of competition, among other things, were gauged.
Based on the newly garnered information, the investors presented a business model to nut producers inspired by AgroFair – a farmer-owned Fairtrade fruit co-operative based in the Netherlands. Among its novel and many benefits, AgroFair's business model ensured that farmers had a large stake in the company (in the form of share options) and meaningful representation at the highest level of management (with farmer representatives on the company's governing board).
During regional meetings with farmers' representatives in South America, Italy and the UK, AgroFair's constitution was used as the basis for establishing INPC. With certain amendments to the organization's constitution incorporated into a new document, a second round of meetings with farmers took place in South America and the South of Africa in 2007.
Having already established Liberation Foods as a Community Investment Company (CIC) in July of 2007, in December of the same year the investors encouraged two new parties (based in the UK) to join them in order to raise awareness and funds: Comic Relief, a charity, and the Hunter Foundation, a venture philanthropy organization.
As an organization conducting business as a co-operative or CIC (as opposed to a charity or a limited company) in the UK, INPC was registered as an Industrial and Provident Society under the Industrial and Provident Societies Act (1965) and the co-operative is regulated by the Financial Services Authority, the financial regulator of the UK government.
Since INPC members own 42% of the shares in Liberation Foods, the company was the first farmer-owned nut sales and marketing business in the world. As Tomy Mathews, a Director of Liberation Foods who represents cashew nut farmers from Kerala, India, said: “Owning [the company] is tremendously encouraging and motivating for our farmers. The farmers tell each other: ‘We are selling to ourselves!’”
As of 2012, INPC had over 22,000 members from co-operatives around the world including: Fair Trade Alliance Kerala (FTAK), in the Kerala region of India; the Mchinji Area Smallholder Farmers' Association (MASFA), part of the National Smallholder Farmers' Association of Malawi (NASFAM), in Malawi; and Empresa Comercial dos Produtores Associados (IKURU), in Mozambique.
Other members of INPC are: the Del Campo co-operative in Nicaragua; Aprainores, in El Salvador; the Integral Agro-extractive Farmers’ Cooperative of Pando (COINACAPA) and Cooperativa Agricola Integral El Campesino (CAIC) and ACERM, in Bolivia; Recolectores Organicos de Nuez Amazonica del Peru (Ronap), in Peru; and CAPEB and CAEX, in Brazil.
In order to enter the international market with quality, competitively priced and attractive farmer-produced nuts, INPC farmers have relied on Liberation Foods to engage in a series of imaginative branding and commercialization initiatives.
Working through the media, press and in collaboration with industry professionals, Liberation Foods has branded its products as ethically sound (with producers' well-being at the centre of its business model) and based on quality produce. Indeed, the company's founders placed ethical ideals of fairness and justice at the core of their business model through a well-chosen corporate name – Liberation Foods: the embodiment of their ideals.
The company works closely with the Fairtrade Foundation, an established charity in the UK that promotes the rights of producers in developing countries. Having received the Fairtrade Mark of Certification (which appears on all the company's products), Liberation Foods is able to ensure fairness for its producers and reassure customers of the quality of its produce. Because it is 100% Fairtrade, the company has grown in popularity, especially among ethically minded consumers.
After gaining a strong foothold in the Fairtrade market, and supplying nuts to supermarket own label products in the UK and elsewhere, Liberation Foods launched a brand – called “Harry’s Nuts!” – supported by a well-known comedy and Television personality called Harry Hill. Harry Hill had visited smallholder peanut farmers in Malawi and came up with the idea to help them sell their nuts on Fairtrade terms (the comedian makes no money from the brand for himself).
Not only does the comedian actively participate in the product's development (by making recommendations on the level of saltiness and length of roasting and using his image on the product's sleeve); he has met with supermarket executives and helped push the brand in many other ways. The media campaign surrounding Harry's Nuts! has reached approximately 30 million consumers.
Intended to be attention grabbing, Harry's Nuts! are sold as Fairtrade salted peanuts, Fairtrade salted cashews and Crunchy Peanut Butter products. Liberation Foods also developed another brand, called Liberation, which includes baked Fairtrade peanut and cashew mixes, and flavoured and lightly salted nut products.
INPC farmers produce cashew nuts, peanuts and Brazil nuts and Liberation Foods also supplies walnuts and macadamia nuts. The company's products are retailed in several of the UK's leading supermarkets including Sainsbury's, Tesco, Morrisons, Waitrose, The Co-operative and in Oxfam shops and on the Internet.
In order to ensure the integrity of its hard-won corporate image and to maintain its distinctive Fairtrade competitive advantage, Liberation Foods relies on the intellectual property (IP) system. Because the company name is an integral part of its corporate identity, in 2007 it registered Liberation as a trademark at the UK Intellectual Property Office (UKIPO).
Furthermore, in order to secure the IP rights (IPRs) of its most famous brand, in 2008 the company registered a trademark for Harry's Nuts!, written in three different text formats, at UKIPO. Two years later, “Harry's Nuts!” was registered as a trademark in the UK's largest trading region, the European Union (EU), via the Office for Harmonisation in the Internal Market.
Apart from registering trademarks for its corporate name and leading brand, Liberation Foods has bolstered its presence on the Internet thorough imaginative use of popular online social media tools including establishing a Facebook profile for Harry's Nuts!. With trademark protected IP assets and a firm brand presence on one of the world's most popular social media website, the company is able to project a positive image and expand into new markets with confidence.
Liberation Foods has collaborated with several partners in order to realize the dream of establishing a financially viable and internationally competitive farmer-owned company. Apart from key investors who joined the project early on, the company has collaborated with Brand Opus in order to create attractive product sleeves for Harry's Nuts!.
As Nir Wegrzyn, managing partner at the product design company, said, “ [Brand Opus was] keen to get involved with this exciting project and wanted to promote the role [Harry Hill] plays on the pack to give him a more distinctive visual presentation that would increase the impact on-shelf and drive sales for this great cause.”
Moreover, in order to raise extra funds to support community based projects, the company has teamed up with Sainsbury's and benefited from the supermarket's “Fairtrade Development Fund” (FDF) – which is aimed at financing Fairtrade inspired initiatives, such as those involving INPC members, over a period of four years.
The FDF (inaugurated with a £1 million donation and managed by Comic Relief) is a unique mechanism intended to help producers such as INPC improve crop quality and gain access to international markets. Through strategic industry partnerships, therefore, Liberation Foods and the INPC have managed to raise funds, augment their profile, and invest in enhancing product quality.
Among the many benefits enjoyed by INPC farmers is the ability to ameliorate the costs of lost yields (caused by natural disasters such as flooding or via wild animals and pests), improve the health and education facilities available for its members, and provide the help necessary to relieve indebtedness. Indeed, an important aspect of Fairtrade is the Fairtrade Premium – payments to producers that allow them to invest in long-term projects in the community such as health and education initiatives.
Twin and Liberation Foods, with help from Comic Relief, the Department for International Development of the UK government, the FDF and others, also aim to create broader and more collaborative ways of supporting Fairtrade. Via such collaborations, producers in some of the least developed countries in the world have been equipped to meet Fairtrade standards, improve crop quality and start selling their produce on the international market on fair terms.
Small-scale nut farmers from FTAK in India (an INPC member which was established in 2006 to deal with food security and indebtedness in the region), for instance, have used their Fairtrade premium payments from Liberation Foods to pay for a disaster management fund. Living on the hillsides, these farmers sometimes suffer from homelessness and loss of crops caused by landslides following monsoons.
Using premium payments (and thereby avoiding going into debt), the farmers can replace lost crops by buying new seeds or diversify their production (by planting spices such as white and black peppers) so that they are not vulnerable to the total loss often associated with monocultures – the practice of growing just one crop.
Wild animals including trespassing elephants have also proved to be a health concern for farmers in this region who are sometimes injured trying to protect their crops from such creatures. To counter this common problem, some INPC farmers in India have surrounded their farms with solar energy powered electric fences which deter trespassing elephants via a light and non-lethal shock. Through such initiatives, the farmers hope to prevent injuries to humans and animals whilst also protecting the cashew nut trees on their farms from damage caused by trespassing animals.
Not only supporting the environment, its animals and farmers’ crops, Fairtrade premium payments have improved the health, education and commercialisation facilities and opportunities of many INPC members. MASFA producers in Malawi, for example, received US$43,000 of premium payments over two years some of which was spent on establishing a guardian shelter for family members of patients at Mchinji hospital, in Mchinji District. This shelter is also used by expectant mothers with complications in their pregnancies who cannot afford to travel to and from hospital for their check ups. It gives such patients somewhere to sleep while protecting them from the elements.
Sainsbury's FDF payments have contributed towards a nut-shelling machine which will replace nut shelling by hand and thus relieve famers of a great physical burden in the Mchinji community. Also in Malawi, MASFA farmers are using their Fairtrade premium payments to develop Community Buying Centers (CBC). “The new [CBCs] have a small office with a safe, a storage area which will hold about 20 metric tons in conditions which will protect the quality of the peanuts, and the farmers will be protected from the sun and the rain,” said Joshua Varela of NASFAM.
In the Amazon rainforests of South America, furthermore, farmers have used Fairtrade premiums to offset medical costs (for cataract eye surgery and injuries sustained during farming, for example), improve farmers' facilities (including the construction of payoles or areas where nuts are kept secure from water, animals or petrol and chemical contaminants) and for funding educational scholarships. As one farmer said, “Some of the Fairtrade premium is being designated for scholarships so our children can go to university. Those who receive the scholarships will come back to COINACAPA and work for the co-operative, maybe after studying agricultural techniques or accounting.”
INPC members continue to work towards transforming the lives and communities of farmers who often have to live on the edge of economic, social and environmental catastrophe. Using premium payments from Liberation Foods, the producers have successfully improved their crops, diversified their earning potential and seen their incomes, health and educational opportunities improved.
Since INPC and Liberation Foods were established, there has been a sea-change in international collaboration and understanding between retailers and consumers on the one hand, and nut producers from several countries and communities on the other. As the Fairtrade business model continues to grow and prove itself to be financially viable, a new category of international trade – Fairtrade nuts – has developed in stature and grown in influence. In 2011, Liberation Foods had a turnover of BP £4.5 million and its products retailed in four of the five largest supermarkets in the UK. Indeed, the company imported 80% of the country's Fairtrade nuts.
Liberation Food's influence in some countries has contributed to the revival of an industry. From 2008 to 2009, NASFAM exported 576 tons of groundnuts generating an income of US$58,000 in Fairtrade premiums for 10, 709 farmers. Indeed, in Malawi, the company has brought improvements to the lives of approximately 400,000 individuals (many of them women caring for orphans carrying the HIV/AIDS virus) living in farming communities.
The development of a peanut crop in Malawi (which is high enough in quality and big enough in quantity to be exported to the UK) has led to a brand new project in the country – the Afri-Nut Company Ltd, a peanut processing plant in the capital, Lilongwe. This plant will be used to blanch and process peanuts and the paste thereafter created will be used in ‘Plumpy Nut’ accredited sachets – Ready to Use Therapeutic Foods; they are energy-dense, micro-nutrient enriched pastes. These nutrition-rich satches help fight malnutrition in children in Malawi and elsewhere in Africa.
INPC, meanwhile, continues to grow in strength and influence across three continents. The co-operative's members have continued to receive premium payments that have been invested in improving local produce, health, wealth and educational opportunities for nut farmers and their families.
Through INPC and Liberation Foods, disparate communities of farmers, investors and retailers from around the world overcame their differences, including language barriers, collaborated over common interests and turned an alternative business model into a commercial success.
On the basis of a nutty idea and empowered by their own company, farmers from three continents managed to create their own branded products, enter the international market and compete against established corporations. Producers, investors and consumers are now reaping the benefits of a unique marketing venture supported by registered IP assets.
This case study is based on information from: