By Colin Paiva
November 3, 2015: Patrick Struebi, founder and CEO of Fairtrasa, recently visited the Yale Entrepreneurial Institute to speak about social entrepreneurship and the founding and development of his own social enterprise. Fairtrasa is a vertically integrated fair trade fruit and vegetable produce group that helps farmers in developing countries to earn incomes over eight times what they would receive in normal local markets. The company also reinvests a portion of its profits into schools and other development projects in farmers’ communities.
During Patrick’s talk, he shared the story of his Fairtrasa's development along with some unique insights about social entrepreneurship. Here’s are four key lessons:
1. Social entrepreneurs connect the dots in new ways.
When Patrick started Fairtrasa, he first focused on two new and undeveloped products: fair-trade Mexican avocados and fair-trade Argentinian wine. Back in 2005, most fair trade products were constrained to coffee, bananas and chocolate. Patrick saw possibility in developing these two new products. Social entrepreneurs need to have this same sort of vision, he told the audience—but they can still work, as he did, within an existing model.
2. Social enterprise gives you impact, but it also gives you returns.
Despite being a for-profit company, Fairtrasa is still a social enterprise. Fairtrasa currently partners with 6,500 farmers in developing countries. These farmers usually see income over eight times higher with Fairtrasa than they would normally get selling to large produce conglomerate middlemen. The combination of better prices and farmer education (resulting in 50% higher yields) helps to lift Fairtrasa’s farmers out of poverty. All the while, Fairtrasa still makes a profit despite their higher direct produce purchase and education expenses. Just because a company is for-profit, does not mean that the company cannot be socially conscious and beneficial to people beyond its shareholders.
3. Social entrepreneurship doesn’t work without conscious consumers.
One of the most difficult challenges that fair-trade and other social enterprises often present is that consumers must be willing to pay more. Some consumers simply do not have the discretionary income to buy what are often higher-priced fair-trade products. Other consumers simply do not care all that much whether their avocados were grown on a small farm or a large plantation. These constraints made for an interesting marketing challenge for Fairtrasa. Because many Western Europeans were more aware of fair-trade and receptive to its social impact, Fairtrasa debuted in Western Europe and has only recently come to the United States and China. Social entrepreneurs need to be aware of these marketing challenges and plan accordingly.
4. Social entrepreneurs don’t teach people how to fish; they revolutionize the fishing industry.
Oftentimes, the traditional nonprofit economic development model focuses on education instead of direct aid with the hopes that beneficiaries will then be able to use their education to better their economic standing. While education is important (and as seen with Fairtrasa, integral to the mission), if there is no market or an underdeveloped/corrupt market in which beneficiaries can use their skills, it is difficult for the person to get ahead. Where Fairtrasa has been so successful is with its unique combination of farming education and fair-trade prices. Because farmers are educated and also have a working market in which they can sell, they are able to escape the cycle of poverty that trapped previous generations.
COMING UP: On Thursday, November 12, 12-1p.m. join Patrick and Rob Lalka, a partner at Medora Ventures, for “Introduction to Social Finance and Venture Capital Investments” at YEI (254 Elm St., 3rd Floor – Door to left of Tyco). Learn about the various social financing options and how you can get funding for your social venture. REGISTER HERE. This event will also feature a Social Venture Elevator Pitch from 1-2pm. All students welcome to submit ideas to share before the group in 1 minute or less and receive valuable feedback from Patrick and Rob. SIGN UP HERE.