Scaling Social Entrepreneurs in Argentina

Background

One of the consequences of the devastating 2001 economic collapse in Argentina was the emergence of an unusually high number of worker-owned cooperatives. Unfortunately, many of these cooperatives lacked the capital and business expertise to be successful. In 2003, the European fair trade organization, FLO, added cotton as one of the newest fair trade commodities, opening up the opportunity for cotton farmers to take advantage of a floor price and premium for their cotton.

In Northern Argentina, Chaco, home to 60,000 Indigenous peoples of Toba, Mocoví and Wichí, many children were suffering from malnourishment and preventable diseases. Indigenous farmers were protesting government policies that distributed land to cattle ranchers and big soy farmers, ignoring small farms. Some were skeptical of development aid because they had seen wells and solar energy create a new kind of dependency.

Approach

Theresa Fay-Bustillos and her colleague Jill Southard, heard from numerous non-profit and business leaders that the most important issue to address was business development. While visiting a project serving the homeless, they were introduced to Harold Picchi, Executive Director of Otro Mercado, an Italian fair trade organization.  He was working with Indigenous cotton farmers in Northern Argentina and a sewing cooperative near Buenos Aires.  His vision was to create a fair trade supply chain linking the farmers with cooperative-owned factories to produce apparel that could be marketed locally and internationally.

After conducting extensive meetings and site visits, Theresa and Jill knew they had found the right partner and idea to support. While Otro Mercado were experts in fair trade and agro-ecology (natural farming methods), they lacked capacity and commercial business experience.  Theresa and Jill knew they needed someone to manage the project from Argentina and that this individual should also have commercial business expertise.  They hired Gabriela Soria who was passionate about the project, had significant commercial business experience and relationships with Leuru S.A., Levi Strauss and Co.’s business partner in Argentina.

Results

In September 2009, through the efforts of Otro Mercado, Coooperativa Agroecologica del Litoral consisting of 90 mostly Indigenous cotton farmers from Chaco received legal recognition as a cooperative. Otro Mercado purchased 80 tons of cotton in 2009 from the farmer’s coop at the fair trade price which was 70 percent above the price being paid by local buyers. Otro Mercado purchased $144,000 worth of fair trade cotton in 2009 compared to $102,000 in 2008. In 2010, the coop received its fair trade certification from FLO. A farm school was set-up to train farmers on environmentally-friendly cotton production, including basic organic standards.

The farmers’ cooperative was linked with a fabric mill TN & Platex for spinning and a cooperative in Pigue for weaving and dyeing along with sewing cooperatives into a fair trade supply chain entitled, “Cadena Textil Solidaria.” Otro Mercado and Gabriela worked with the coops to purchase new equipment, develop new fabric finishes and increase quality control. Before this project, the fabric mill at Pigue had lost its biggest customer; wages for cooperative members had fallen far below minimum wage. Since 2008, sales and wages have increased every year; in 2010, associates at the coop were finally making minimum wage. Prior to this project, the main sewing coop had almost no business and the building was falling apart. Otro Mercado and Gabriela moved the sewing coop into another facility and by the third quarter of 2009, coop members were making more than the minimum wage.

Levi Strauss and Co. inspected the coop factories based on its code of conduct and worked with the factories to meet its health and safety standards. Leuru initially placed an order for 8,000 t-shirts for the “Eco” line. As of the end of 2009, 20,000 t-shirts have been ordered. In 2010, Cadena Textil Solidaria expanded to other local brands and European fair trade organizations providing a continuous stream of work.