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A Bit of Context on the Fair Trade Kerfuffle
December 6, 2011
There has been a flurry of media attention to the pending break-up between the main US certifier of fair trade coffee, Fair Trade USA, and the international umbrella organization, the Fairtrade Labeling Organization (FLO). The two organizations issued a joint press release in September, announcing that Fair Trade USA would go its own way as of the end of the year.
The organizational split reflects a long-running debate over the meaning of fair trade and whether it should be thought of as a market – all about supply chain management as one expert interviewed by NPR put it – or as a movement that emphasizes the relationship between consumers and producers. Although several issues reportedly contributed, the key issue behind the split was Fair Trade USA’s decision to begin allowing certification of coffee plantations, as well as smallholders represented by democratically-organized producer organizations.
The movement believers want to keep the focus on smallholders, while those coming from a market-oriented perspective are looking for ways to mainstream fair trade products to scale up the impact. The focus is on coffee because it is the most important fair trade product, accounting for a third of certified producer organizations and two-thirds of certified products sold in the United States in 2010. But there are a number of other products eligible for fair trade certification and, guess what; some of them are primarily plantation–based! According to the most recent monitoring and evaluation report from FLO, there are nearly 200 certified organizations that are not smallholder-based, compared to 500 that are, and they mostly produce flowers and tea in East Africa. So pragmatism has trumped principle in some cases in the effort to spread the benefits of fair trade; is coffee (or cocoa) so different?
Another concern about the split is that it will create confusion among consumers and, perhaps, depress sales. But many companies already put fair trade claims on their coffee or chocolate without seeking certification or using the trademark on their label. There is also shade-grown coffee or, more specifically, bird-friendly or rain forest supporting coffee. There is endangered species chocolate with endearing pictures of animals on the label. Do we know what consumers really want? Or whether very many of those that buy fair trade certified products actually know what that really means? Finding ways to provide consumers with more and better information is already a challenge for fair trade.
So, yes, the divergence in approaches to fair trade certification could add to consumer confusion, but it also has the potential to expand consumer awareness and spread the benefits of their empathy to many more poor people. These are all issues that I’ll be exploring in more detail over the coming year so stay tuned and let me know what you think.
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6 Responses to “A Bit of Context on the Fair Trade Kerfuffle”
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December 6th, 2011 at 3:08 pm
Readers may also be interested that many years before Fairtrade existed, we imported almost 3 tonnes of instant coffee from Tanzania to the UK to help support manufacturing in the Third World. Last month BBC radio interviewed me about our ‘Campaign Coffee’, that helped to start the idea of ethically sourced coffee in Great Britain. The broadcast is now available on YouTube (4 minutes):
http://youtu.be/4qiHw40CubY
December 7th, 2011 at 9:28 am
Thanks for the article, Kimberley. Really appreciate your fact-based approach to understanding the issue, especially in the face of so many recent, heated views (largely negative) shared by others over the last few months.
December 7th, 2011 at 6:32 pm
Thanks for weighing in, but I think you’re a little off-base on why just about everyone (farmers, certifiers, activists, consumers, and every 100% Fair Trade company including mine – Equal Exchange) has been up in arms about this.
Most coffee and cacao in the world is grown in small plots by small-holding family farmers. They have historically been marginalized and exploited in the global coffee market, generally receiving pennies out of each consumer coffee dollar. Fair Trade was designed as a way to address not just to change the financial picture, by guaranteeing the farmers higher prices, but also to empower them by supporting co-operatives. Over our 25 years selling only fair trade products from small farmer co-ops, we’ve helped these organizations build capacity and become real change agents in their communities and beyond.
It’s thanks to the co-ops that family farmers with just a few hectares can climb up the commodity chain, get access to technicians that have helped them improve quality and embrace environmentally positive practices, receive affordable credit, and become effective political actors in their countries.
The reality is that the hard work of the co-operatives costs money. Up to now, the Fair Trade market has been a way for consumers who care about these issues to directly support these co-ops.
Plantations (which PR folks have reinvented as “Estates”) do not bear these costs. Nor are they interested in empowering farmers. Anyone with a cursory knowledge of the role of plantations in Latin America is well aware of the destructive role that landowning elites have played.
Paul Rice at FTUSA has been pushing to certify plantations in coffee, cacao and bananas through the Fair Trade system for years, but has been rebuffed by the people who built the system. Now he has taken the name of a movement in which he doesn’t belong and created a new set of standards that only Walmart and Starbucks can love.
The farmer co-operatives cannot provide the services to their members and remain competitive against plantations that do not have these expenses in the same marketplace. They will either have to stop serving their members, or go out of business.
Consumers buying a product with the FTUSA seal would have no way of knowing if they are supporting a small farmer co-op or a plantation owner.
Plantations that earn certification are even allowed to certify all the products they have on hand as “Fair Trade Certified” once they enter the FTUSA system, even if their cacao was bought from plantations that used child slave laborers.
The concept of “spreading the benefits of Fair Trade” to plantations is nonsense. The benefits of fair trade are about empowering family farmers through co-ops. The standards that FTUSA has set up for plantations are so low-bar as to be a joke. Farmers do not have to be unionized, only be offered the “opportunity” of unionizing. Plantation bosses have to offer the legal minimum wages. How is following the minimum legal requirement “Fair Trade”?
FTUSA’s motives are also suspect. According to their own audited financials, Paul Rice and his top employees are paid in excess of $200,000 a year, even though the company had a loss of $1 million in 2010.
FTUSA has received millions of dollars in donations from WalMart, Green Mountain, Levis and others only to turn around and issue new standards that are lower than the companies have had to meet in the past.
FTUSA is more than welcome to help these companies come up with a label that meets their PR needs, but they must do it with a new name.
December 8th, 2011 at 2:34 pm
@Kimberly—Thank you very much for presenting such a balanced and factual piece on this topic. As you state in your article, Fair Trade USA’s move to bring the benefits of Fair Trade to more farmers and workers around the world truly does have “the potential to expand consumer awareness and spread the benefits of their empathy to many more poor people.” In fact, it already has. Our first pilot is now underway on an organic coffee farm in northern Minas Gerais, Brazil. The 200 workers there have already received training on Fair Trade principles, rights and standards, and the farm was recently audited by Scientific Certification Systems (SCS) to assess its practices and performance. The workers have also democratically selected to allocate their additional income earned through Fair Trade to areas like health care and education. For these individuals, Fair Trade is going to make all the difference in the world.
The truth is that Fair Trade in the United States stands at a crossroads. Over the past 50 years, the Fair Trade movement has empowered farmers around the world to improve their lives, protect the land and develop their communities. We are proud of what we have accomplished – hardworking farmers, responsible companies, NGOs and conscious consumers – all working together. Yet the need is much greater. According to the World Bank, more than 2 billion people live on less than two dollars a day. Today’s Fair Trade model reaches only a small percentage of them. Fair Trade can and must do more.
To learn more please visit http://www.fairtradeforall.com
December 8th, 2011 at 6:00 pm
So thanks to all of you for your comments and I hope we can keep the dialogue going in coming months. According to its mission statement, CGD “works to reduce global poverty and inequality through rigorous research and active engagement with the policy community….” That’s what I’m hoping we can contribute in analyzing these contentious issues.
December 15th, 2011 at 2:32 pm
Some good discussion here and thanks for the article looking into all of this. I’d like to add a bit to Dan’s and Jenna’s points from the perspective of the global Fairtrade system.
As Dan mentioned, one of the strengths of the current Fairtrade approach to coffee is the promotion of independent, democratic decision-making that cooperatives embody. Coffee production is still predominantly the realm of small producers and opening the Fairtrade system to plantations with large coffee volumes could threaten these groups. All three Fairtrade producer networks have voiced the need for additional research and their opposition to opening Fairtrade Standards to coffee plantations(http://www.fairtrade.net/897.html).
In the case of coffee, most plantations do not have a permanent workforce. This means that workers are largely transient and it is difficult to ensure that Fairtrade benefits would reach them. In addtion, the independent, democratic decision-making mentioned above is difficult to promote among a transient workforce.
In the case of tea, flowers and bananas where there is Fairtrade certification for plantations, these crops tend to be year round operations with regular croppings that require a large permanent workforce. Workers often live on/or nearby the estates with their families and neighbours forming a community that is able to benefit from Fairtrade Premiums. Our existing hired labor standards actively work to support long-term contracts, improved wages, workers’ rights and other benefits, something that would be difficult to replicate in coffee estates currently.
It is true that there are many small producers not associated with cooperatives, as well as large populations of workers, that could benefit from Fairtrade. There are studies into how we can adapt the Fairtrade Standards to help these producers overcome barriers to entering the system, but in the global Fairtrade system any changes are made in consultation with all stakeholders in the system.
Full disclousure: I am Interim Liaison Manager at Fairtrade International