Beyond Fair Trade

by Mark Pendergrast

  John Darch Junior and Anand Pawa, the marketing director, flew to Thailand every six weeks or so to visit Doi Chang and talk directly with Wicha, Adel, Miga, and the other Akha, making sure that they were on the same wavelength. Each side of the partnership had to deal with seasonal issues—coffee sales began to pick up in the fall in Canada, for instance, just when the harvest season got underway in Doi Chang—and each side of the business tried to anticipate the needs of the other.

  John Darch Senior joined them several times a year to lend his support and fatherly advice, and he kept tabs on all major developments. He never wavered in his commitment to the Doi Chaang project, and those around him acknowledged this. His lawyer George Brazier, who had helped Darch with various mining deals and had helped incorporate Doi Chaang Coffee, commented, “I take my hat off to him for the coffee venture. Most people would have thrown in the towel long ago.” His accountant, Paul Royce, called him a “big picture” type who didn’t always have the details at his fingertips, “but if he didn’t have the answers, he would get them.”

  Sharon Cramen, Darch’s private banker, made the most interesting observations. “John is as honest as can be, his integrity is super important to him, and his word is everything. If things fall through, he’ll try to back it up eighteen ways to make it come to fruition.” Cramen’s select clients were all quite wealthy—some were billionaires—and she said that they all share one characteristic: Money isn’t what drives them. Their work is fun, it’s what they do, it’s a challenging game, and money is just a way to measure it. “They are all workaholics. Being successful in business, putting a deal together, it defines who they are. I have clients in their eighties.” Even among such high-powered clients, though, Darch Senior stood out. “I have never seen anyone travel as much. He used to buy a one-way ticket around the world once a month. I told his wife, Louise, that she had better come to grips with the fact that he will probably never really retire.”

  The Canadian coffee company was still barely making a profit, but two banks had each made substantial loans to Doi Chaang Coffee. Greg Noda and Scott Bearss of Canadian Western Bank’s branch in Surrey, BC, first agreed to a $500,000 line of credit. Both men had worked for much larger banks, which wouldn’t have made the loan, but Canadian Western was smaller and more nimble—and could think outside the box. “We met with John and John Junior and were impressed,” said Noda. “It’s rare that you find deals in which there is a bigger emotional connection, where it’s not just number analysis. We were impressed with their compassionate capitalism model.” And they trusted Darch Senior. “For us, John being behind it was enough. If half a million goes sideways, a big bank would look for a building to take over as an asset. But John is passionate and he will stand behind it. Also, he used to be a banker, so we speak the same language.”

  Noda then called Robert Napoli in Langley, BC, at First West Capital, part of a large credit union. “I’ve got something a little different for you,” Noda said. “You’ve got to meet John.” Napoli remembered thinking, Oh no, but over lunch, when Darch Senior told him the story of the Akha and their coffee, he made a quick decision. “That was the only time I’ve gone to a meeting where I met a client and made an offer on the spot.” First West Capital made an additional $500,000 five-year loan.

  Expanding Ripples

  DARCH SENIOR’S NEW approach to doing business was attracting attention outside the coffee world. In June 2013, he was asked to participate in a seminar at the business school at the University of Victoria, BC, in which several MBA students were trying out their presentations for the Nespresso MBA Challenge contest. The challenge focused on how to ensure long-term sustainability for Colombian coffee farmers, and Professor Matt Murphy hoped that aspects of the Doi Chaang experience might provide a model to emulate. The University of Victoria cafeterias brewed Doi Chaang coffee.

  Darch Senior enjoyed this aspect of his business: “connecting the dots,” networking, sharing knowledge, and seeing what happened. In Victoria, Darch Senior explained how he had been introduced to Wicha and the Akha, how impressed he was at their self-determination, and how he decided to start the coffee company as a result. He spoke simply and from the heart. “We are practicing an alternative form of investing. We want to elevate the tribal farmers, helping the schools, giving them choices. We are a catalyst,” he said. “We don’t tell them what to do.” He emphasized that his company was neither a charity nor a religious organization, as many people often assumed.

  Then Anand Pawa and Darch Junior took over to explain the details and challenges of the business. Darch Junior emphasized that inequality was still built into the coffee business. “If you paid the Canadian minimum wage to Thai coffee harvesters, you’d be paying $50 here for a cup of coffee.” Nonetheless, the prices they paid for green beans, well above Fair Trade requirements, meant that it was challenging to thrive in Canadian supermarkets, where they had to remain competitive.

  The MBA students presented their “Cooperative Incubator” plan for Colombia, which proposed the development of regional cooperatives to disseminate “coffee-centric knowledge” and help farmers secure capital and access technology through mobile phones and the Internet, while encouraging crop diversity. What they were suggesting was already happening in the village of Doi Chang, where it wasn’t unusual to see a coffee harvester pause on a mountainside to check his cell phone, where the Academy of Coffee provided free classes and seminars, and where honey, macadamia, tea, soap, and cordyceps were providing diverse income streams.

  Darch Senior also told the MBA students that his company had just facilitated delivery of medical supplies to the village. The story behind that donation provided another example of the ripple effect. One day Robert Denning had called Darch from Calgary. As a coffee aficionado traveling through Thailand in 2011, he had stopped at a Doi Chaang café, loved the coffee, and been surprised to see a sign about the Canadian company. Once home, he looked it up online and called the Vancouver office. It turned out that he and Darch Senior both grew up in the British county of Dorset, and they hit it off, talking about cricket and rugby.

  Denning told Darch that he wanted to help the village of Doi Chang in some way. Formerly an airline transport pilot, when he was forty-five he had sustained disabling injuries when his car slid off an icy road in the winter of 2009. He had gone to Thailand for therapeutic massage, fell in love with Peetah, now his fiancée, and discovered Doi Chaang coffee.

  Subsequently, Denning arranged for Doi Chaang Coffee to be served at GlobalFest, an international Calgary event, where in August 2012 Wicha, Piko, Adel, Miga, and Sandra came to speak at the human rights forum. Denning and his two sons served the coffee. He also raised thousands of dollars from Calgary businesses and individuals to pay for the container of used, refurbished medical supplies through Food for the Hungry Canada, including an ultrasound machine, dental equipment, beds, blankets, gowns, wheelchairs, and instrument and scrub kits. Darch’s company helped pay for the shipping costs. Denning then worked with the Rotary Club to send another container of books and furniture for the school in Doi Chang, as well as physiotherapy equipment for the clinic. One day he hoped to move to the village to teach English and coordinate aid efforts.

  Crisis upon Crisis

  IN SEPTEMBER 2013, Doi Chaang Coffee introduced its new blends, all organic Fair Trade, which John Gray of Canterbury had created. Following advice from Fluid Creative, the Vancouver marketing company, they opted for trendy, hip-sounding blend names, with pastel-colored 340-gram bags replacing the stark, black one-pound packages of the old single-estate Doi Chaang. The dark roast (Doi Chaang mixed with Nicaraguan beans) was called Hardwired, light (Doi Chaang, Peruvian and Guatemalan) was Chillin’, medium roast (Doi Chaang and Sumatran) was Social Medium, and the espresso blend (Doi Chaang, Brazilian, Sumatran, Nicaraguan, and Peruvian) Espress-Yoself!

  Unlike the single-estate packaging, the blends featured flavor notes on the bags. Social Medium, for instance, offered this descri
ption: “Our whole bean medium roast blend. Download your daily dose with this sweet, earthy medium roast blend. A balanced interaction of Doi Chaang Thai and Sumatran beans for fine complexity and a high-grown clean finish. Life is good.” The blends all referred to “Our Master Roaster” (i.e., the Canterbury roaster) who “picks only the world’s best fair trade organic beans.” The story of the Akha hill tribe, featured prominently on the single-estate pound bags, was notably absent from the blends. Piko’s picture was still there, but it had been modified slightly to make him less severe-looking than he was on the original packaging. In keeping with the company’s approach to business, Wicha and Adel were consulted about these changes.

  In October 2013, the Darches and Anand Pawa went to Doi Chang to negotiate the price for fifteen containers of coffee for the new harvest, asking for a slightly lower amount, given the global decline in coffee prices. “I love Wicha like a brother, but he lives in his own world,” Darch Senior said. “Our relationship continues to evolve and move forward, but it has to be a true partnership. It won’t work if they regard us only as buyers of their green beans at an unrealistically high price.” Fortunately, the negotiations went surprisingly well, with Wicha and Adel understanding the challenge and agreeing to $2.93 a pound. But that price would remain in place for an entire year, regardless of the C-market. “Most commercial roasters shift all the risk to the farmers, but we want to give them some stability and share the risk with them,” Darch said.

  Yet another crisis had erupted in mid-September 2013, when the BBC (British Broadcasting Corporation) aired a disturbing television program showing Indonesian civet cats kept in cramped cages, where they were fed coffee cherries. “The cages are completely barren, they’re filthy, there’s nowhere for them to climb, there’s nowhere for them to properly hide,” said Neil De Cruz of the World Society for the Protection of Animals (WSPA) on the television program.

  The same day, the Guardian newspaper published an editorial by Tony Wild, the British coffee importer who had introduced kopi luwak (the Indonesian name for civet cat coffee) into the UK in 1991. Now he was launching a “Cut the Crap” campaign. “Nowadays,” he wrote, “it is practically impossible to find genuine wild kopi luwak—the only way to guarantee that would be to actually follow a luwak around all night yourself.” Wild lamented the terrible conditions that some caged civets endured: “The naturally shy and solitary nocturnal creatures suffer greatly from the stress of being caged in proximity to other luwaks, and the unnatural emphasis on coffee cherries in their diet causes other health problems too; they fight among themselves, gnaw off their own legs, start passing blood in their scats, and frequently die.” Consequently, he launched a boycott of all civet coffee, which he called a “preposterous, utterly hideous trade.” On his blacklist, he included Doi Chaang beans.

  “Check out this campaign,” e-mailed Simon Wakefield of DRWakefield, the green coffee bean importer who sold Doi Chaang beans in Britain. “Means we have to stop buying your regular coffee if you still trade luwak! [coffee excreted by civet cats].”

  Two Thai staff employees of the World Society for the Protection of Animals (later renamed World Animal Protection) made a clandestine visit to the village of Doi Chang in October 2013, where they apparently spoke to Miga. In their report, they noted: “The woman spoke strongly about Doi Chaang Coffee’s commitment to collecting and selling only wild-sourced coffee and pointed out that caging civets is cruel.” They found that some villagers were keeping caged civets, but they had no affiliation with the coffee company.

  Despite this exoneration, Lynn Kavanagh, the Canadian WSPA director, refused to make the report public, writing: “We can’t endorse a company because doing so would then require that we continue to do regular checks.” But she did offer to put Darch Senior in touch with Tony Wild and to let him know that “your company is genuine in its claim about selling only wild-sourced civet coffee.”

  In the meantime, some irate consumers blasted the Canadian coffee company, as in this December 2013 e-mail: “There are several petitions going around that call for an end to the cruelties you impose on these beautiful little animals that you seem to want excrement from… You say it is organic and fair trade, but what you don’t mention is how you steal the lives of sentient beings… Wake up and smell the coffee, you heartless, apathetic lunatics.”

  Public relations director Katharine Sawchuk wrote back: “We truly understand why you are passionate about the welfare of civets, and we believe they should not be caged or abused for the production of coffee.” She included links to documentaries indicating that Doi Chaang’s civet coffee was indeed collected from the village mountainsides. The angry correspondent was convinced and even wished the Canadian Doi Chaang staff a Merry Christmas. On January 6, 2014, Darch Senior had a good conversation with Tony Wild, who agreed to remove Doi Chaang civet coffee from his Cut the Crap campaign.

  Then, just as one crisis ended, another began. At the end of February 2014, Vancouver truckers went on strike. The city’s port was closed down for a month, leaving a container of Doi Chaang green coffee beans stranded. For three weeks, the company had nothing to roast. Darch Junior estimated that the company lost $300,000 in sales for the month of March. To add insult to injury, the port charged $300 a day for storage fees. “We have one [new] container arriving today,” Darch told a reporter on March 28, 2014, a few days after the strike ended, “but the port won’t accept it because they are backlogged, so that container has to be shipped for an extra $5,000 to Calgary.”

  Two months later, on May 22, 2014, the Thai government of Yingluck Shinawatra was overthrown in a bloodless military coup, following six months of protests. Yingluck was widely perceived to be a puppet of her older brother, Thaksin, who was ousted as the Thai prime minister in 2006, convicted of abusing his power, and now lived in exile. Some Thai felt that the Yingluck government had disrespected the king and had ruined the rice market by endorsing a poorly planned, corrupt stockpiling scheme. While many uninformed observers might hear the phrase “military coup” and assume the worst, most Thai experts thought that the coup, which the elderly king subsequently endorsed, was a reasonable solution to an untenable situation.

  The coup had no discernable impact on Doi Chaang coffee, in Thailand or in Canada, but Darch Senior realized that the Canadian company he had started needed to assess its goals and trajectory. That May, he asked banker Rob Napoli of First West Capital to moderate a meeting about the future of Doi Chaang, seeking a long-term plan. “The Akha tribe in the village of Doi Chang is doing pretty well now,” Napoli observed. “It feels like the goal of self-sufficiency is mostly accomplished. Where does that leave your company, what is its mission in life?” Should they extend the Beyond Fair Trade model to another needy community?

  Maybe at some point that would make sense, but the staff consensus was that there was more to do for the Thai village, which still needed to build its new school and had yet to begin to take its own profits rather than plowing them all back into capital projects. Besides, the Canadian business was not in nearly as good shape as its Thai counterpart. It continued to struggle to establish itself as a strong contender in the specialty coffee industry, even in its home territory of British Columbia. What strategy did they want to pursue? They had begun to do some business in Ontario. Would they continue to push into Eastern Canada? Would they be able to penetrate the neighboring market in the United States? They had established a foothold in the UK. What was their ultimate goal in Europe?

  “What do you want to be in five years?” Napoli asked, “and what are you willing to give up to get there?” No one had good answers to Napoli’s questions. Everyone agreed that none of them were coffee experts. The Darches had launched a new company with great idealism but without really knowing what they were doing. Canterbury had been very helpful in reaching a certain level, but as Doi Chaang grew larger, the toll fees were eating up too much of the profits. While it might make sense to start their own roaster at some point
, Darch Senior made it clear that he was not eager to throw more money into the venture until they had a clearer mission statement. He assigned Darch Junior to get the staff to come up with a strategic vision paper in the coming months. Then they would call Rob Napoli back for another session.

  In the meantime, the Canadian company underwent some changes. Receptionist Jackie Kingston left, and Ksenia “Senni” Dempster replaced her. “What drew me to this job,” she said, “was that it is an ethically focused, sustainable business. It makes you feel that you are working for a good cause.”

  In early August 2014, the company changed locations, moving to new offices on Powell Street, a few blocks to the east of the Terminal City Club. There Doi Chaang would have more space for less money in a grittier, industrial area not far from trendy Gastown and its restaurants, bars, and coffeehouses. It was a more logical location for a coffee company, with street-level access, and now the name Doi Chaang Coffee would be prominently displayed outside the building.

  From a business perspective, the staff dedicated a great deal of attention to every account. In Costco, a TDP (“temporary price discount”) for Doi Chaang was boosting sales of the two-pound black single-estate bags, but Starbucks overlapped with its own TDP, which was irritating to Doi Chaang staffer Tanya Jacoboni when she went to check the shelves in 2014. Costco had not yet added the new Doi Chaang blends, but some of those blends were doing well elsewhere, particularly Social Medium, the medium roast in the pastel blue bag. Chillin’, the light roast, fared poorly, and London Drugs was phasing it out. Espress-Yoself, the espresso blend, wasn’t selling very well either. There was also concern over the Safeway account, where sales of single-estate had been lagging. The company wondered if it should arrange a promotion and try to persuade the store to add the new blends. Conversely, things were going well at City Market, where the store was promoting Doi Chaang at a $2 discount, and the company had offered free brewed drinks during a “demo.” And there was hope that Whole Foods would once again sell Doi Chaang, since the new coffee buyer was interested in new brands.