Nvate Ndepth: How Fair is Fair Trade? Part II

By Carolina Luna

Click Here to read How Fair is Fair Trade? Part I

Last month we delved into the players, the claims, and the facts behind Fair Trade. Advocates say the movement helps small-scale farmers improve living conditions by stabilizing their incomes, but does it actually lift people up from poverty? Fair trade networks provide annual reports in regards of their profits and how much farmers received throughout the year. But data on how much each cooperative or farmer received is hard to come by.

This month we look at the movement’s interaction with other food trends, the effect of major companies looking to cash in, and the future of the fair trade movement.

Fair Trade Lady Gathering Food

Organic, Sustainable, and Fair?

Over the years, organic and sustainable products have become a growing trend among many customers who see them as a sustainable alternative to the conventional food system. According to Organic Trade Association, the U.S. sales of organic foodstuffs have exploded over the last 20 years. In 1990 sales were about $1 billion, by 2010 it was $26.7 billion. The fair trade networks have noticed this trend and have set environmental standards to compete in the global “high-quality” produce market.

Producers who participate in the fair-trade system are not required to transition from conventional to organic. Those that do, however, are given an incentive for their organic products. They might receive an additional $.30 or more depending on the product and quantity.

The fair trade networks support producers through their transition to organic certification with training and environmental education. Fair Trade USA maintains that farming organically both protects the producers from exposure to toxic chemicals and the local ecological systems. Done properly organic certification is a win-win situation for producers, consumers, and the environment.

But for producers the transition to organic farming is not a matter of seeking to be more environmentally conscious, it is a question of affordability. To export organic products, farmers need to be certified annually and at $2,000 the certification process can be pricey for poor farmers.

To offset the cost farmers use their Fair Trade premiums to pay for the certification. “Because the bureaucratic costs of organic certification [are] too high for any one farmer to bear,”asserts Christy Getz, a Cooperative Extension Specialist at UC Berkeley,”…farmers [are] able to create economies of scale by forming a cooperative that [obtains] certification and [coordinates] production.”It is estimated that 30% of farmer associations invest a fraction of their Fair Trade premiums to transition to organic practices. Fair Trade USA argues that strict standards will make farmers practice environmental sustainability, thus producing high quality crops and receive a higher price in mainstream and specialty markets.

In addition, produce, that are classified as “high-quality” by Fair Trade Standards, are more likely to be exported to wealthier countries, whereas produce classified as “low-quality” are shipped to poorer nations. During her research in the Dominican Republic among banana farmers, Getz noticed that “the poorest farmers tended to have lower quality bananas, which prevented them from realizing direct benefits from Fair Trade and kept them stuck on what might be described as a ‘quality treadmill.”

These farmers were unable to practice environmental sustainability because they could not afford it. Therefore, is fair trade only creating a new have/have-not split among Third World farmers?

According to Philip Booth, a British economists at the Institute of Economic Affairs, the fair trade system does not improve conditions for small-scale farmers or workers. Instead, it is a private labelling system that gives consumers confidence to exercise their purchasing power to support disadvantaged producers. Despite the best intentions, market demands still play a vital role in shaping the experiences – good or bad – of farmers and workers within the fair-trade system.

Fair trade federation logo

Multinationals and Mainstream America

Success, as they say, breeds imitators, and the success of trendy fair trade, organic, and sustainable products has not gone unnoticed. Companies like Costco, Target, and Nestle have offered their customers the choice to purchase fair trade products—although the amount and variety of such goods are limited or seasonal.

Private companies that participate in fair trade, who are certified by FLO International or other national certifiers, are not obligated to buy a minimum to enter into the fair trade system. They can purchase as low as 1% of fair trade products and still build an image as a socially and environmentally conscious company.

Some large retailers who are not certified by a third-party have developed their own socially just and environmentally responsible criteria. Many accuse these companies of simply climbing on the bandwagon of fair trade – either because of pressure by NGOs, marketing purposes, or both. Except for Public Relations flacks, few will claim these for-profit companies are in it for the humanitarian reasons alone.

Pressured by thousands of activists, including the San Francisco-based Global Exchange, since 2000 the largest coffeehouse in the world, Starbucks has offered its custumers Fair Trade Certified coffee. In 2004, the Seattle-based coffee giant launched its own eco-label, Coffee and Farmer Equity, better known by the clever acronym C.A.F.E. By employing these guidelines in its sourcing policies, Starbucks has assured its customers its commitment to social and environmental responsibility.

In 2011, Starbucks used its annual report to publicize efforts at protecting tropical forests in several coffee-growing communities. Starbucks claims concern about providing a high-quality “green coffee” to its customers. To achieve this, Starbucks employs its C.A.F.E Practices, which are centered on 4 key principals: product quality, economic accountability, social responsibility, and environmental leadership.

Despite their detractors, Starbucks has committed to invest in farmers and their communities by increasing farmer loans to $20 million by 2015. Starbucks has ensured its customers that by 2015, its coffee will be 100% ethically sourced, either certified by C.A.F.E. or a third party.

Starbucks continues to be the largest buyer of Fair Trade Certified coffee, but by developing their own social and environmental standards, Starbucks has conveniently taken the reins of their own fair trade process, to make as lax or strict as they deem fit – if enough large businesses follow this path, the multiplying “certifications” could undercut the fair trade movement by confusing customers and watering down standards.

Retail giant Walmart has waded into the battle and developed their own corporate guidelines. In “Sustainability 360” they tout their approach to connecting all the players—the suppliers, associates, and customers—involved in their global supply chain.

According to Walmart’s manifesto, its key goals are to be supplied 100 percent by renewable energy, create zero waste, and sell products that sustain the environment and people. Since 2007, Walmart subsidiary Sam’s Club has been selling Fair Trade Certified bananas from Colombia. Walmart claims that as of 2010, their banana sales have generated nearly a million dollars to fund sustainability-minded community projects.

The ice cream company Ben & Jerry’s, with it’s longstanding commitment to charity is more believable in its commitment to fairer global trade. “Fair Trade”, says Jerry Greenfield, the “Jerry” from the ice-cream slinging duo, “is about making sure people get their fair share of the pie.”

In 2010, Ben & Jerry’s reported that 16.4% of the sugar used in their ice cream base mix and 1.9% of the cocoa and chocolate ingredients were Fair Trade Certified. The cocoa powder comes from cooperatives in the Ivory Coast and in Ghana. By purchasing Fair Trade cocoa powder, Ben & Jerry’s has helped Ghanaian communities create health programs that benefit local farmers. By 2013, Ben & Jerry has pledged to source Fair Trade Certified ingredients whenever possible.

What Lies Ahead for Fair Trade

On September 12, 2011 Fair Trade USA, decided to open the certification of Fair Trade coffee to hired laborers and plantation workers. Its announcement resulted in its resignation from the FLO International. With its new approach,”Fair Trade for All”, it claims that it will increase fair trade awareness and double sales by 2015.

While these are worthy goals, the announcement was not met with approval by other national certifiers. From its inception, the term fair trade has meant that products come from democratically organized farmer or artisan cooperatives. By integrating hired laborers and plantation workers, Fair Trade USA is transforming and complicating the movement further.

“In our opinion”, says Rob Everts, co-director of fair trade organization Equal Exchange, “this represents a continuation of [Fair Trade USA’s] years-long practice of playing to its own set of rules, almost always to the benefit of large scale players in the commodities world and against the interests of Fair Trade’s original primary stakeholders: organized groups of small scale farmers.”

The Latin American and Caribbean Network of Small Fair Trade Producers piled on, declaring “we cannot share [Fair Trade USA’s] new vision of expansion, since it threatens the empowerment, development and self-management of small organized producers.”

According to Fair Trade USA, they decided to include plantation workers and hired laborers due to demand of companies to engage in fair trade. In coffee, for example, cooperative organizations represent about 8% of the world’s coffee-growing community. By making Fair Trade more inclusive, they argue, companies will be more eager to engage in the movement and more farmers will receive their fair share from the global market.

But what is driving this transition? Some scholars argue that education drives it; creating consumer-awareness will further push Fair Trade Certified products into mainstream. It’s clear that consumer demand will make or break the movement more than any other factor, and that’s likely behind Fair Trade USA’s new approach.

However, as more players belly up to the fair trade bar, the movement must maintain trust in the system. Consumers will want to know exactly how are they contributing to better the lives of poor farmers and artisans, and a single misstep or corner-cutting by the increasingly splintered movement could stain it in the eyes of customers who are unlikely to care about the difference between the growing number of certifications and standards. Rather than providing broad data on annual reports, multinationals and fair trade organizations will need to specify the amount each cooperative receives; broad figures will no longer measure the impact – good or ill – that increasingly savvy consumers are making in the world’s poorest regions.

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