Urmatt Group in Thailand, an organic rice producer, proves that fair trade can still be profitable.
Back in the 1990s, Arvind Narula was walking alongside one of the fields he owned as part of his agricultural business. He noticed one of the farmers carrying a baby in a front pack and a pesticide spray on his back. “I thought: ‘I don’t want to be part of this anymore,’” he says.
Bangkok-born Narula, one of Thailand’s most respected entrepreneurs, set up an agricultural business in 1982 in his early 30s. At the time, he admits, he was focused on profits, but he quickly began to recognise the deep poverty of the farmers and the awful choices they were having to make.
He decided to make a switch to organic farming to employ smallholder farmers to produce rice, chia, eggs, coconuts, soybeans, corn and other products organically and at a higher price. It was not easy at the time and it took around seven years to become commercially profitable. “In all honesty it is easier to be non-organic, but we kept our course and, although there was pain, now we are integrated and successful.”
How did Narula succeed? He says he chose crops with higher demand than supply and identified companies who understood his values and were willing to pay a little extra to “leave something on the table” for the farmers. Today, Urmatt employs some 3,000 farming families in rural Thailand, paying them certified Fairtrade wages, checked through regular social audits.
Urmatt’s products are marketed domestically, as well as in major markets including Denmark, Germany and the US. “We are the largest organic jasmine rice producer but it’s not important to be the richest. Let’s get the soil clean and more farmers taken care of,” says Narula.
The company has just launched an organic instant noodle range called Perfect Earth Noodles, sold in compostable packaging made from crop stubble. This has a two-fold benefit in that the farmers won’t burn the stubble, which is a terrible pollutant. “I thought, instant noodles are the world’s single-largest food group,” says Narula. “One-hundred-and-40-billion pots of noodles are sold each year, all of them filled with chemicals. We should not be letting our kids eat that stuff, and we should not be using yet more plastic. So, let’s turn this to our advantage.”
His noodles are around twice as expensive as non-organic noodles, but there are enough consumers who are willing to pay the extra, according to Narula.
He says that the Corona virus will certainly prompt more companies to adopt sustainability into their business model. “COVID has created an awareness that things can’t go on as they are,” says Narula. “Corporations especially need to rethink how they work and that’s everything from environmental protection to social protection. Between COVID and the Black Lives Matter campaign, people are waking up and saying you can’t merrily go on destroying the world and society as we have for over a century.”
Narula adds that now, writing sustainability into your business model, as an entrepreneur, pays off, as larger companies are increasingly looking for this when making acquisitions.
“Every time a company proves it is a viable company with a sustainable operation, larger companies come and buy them out. Consumers want cleaner products and there’s no going back.”