OAKLAND, Calif. —

After years of living in the mountains of northern Nicaragua as an agricultural aid worker trying to make life better for the country's poor farmers, Paul Rice woke up and smelled the coffee — specifically, fair-trade coffee.

That was 12 years ago. Today, Rice heads Fair Trade USA, an Oakland-based nonprofit that is the country's leading certifier of fair-trade products. Such certification helps farmers living in countries with emerging economies receive a fair price for coffee, tea, chocolate, rice and other products they produce instead of selling at the lower market price to a middleman. Fair trade ensures that farmers are provided with a livable wage and premiums that help fund community projects such as schools and clean water systems.

Rice grew up in Austin and Dallas, Texas, the son of a single mother who worked as a family therapist. But early on, he showed the strong entrepreneurial streak that is integral to who he is today. When he was 11, Rice shined shoes to make money. At age 12, he had a paper route. Two years later, he was mowing lawns, and by the time he was 16 had so much business he hired a couple of kids to help out.

A month after graduating from Yale University in 1983, Rice arrived in Nicaragua, determined to improve the lives of farmers. He booked a one-way ticket, even though he did not have a job lined up, arriving there four years after the Sandinistas overthrew the Somoza regime.

"I was in a $2-a-night pension in downtown Managua," he recalled. "Rice and beans were pretty cheap back then, and they went a long way."

Although his Spanish wasn't that good, it got much better after 1985, when he met the Nicaraguan social worker that he would later marry.

A few weeks after arriving, Rice found work with a local organization whose mission was to help farmers improve their crop yields through the use of irrigation techniques and pesticides. That led to other jobs with similar groups in the next seven years. Rice said such groups had good intentions but created dependency on aid programs instead of self-reliance among the farmers.

Then he heard about the fair-trade certification movement in Europe.

"We were making a big mistake by ignoring the market, this whole issue of where farmers sell their harvest and what price they get. I'm not saying we should ignore production. I'm just saying it's a big mistake to ignore the market," said Rice, who organized small farmers into Nicaragua's first fair-trade coffee cooperative in 1990. "I saw people rise out of poverty right in front of me. ... It made me believe that the market was the most powerful tool for change that we could hope to have."

After helping the Nicaraguan cooperative sell coffee to European fair-trade buyers for four years and seeing it grow from 24 members to 3,000, Rice figured it was time to bring the fair-trade model to the United States.

"I had to decide what I wanted to be. Did I want to be that cowboy living in the mountains of Nicaragua, organizing farmers? It was a great life; I was living my dream. ... Or was I going to be the guy who bought fair trade to America."

He decided to move to Berkeley, Calif., where he earned an MBA and worked with cooperatives before he was named to head Fair Trade USA in 1998.

The nonprofit collects certification fees from companies that sell fair-trade products in grocery stores such as Whole Foods, Safeway and Costco and other retail locations. Certification ensures that pricing, environmental and working-condition standards established under fair-trade principles are being met. An independent third party conducts the farm visits while Fair Trade USA does a supply-chain audit.

His years in Nicaragua gave Rice a true understanding of the challenges faced by the farmworkers who live there, said Ana Lucia Zacapa, senior program officer at the Palo Alto, Calif.-based Skoll Foundation, which in 2005 presented Rice with the Skoll Award for Social Entrepreneurship.

"He is one of them. He understands what they were struggling with," Zacapa said.

But dissent is brewing.

In the past year, a dispute broke out in the fair-trade community after Fair Trade USA proposed that larger coffee farms (those bigger than 20 acres) and smaller farms that don't belong to a cooperative be included in the fair-trade model. (Most other products, such as bananas and tea, already incorporate larger farms into the fair-trade model.)

Critics are concerned these changes will weaken the fair-trade movement for coffee and squeeze out small farms that belong to cooperatives.

Rice defends the changes, saying they are needed to reach the huge number of coffee workers who don't own their land and are the poorest of the poor.

"Farmworkers on big farms in many of these countries earn $3 a day," he said. "We feel we are raising the bar by opening up the model to be more inclusive and allowing farms of all sizes to join."