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Equal Exchange, an importer dedicated to the idea that Third World farmers should earn a living wage from selling their produce, has done pretty well for itself - and its farmers - in the food aisle.
Now, the employee-owned company in West Bridgewater is applying its brand to banking.
In what may be the first such branding arrangement of its kind, Boston-based Wainwright Bank is selling Equal Exchange certificates of deposit that will raise operating funds for the coffee-, cocoa- and chocolate-importing company.
"To our knowledge, this is the first branded certificate of deposit," said Rodney North, spokesman for Equal Exchange. "It brings our brand equity to something that has otherwise been a generic product."
North said the sale of the Equal Exchange CDs will create a line of credit to help the company finance its imports. Its initial target is to raise $1 million through the sale of the CDs, but it has an arrangement with Wainwright to raise as much as $3 million if sales go well.
"We have a small but very loyal customer base, certainly here in New England in Wainwright's back yard, but also nationwide," North said. "Most CDs don't have that working in their favor. This one does."
The CDs are different from - and riskier than - the typical CDs sold by banks. Like most other CDs, they are insured by the Federal Deposit Insurance Corp., so if Wainwright Bank collapsed, up to $100,000 would be insured.
However, because the CDs are being used to back up a loan to Equal Exchange, depositors could lose their money if Equal Exchange defaults on the loan.
Alistair Williamson, investment coordinator for Equal Exchange, said those who are interested in the CD can consider the risk by reading the company's financial reports online.
"We wouldn't have gone into this if they weren't credit-worthy," said Steven Young, senior vice president of consumer banking for Wainwright.
Equal Exchange does have a record of growth: In the past three years, it has doubled its sales to $20 million, and it projects sales of $24 million in 2006. Founded in 1991, it has turned a profit in all but one year.
"In return for that extra risk, they're getting a social return," Williamson said.
How does the CD stack up in terms of its monetary return? According to bankrate.com, percentage rates on three-year CDs in the Boston area range from 2.96 percent to 4.85 percent; Equal Exchange's CD carries a rate of 4.45 percent, the same as a regular three-year CD at Wainwright. The minimum investment is $1,000.
Equal Exchange was one of the early pioneers in what has become known as the Fair Trade movement: a network of companies that guarantee they will pay farmers or craftsmen an amount for their product that enables them to earn a decent living. Its first product, and still by far its largest seller, was coffee, but it has since branched out into cocoa, chocolate, tea and sugar.
Wainwright Bank's Young said he has already been approached by other Fair Trade-oriented organizations about offering CDs on their behalf.
He said the bank is also hearing from people who aren't Equal Exchange customers who are interested in the CDs because they support the company's social justice orientation.
Copyright 2006 The Patriot Ledger
Transmitted Monday, June 12, 2006
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