NPR's Morning Edition did a major piece this morning about how the structure of publicly held companies prevents them from doing good in the world. The premise was the directors and officers of these companies have a legal duty to maximize shareholder profit, and therefore could be sued if they did things that impacted the profit, even if done for social good. As an ex-Wall Street corporate lawyer, I can tell you that this is utter nonsense. It reflects a lack of imagination on the part of the directors and officers (and their legal advisors) and replaces their real legal duty with the profit-oriented economic theory that has gripped our country since the late 1980s.

The truth is, officers and directors are legally required to maximize shareholder VALUE, not shareholder profit. That is or can be a very different proposition. "Value" is what the company defines it as. Profit is only part of the value equation, but there is no legal, ethical or moral requirement that it is the only definition of value. So if the highest value of a company is to serve the common good and be profitable (which we at Dean's Beans, among others, have proven is possible for almost twenty years), then when shareholders invest in that company, they will know what they are getting into. There is no shortage of investors looking to put their money where their greater values are, as proven by the billions consciously placed in socially responsible investments in the last decade.

What is required is not a new form of corporation. Rather, social entrepreneurs creating their new businesses for the common good simply have to write their foundation documents (the Bylaws and Articles of Incorporation) to enshrine their social mission into the very bones of their new company. They need to state clearly what the values of the company are that they are seeking to maximize. Thus it is a lack of imagination on the part of the company's lawyers and advisors, not a lack of legal possibility, that prevents new public companies from being organized for the common good, as they define it.

I will be happy to give free advice on this subject to any social entrepreneur who wants to insure that their new company can pursue its social mission without the fear of being sued by shareholders for not putting profit above everything else.

One of the most satisfying aspects of my work is sitting down with farm families and trying to solve a problem creatively. During my last visit to Peru, we were having a discussion with CODEMU (the Women’s Development Council) on how to insure effective participation of the women in the Oro Verde coop’s decision making. Everybody who sells Fair Trade coffee puts gender equity, etc. in their literature, but there are lots of nitty gritty reasons why women don’t fully participate, even though Fair Trade rules require it. One reason is that most of the women have kids, and as every working mom (and dad!) who is reading this knows, it is impossible to participate in a meeting when you’ve got an infant in need of a change or a two and three year old falling down, spilling a drink or crying at the injustice of the sharing impaired. (I remember once when I was a lawyer/stay at home dad I had a three way international call going on while I tried to change Sarah’s diaper- okay, just the tip of the iceberg!).

We came up with the idea of creating a day care program during assemblies, committee meetings and other gatherings of the coop. Now this may seem pretty straightforward up here, but it is not common at all in rural coffee village settings. According to Melba, the head of CODEMU, the social expectation there is that a woman will take care of the kids while doing everything else at the same time, even if it means not being able to stay in a meeting or stay focused. As a result, women are rarely effective participants in these meetings, which determine the nuts and bolts policies and practices that control their economic lives.

We co-created and funded a program to bring in day care providers, toys and a safe space for young children at the Oro Verde headquarters in Lamas. After six months, we found that it was helpful but not great – the women were having trouble finding skilled caretakers who were available for short gigs. As we analyzed the problem, it became clear that the issue was that the coop was only looking for degree-holding social workers or psychologists for daycare, as there is a knee-jerk reaction in many Latin American communities for degrees, hierarchy and licenses.  I suggested getting a list of responsible sixteen and seventeen year olds who could provide short- term oversight and care and who would love to make the money (read: slightly older babysitters!). Although this was a new concept in this rural area, Melba and the women of CODEMU thought it might work. The big annual meeting is coming up in April, so we will see how it works.

Small steps, shared ideas, a little help from your friends. That is how we build community around the coffee world.

Every time I visit a coffee village I hear the same question: why is the price of coffee to us farmers so low? Why is there no relation between the costs of production and a reasonable (if any) profit and the price we get for our beans? These questions apply to 99% of the coffee in the world, fortunately not ours. But here is the answer, from my perch atop a waterfall in northern Peru:

In New York City, half an earth away  from the coffeelands, a room full of overcaffeinated young men (who’d probably never heard of Yirgacheffe or Atsabe) are shouting themselves hoarse bidding down the lifeblood of rural coffee farmers. In the middle of this room is the circular trading floor of the New York Board of Trade (NYBOT), known to its denizens as “The Ring.” Here, investment houses, banks, financial speculators and large coffee companies bid on the future price of coffee. For the companies, the goal is to insure a future supply at a known price – a necessary planning tool for a business based on an agricultural commodity. But for the rest of the frenzied traders the point is to make a profit on the “float” between what they pay for coffee futures and what they hope to sell them for later. For two centuries, coffee had been a dull commodity, traded on a somnambulant market. Yet somewhere in the last decade, it had morphed from a morning brew into a raging speculative commodity on the trading floor.

In this wired world, these Lords of the Ring are supplied with up-to-the-minute financial, political, meteorological and other data from an army of consultants. An early frost in Brazil? The flowers necessary for the budding coffee fruit to develop could wither and die, shrinking the coming harvest. Supply down, price up; bid two cents more for March deliveries. A rumored peace deal in Colombia? Easier deliveries in three months; hold off and let the price drop. The rumors and intelligence are translated into Buy and Sell orders, little slips of paper carried across the floor by the Runners, the traders-in-training. Their street clothes covered in tunics carrying the colors of their houses, the Runners grab the slips from the phone and computer banks owned by the Lords and race them down to their warriors in the Ring, who scream out their offers to buy for a penny more or sell for a penny less. These players make the prices rise and fall in an incestuous system unrelated to the true cost of growing and processing the crop, and with no consideration at all for the needs of the growers to feed their families and keep their kids in school. As one trader told me:

“Traders are not guys with moral fiber when it comes to the conditions of the farmer’s lives. We’re seeing money and we’re making money."

It always amazes (and angers) me that when the market price determined by the Lords of the Ring goes up, roasters and retailers are quick to raise their prices to the consumer. “We have to charge the replacement value of the coffee” one broker told me. But when the world prices go down, these same brokers and buyers never drop their prices.

To me, Fair Trade is not just a formula to keep the price at a level sufficient for the farmers to rely on to improve their lives, it is a deeper commitment to social change that challenges the basic assumptions about the market and the human relations that lie beneath the surface.

While I sat above that waterfall, the market price dropped below 60 cents per pound - the price it costs a farmer to grow and harvest the coffee. From that day forward, each pound produced would drive the farmer who grew it deeper into debt and bewildered despair. For half a decade to come, farm families would suffer malnutrition and infant mortality would soar. At the same time, corporate profits were about to rise to historic heights, as the Lords of the Ring made their killing.

(Dean is currently in the field in Peru. Stay tuned for a new blog upon his return. In the meantime, here is Dean's Beans' 2009 Year in Review and a sneak peak of what's in store for the year to come...)

We don’t have to tell you how rough 2009 was. All of us had to struggle with a decimated economy, lost jobs and demolished savings, a polarized political system and a swine flu epidemic. Whether it was people’s desire to brew coffee at home instead of paying a tuition’s worth for a cup at those chain stores, or folks looking for a company that reflected their values and they trusted, we actually grew in 2009. In recognition of our good fortune, we gave away over a thousand pounds of coffee to folks who you told us were having a rough time due to the economy and otherwise. We committed to supplying all the coffee needed all year long to the overburdened Amherst Survival Center. We even got our coffee back from those Somali pirates.

At home we started a new program with Somali refugee women in Massachusetts to create an economic base for them. Our reusable grocery tote project was so successful that we had to suspend it after a week. We will be back on it as soon as “the ladies” (as they call themselves) crank out more bags made from the burlap bags our coffee arrives in. After twenty years of false starts, this is the first successful economic development program in this community. Congratulations, Walaalo Sisters!

Internationally, we kept our promises and our programs with our farmer partners. This was not easy. The dollar fell to record lows internationally, which actually forced up the price of coffee. In most of the coffee world that didn’t mean more money to farmers, only to the exporters. But for us it meant more money for the farmers themselves and no passing it on to the consumer. That’s how we do business regardless of convenience or cost.

Here is an update on some of our People-Centered Development work in the coffee lands:

• Peru – We are working hard with both our partners in Peru, Pangoa and Oro Verde. In Pangoa, our Restoring the Sacred project keeps growing, having reforested with local trees and local knowledge a large part of the deforested sacred lands of the Ashaninkas peoples. Our Women’s Loan Fund continues to offer the only credit available to coop women, and our latrine program (with our logo on the doors! Talk about off the wall marketing!) continues to, uhh, blossom. Additionally, we have supported the travels of General Manager Esperanza Castillo to international events so that she can tell the story of women in coffee to the world. Powerful stuff.

• Colombia – In Colombia we have dedicated our program to supporting indigenous self-determination and the maintenance of sacred knowledge.  We have helped start a land re-purchase program that brings communal land back into the fold after years of government programs that saw the land base shrink. We are also supporting a new initiative to bring Elders of the four tribes of the Sierra Nevada together to walk the sacred spots around their mountains (the “Heart of the World”) and teach the knowledge to the next generation. Additionally, through the Coffeelands Landmine Victims Trust, we are supporting meaningful job training for coffee farmers disabled by explosives in the on-going violence in this country.

• Guatemala – We continue to support the great programs of APROS, the women’s health collective on Lake Atitlan, including new programs with the women’s teen daughters. This is the first girls-training-girls program in Central America and is powerful and successful in self-esteem building and small scale income generation for scholarships.

• Nicaragua – Our work with Prodecoop continues as it has for sixteen years. Last year we worked on the design and funding of a farmer-owned café/roasterie, modeled on our successful project in Leon, Nicaragua that supports land mine victims. We also sent volunteers down to assess educational needs, which we will continue to do this year as we evolve a new program for needs assessment on the farm level and how best we can participate.

• Kenya – We keep struggling against corruption and inefficiency in the government to help farmer coops get fair trade and organic certification. We established an organic demonstration plot in Embu so that the farmers could see the real results of going organic. We held a training in Fair Trade and organic techniques that drew a roomful of farmers representing ten thousand coop members. We are designing an Internal Control System with Rianjagi Coop to help it become the first Kenyan coop to get organic certification. At the same time, change comes very slowly in Kenya.

• Rwanda – Our groundbreaking Men Overcoming Gender Violence trainings last year were so successful that the UN funded some of the farmers who had received the training to go share their work with other cooperatives in Rwanda. This is a groundswell of work in a land so torn by gender violence. We have also begun a weaving project with women genocide survivors at COOPAC cooperative, starting with coffee canister sized baskets with “Dean’s Beans” woven into them! Available soon!

• Ethiopia – This year we brought water directly to the new school in Negele Gorbitu. We also paid the salary of the new teacher at the school (three times the salary of the government supplied teacher, but three times the quality as well!). We are still in the planning stages of a farmer owned and operated well drilling company.

• East Timor – Working both with and against the system in East Timor, we managed to create the first direct relationship in the coffee industry with a village level farm coop, in Atsabe, Ermera District. This has allowed us to be able to put our profit share and development assistance directly into the farmers’ hands and assure accountability and impact. Our first project was to supply 200 fair trade soccer balls to the President’s Youth Anti-Violence Initiative, giving young Timorese their first insight into progressive business and hope. We are working to establish a recording studio for young Timorese musicians and a farmer owned and operated café/roasterie. We hope our example will lead other companies to buy directly from farmers in East Timor.

• Papua New Guinea – This is one distant and difficult place to work! We continue to provide organic certification and training to farmers we buy from, as well as to fund the microloan program.

Some of our really exciting new programs for 2010 include:

• The creation of a Bulletin Board, where farmers post their needs (“experienced electrician”, “English teacher”, “computer help”, etc.) and our customers (that’s you!) step up and volunteer to help out. Still working out the many bugs in this one but it will be the best thing we’ve ever done!
• Dean’s Constitutional Convention – help us design the progressive company of the future! (I ain’t getting any younger!). No progressive founder has ever left a company that really sticks to its ideals. Can we?
• Coops Supporting Coops – We are putting together a program where our cooperative customers can choose which projects they’d like to support from their purchases. It will be a great way for coops here to connect directly with coops there.

We’ll keep providing great coffee at reasonable prices, great opportunity for the farmers and increased opportunity for you to participate in making the world a better place. Really.