Thursday, September 11, 2008

relational trade [part 2]: Level Ground Trading

Studying some marketplace theology at Regent College, I have been reflecting on my experience of working in the business world and looking to find examples of businesses that are run by Christian people, who don’t follow the pervasive rules of strict profit-maximisation that the capitalist market economy demands, seeking instead to run their businesses by different rules, with multiple bottom-lines, perhaps even going as far as God’s Kingdom rule here on Earth. During summer school, I met Hugo Ciro [read part 1], a founder and the CEO of Level Ground Trading, a business leader and a business with which that I am deeply impressed.

Being involved in the fair trade movement, seeking to bring economic justice and opportunity to small-scale producers of coffee, cane sugar and dried fruit is impressive in itself. Hugo’s company however seems to take the ‘fair trade’ concept far beyond a simplistic definition, and thread the ‘fair trade’ ethos throughout the whole of Level Ground’s business activities and relationships. Here’s how they do it:
  • Fair trade & relationships with producers – there are established minimum premiums that are paid to producers in order to be certified as a ‘Fair Trade Company’. However, instead of meeting the minimum, Level Ground seeks to know their producers personally, and thus their producers' needs and circumstances. As a result, they frequently pay in excess of the minimum requirements, to ensure a fair deal is negotiated.
  • Level Ground goes beyond the traditional B2B supplier relationships, by donating time, money, and expertise to enable its supply partners to produce more efficiently and develop communities, thereby supporting farmers who are seeking to experiment and farm using sustainable techniques, like an organic farmer who uses “a bio-digestor that converts his compost and manure into usable cooking fuel.”
  • Level Ground seeks to be actively open and accountable to their stakeholders, including customers, by making information about "what the farmer gets" available online, and be audited to prove it.
  • Fair trade & relationships with the environment: through composting, twelve recycling streams and smart purchasing decisions, Level Ground only trash one shopping bag of waste each week – a growing medium sized business achieves a feat that would be impressive for a small household! Plus, they try to be aware of where they are failing, be open about it with their customers and seek solutions.
  • Hugo arrived at Regent College, coming from Vancouver Island not in the company car, but on his recumbent bike (see similar bike). Level Ground also support their staff who are seeking to make environmentally friendly decisions that are connected to their work: “On an on-going basis, staff who regularly cycle, bus or carpool to work are paid a monthly green transportation bonus.”
  • Hugo’s business card was “Printed on 100% post-consumer paper”.
  • Fair trade & relationships with employees – They try to recognise that employees have different motivations and commitments outside of the workplace and seek to be flexible to accommodate these needs to achieve an effective, rather than just talked about, work/life balance. In-turn, Level Ground has been recognised by the provincial government with a WorkLife award.

    To me, this model of business is remarkable in how the ‘fair trade’ concept is permeating all facets of Level Ground Trading’s business, or in Level Ground's words:
    “Level Ground Trading envisions a world wherein lifestyles are simpler, relationships are deeper and justice is inherent in each exchange. We remain focused on Direct Fair Trade through dialogue with producers, payment of a fair price, respect for the environment and transparency in the marketplace.”
    In class discussion, Hugo told us of interactions with other sellers in the coffee industry, who could not comprehend why Level Ground would not want to maximise their profits by paying the premiums they do. Hugo then challenged us to re-think our business relationships, ensuring that they were fair. The ongoing success, growth and profitability of Level Ground Trading gives me hope that seeking fair trade relationships in all aspects of marketplace exchange is viable, and much of the exploitation, injustice and dehumanising tendencies of our global economy can be overcome, if we have the will to pursue fair trade relationships.

    I am thinking about making a ‘field-trip’ to Level Ground Trading's HQ on Vancouver Island; I think taking my bike on the ferry would be the appropriate way to travel, and I will take my empty coffee bags with me, so that Level Ground can turn them into energy (as they aren’t yet recyclable). I want (or need) to ask Hugo about what is the primary motivation behind his company:
    • Is it that Hugo is a Columbian-Canadian, who knew first-hand of unjust trade relationships in Columbia?
    • Is it a shared Christian faith among Level Ground’s founders that drives them to seek shalom in this world?
      Are they seeking to live out Micah’s challenge ‘to act justly’?
      Are they seeking to be aligned with Jesus, as he read from Isaiah’s scroll ‘to release the (economically) oppressed’?
    • Or something else?
    I would like to ask Level Ground’s Canadian based employees…
    • If they feel like their work is more fulfilling and rewarding because they work for this fair trade company?
    • How so they think fair trade relationships could be encouraged and implemented in other business?
    Over to my readers: please post a comment…
    • Are you impressed with Level Ground Trading?
    • What else do you think I should ask Hugo and the Level Ground staff?
    • Do you value fair trade relationships enough to sacrifice a ‘maximum profit’?
    • What do you think Jesus would say about the need, or lack of it, to pursue fair trade relationships?
    • Do you know of any other businesses that adopt Kingdom of God ethics to their relationships in the marketplace?
[part 1] / [part 2] / [part 3] / [part 4]

5 comments:

Anonymous said...

Dude,

I've been so badly under the pump at work the past 6 months. That company sounds like 'cool water' in a desert.

I've been working all week as sick as a dog. I had a friend tell me today - go home, put your health and mates first.

The question I'd be asking him if I was you, if you could have a job.

Blessings, Steve

Adrian and Jen said...

collaboration at the bottom line is key

the more and more I understand the drivers of western capital markets its certainly not WWJD

Jesus would be about collabortaive stakeholders workign for a common goal not shareholders.

In saying that I would ask how do you raise capital for such a project in todays market and what can we do to assist this process.

Andrew & Jessica said...

Adrian (I presume…) thanks for your input – I like the focus on stakeholders as well. Good question about capital raising… and I go-out to see Hugo, I will ask him how Level Ground have approached capital raising.

My father-in-law acts as a lawyer for Bolthouse Farms, a Christian family-owned company who, as part of their values rubric, decided that the company would never go into a dollar of debt to fund its operations or expansions. Today, Bolthouse is the largest carrot company in the world and at the time it was sold two years ago, had never entered into any form of debt to run or grow their business. Surely there would have been some attractive acquisition opportunities that Bolthouse could have snapped-up by going in to debt and expanding more quickly… but the company held firm to their stated values convictions and grew the company within those parameters. Check out their mission statement – they are a company who values and considers the broad range of stakeholders interests in how they conduct their business, very relational trade (and they make incredible juices too).

In our credit culture today (where we cant seem to buy a car or a couch or expand a business without it), Bolthouses policy seems absurd. But, reading about the greed of Wall Street and the inappropriate capital raising that has gone on, and the impending credit-squeeze, perhaps companies like Bolthouse will flourish, as they will be the ones who can grow without the credit.

My Marketplace Theology lecturer has talked about “relational investment” – where instead of investing into a stock that you barely know what the company does, or anyone who works there, you invest relationally – where you know the owners and the stakeholders and the way the business is operating, how they treat their stakeholders etc. This of course is much harder, because you need to have a pool of relational investment opportunities to choose from, and the quick profit would be harder to come by.

Lots more thinking needs to be done on capital raising in relational trade – thanks for getting it started. Perhaps some of my finance friends could chip-in to the conversation, or give a reflection in light of the credit crisis?

Andy said...

hey mate - good catching up this past weekender and hearing the coffee story first hand.

to your last comment - the banks will not give debt. the carrot growing firm is very interesting and gives a stark contrast considering the past two years of my working life.

the Bolthouse Farms example of the 7.5% p-notes gives insight into what must be a unique model - the markets are so tough to please that having some patient / like-minded / like-faithed investors would simply be a godsend to many companies.

cheers - ay

Andrew & Jessica said...

AY - it was great to have you in my neck of the woods for a few days - thank you for making the effort to be here!

The interesting thing about Bolthouse is, it isn't (or wasn't before its sale) a publicly listed and traded company.
As you know, Private Equity allows companies the time to invest and develop without the short-term pressure of the markets expectations to force execs and boards to come up with quarterly gains to report to the market, rather than long-term gains that will really grow a business.
The shelter of private equity would have been good for FLT, especially in such a high-profile industry that rises or falls on exchange rates and oil prices which are also very high profile.
I am not sure that relational trade, as in the example of Bolthouse or Level Ground, can be done in a publicly listed company... I have my doubts...
Ownership structure is key to relational trade in my mind, but not the silver bullet.; The owners need to be like minded and have a bigger vision than the bottom line.
Do we really need the debt to build great companies that are profitable? Or would a bit more patience and some less excessive expectations get us there - like they did for Bolthouse, the largest carrot company in the world.

I hope your day in LA has been all-right - I trust the QC in LAX is treating you well... 14 hours of snooze and you are home...