Case Study Sector
The sole third-party certifier of fair trade products in the United States, TransFair USA audited the coffee custody chain from shippers to brokers, to roasters, to retailers, in order to guarantee that farm cooperatives were paid the global Fairtrade Labelling Organizations International (FLO) price. In effect, TransFair USA was attempting to correct a market failure at the production end of the supply chain—coffee farmers’ inability to earn a living wage—by addressing a complementary market failure at the consumption end—coffee consumers’ inability to distinguish fairly priced coffee from conventional coffee.
Though from 2001 to 2003 the Ford Foundation awarded TransFair USA a series of $200,000 to $300,000 grants, the organization lacked the capacity to meet the rapidly growing demand for fair trade coffee. Consequently, Ford program officers Michael Conroy and Michele Kahane worked with TransFair USA founder Paul Rice to write a business plan that included a $2 million program-related investment (PRI) from Ford.
- Latin America