A schism over Fair Trade

Paul Rice is a man on a mission.

The 51-year-old president and CEO of Fair Trade USA, who has led the group since 1998, says he wants the practice of Fair Trade to become bigger, engaging more consumers and helping more farmers around the world. To that end, Fair Trade USA last year quit the international Fairtrade Labelling Organizations, or FLO, an international federation of fair trade groups, to pursue a vision that Rice calls “Fair Trade for All.”  He and his allies want to broaden the definition of Fair Trade, which when it comes to coffee now requires importers to buy from grower-owned co-operatives. The “Fair Trade for All”  permits buying from collections of small farmers and even coffee estates, or plantations, that are deemed to be worker-friendly.

“Fair Trade can be more than a tiny market niche,” Rice says. “It can be scalable and significant.”

Bringing in plantations will make it easier for big coffee buyers like Green Mountain Coffee Roasters, Starbucks and Whole Foods to buy more Fair Trade products–and that’s exactly the problem, his critics say.

Including bigger farms, they argue, will endanger the co-ops that are the heart and soul of the Fair Trade movement.

“Fair Trade is designed to change commerce,” says Rodney North of Equal Exchange, a cooperative that sells Fair Trade and organic coffee, tea, chocolate bars, cocoa, bananas and almonds.  “We shouldn’t be changing Fair Trade to accommodate commerce.”

Equal Exchange's campaign

Equal Exchange has launched a petition drive asking companies, organizations and consumers to choose “authentic, small farmer-centered Fair Trade.” It says:

Small farmer co-operatives are the center of our Fair Trade movement. We believe that cooperative organization is essential for small farmers to survive and thrive, and the cooperative model is an important vehicle for economic empowerment and social change….

Therefore we vigorously oppose Fair Trade USA (previously Transfair USA)’s Fair Trade for All initiative, which seeks to allow coffee, cacao and other commodities from plantations into the Fair Trade system. This strategy means that small farmers will now be forced to compete with large plantations for market access… We oppose the lower standards Fair Trade USA proposes and the lack of farmer and producer governance on Fair Trade USA’s board. We believe that their Fair Trade For All initiative threatens small farmer co-operatives’ existence and Fair Trade itself.

Caught in the middle are coffee companies (and other retailers big and small), which must decide whether to embrace Rice’s “Fair Trade For All” mantra or side with the international federation and traditionalists in the US who favor the co-op model. The brouhaha creates a risk: That what is now a relatively small market — roughly 5% of the coffee sold in the US is certified as Fair Trade — will be further splintered, with competing logos, brands and ideologies.

“This is an exciting moment in the Fair Trade movement’s history because it’s a chance to revisit our purpose, our goals and our practices,” says Ben Corey-Moran, the president of Thanksgiving Coffee Co. , a socially-conscious artisan roaster in northern California. (Its slogan: “Not Just a Cup, But as Just Cup.”) “But it’s also a very dangerous moment. We could confuse or alienate a lot of consumers.”

The idea of Fair Trade dates back to the 1940s when a prominent Mennonite woman from Pennsylvania began selling imported crafts in small stores that eventually grew into the Fair Trade retailer Ten Thousand Villages. “Max Havelaar,” the first Fair Trade label was launched in Europe in the late 1980s. Other labels followed, and FLO was established in Germany in 1997 to bring the labels together and set worldwide certification standards.

Now producers and consumers faced a proliferation of labels and standards–not just Fair Trade International and Fair Trade USA but also independent labels like Rainforest Alliance, which certifies cocoa, coffee, flowers, tea and other products, and a Bird-Friendly seal from the Smithsonian Institution. In every instance, buyers are assured that growers are being paid a premium price for their products, and and that in return they adopt social and environmental practices that are verified by third parties. It’s a market-friendly way to fight global poverty.

The current battle over who owns the idea of Fair Trade is likely to focus on coffee, America’s biggest food import ($526 million in 2011) and the most-traded Fair Trade commodity. Last year, Fair Trade USA certified more than 138 million pounds of  coffee, a 32 percent increase over 2010.  This  enabled Fair Trade coffee cooperatives to earn $17 million in community development premiums, up 61 percent from 2010.  The extra money goes to projects selected by each co-op in education, health care, environment, business management, quality improvement or productivity.

Rice wants to double the impact of Fair Trade by 2015. To make a bigger dent in global poverty, he argues, Fair Trade has to include all kinds of producers, including workers on plantations. FLO limits its certification for coffee, cacao and sugar to co-ops, although it will certify plantations that grown banana or tea.

“We tried our damndest over the last three years to get FLO to move,” Rice told me. “They flat out said no. I find it very rigid and unrealistic for the Fair Trade movement to insist to the farmers out there that we won’t work with you unless you join a co-op.”

Money, not surprisingly, played a part in the disagreement. Fair Trade USA paid more than 20% of its revenues to FLO  which sets global standards, coordinates labeling and advocates on behalf of Fair Trade. Rice will save that money by going out on his owns, and it could come in handy: Fair Trade USA has about $5 million in loans outstanding to the Ford Foundation, among others. (Its annual revenues will be about $11 million this year.) “We needed an injection of growth capital in order to invest in consumer awareness” and drive demand for Fair Trade, Rice says.

Fair Trade USA also collects fees from the roasters and retailers that use its logo. Critics say that creates an incentive for the NGO to loosen standards and expand the market to bring in more revenue for itself.

A graduate of Yale with an MBA from Berkeley, Rice spent 11 years working in Nicaragua where he started a successful coffee co-op called PRODECOOP. Under his leadership, Fair Trade USA has won awards from the likes of the World Economic Forum, the Skoll Foundation, Ashoka and Fast Company magazine.

“Our approach is, by definition, unconventional,” Rice says. “Some people celebrate that. Some people don’t. The purists in the movement don’t.”

Some of the purists who are unhappy include coffee growers–the very people Fair Trade is supposed to serve. Three networks of co-ops, which together represent 800 producers groups and about 1 million farmers in 60 countries, have opposed Fair Trade USA’s split. They fear they won’t be able to compete with the big plantations that are approved by “the people who are trying to steal fair trade from us,” as Rink Dickinson, a co-founder of Equal Exchange, said last year in a speech.

Rodney North

Equal Exchange’s Rodney North told me that  Fair Trade at its best should democratize economies and empower to farmers who form co-ops. “People who were formerly marginalized become participants in the economy,” he told me. “They go from being a peasant to becoming owners of a going concern.”

“Fair Trade should be transformative,” he said. “No plantation, no matter how benevolently run, delivers that kind of change.”

But Erik Nicholson, who is national vice president of the United Farm Workers union, and a board member of Fair Trade USA, says it’s wrong to leave the plantation workers behind. He told me: “My concern with the traditionalists is that their position is one of exclusion. They offer no hope or alternative to farm workers.”

The argument goes on and on (and this blogpost can’t). The critics say there’s no need to broaden the definition of Fair Trade because there’s more than an ample supply of Fair Trade coffee available just from co-ops. Rice responds that it’s not a zero sum game, that expanding the supply will drive demand and end up helping the co-ops. He’s hope that some big buyers will go 100% Fair Trade, which they can’t do without including larger farms.

An industry insider, who asked not to be identified, told me:

Paul Rice is a cowboy. He goes at things with guns blazing. For him, FLO does not move at the speed of business, and he’s right. FLO does amazing work, but they do it very slowly. Paul wants to go for mainstream distribution. He’s got an MBA, and he’s taking a classic business approach and he’s leaving the hippies behind.

I called a number of coffee companies to see what they think. Most seem to be taking a wait-and-see approach. At Green Mountain Coffee, which has embraced Fair Trade for years to become the No. 1 US buyer of Fair Trade Coffee, Lindsey Bolger, the senior director of coffee sourcing and relationships, said:

We’re maneuvering cautiously through this landscape. We have made it very clear to the producers that we work with that we are not going to throw the co-ops off the back of the bus, even if we bring the estates onto the front of the bus.

Ben Packard, vice president of global responsibility at Starbucks, which has been less enthusiastic about the Fair Trade model, at least here in the US, told me: “We are waiting, along with everyone else, to see what the implications of the split will be.”

Brooke McDonnell, the founder of a widely-admired boutique roaster called Equator Coffees & Teas, said: “I’m inclined to give Fair Trade USA the benefit of the doubt.” Her company, while small, has made loans to co-ops in Ecuador and Nicaragua, and bought land to set up its own operations in Panama. “As coffee roasters, if we’re concerned about a future supply of quality coffee, we’ve got to support the growers in any way we can,” she said.

Other companies, meantime, are working with FLO to set up a new affiliate in the US that would presumably adhere to the traditional co-op model. Equal Exchange is small but influential; it has long term relationships with colleges, churches, food co-ops and progressive retailers. Divine Chocolate, which is 45%-owned by cocoa growers, is also supporting what some call “authentic Fair Trade.”

I’m not sure what to make of all this. I agree with Ben Corey-Moran of Thanksgiving Coffee that this is a risky moment for Fair Trade. This dispute has surfaced some unavoidable tensions in the Fair Trade model, not just between the pragmatists and the pursuits but between the labels and the brands: Fair Trade USA and FLO are asking Starbucks and Green Mountain, as well as the small roasters, to pay them fees that are then used to promote the Fair Trade “brand.” In its own way, Fair Trade is competing with Starbucks and Green Mountain to become the trusted brand in coffee. The coffee firms would prefer to persuade consumers that any coffee they buy from Starbucks or Green Mountain is socially and environmentally responsible. If they succeed, that could marginalize Fair Trade.

Brooke McDonnell of Equator is right, too, when she argues that ultimately the onus falls on the coffee roasters to take a long-term view and build win-win relationships with their growers. That’s what the better importers are doing, for business as well as humane reasons, because they want to preserve a secure supply chain. I’ll take a look next week at the ways a big company (Starbucks) and a small one (Thanksgiving Coffee) are working to close relationships with growers, along with the trust of coffee drinkers.

Comments

  1. Fascinating situation. I’m inclined to give Fair Trade USA the benefit of the doubt as well. Why make good the enemy of the perfect?

    I do think someone should, at the very least come to an agreement on definitions and labels, however, or this disagreement will start hurting everyone at the point of purchase. Why not hand Equal Exchange the right to label the “small co-ops only” products and let Fair Trade USA handle the bulk? That would allow Fair Trade USA’s market room to grow, while Equal Exchange would be elevated as the “even better” alternative for consumers who were really into it – benefiting them as well?

  2. Marc Gunther says:

    Thanks, Nick, that’s an interesting idea. And a good idea, in my opinion.

    Two possible drawbacks. First, FLO and Equal Exchange probably believe they have ownership (if not legally, morally) in the idea and brand of Fair Trade, and I don’t think they want to give it up. Second, another label could end up confusing as much as clarifying.

    My fear is that this split will give the big brands a reason to move away from Fair Trade and go it alone–just the opposite of what Paul Rice intends. I hope I am wrong about that.

  3. Thanks Marc for this interesting post, which puts the spotlight on some very critical issues. In the first place indeed there are unwanted risks attached to this schism, such as companies and consumers moving away from Fair Trade. This is one of the main worries of fairtrade producers themselves. The victims of this schism at the end will be the producers, losing their markets, built during more than 20 years. In the second place producers will have to deal with many different kind of labels to guarantee their visibility in the market as Organized Small Producers who want a close and transparent relationship with traders and consumers, based on solidarity and “comprehensive quality”. This increases costs for producers and makes it even more difficult for them to assure that these certification-labels really “do the right thing”, that is to say, they really promote the strenghtening of local economies of producers´communities as they promise the consumers. Producers nor companies are served by a marketing-war between labels to control the fairtrade-market on both ends of the supply-chain. For organized small producers, the only way to keep on struggling for a fair trade which really can change and enhance development of communties of small producers, in many senses, is by striving for true participation of these small producers in the definition of the strategies and regulations of these labels. We should not forget why Fair Trade was started, as a small producer proposal, in the first place. Mainly because of the lack of access to the market and the unsustainably low prices for their produce. Now in Fair Trade, not only in coffee as done by TF USA, the door has been opened, to the participation of big producers, private plantations, the unfair competition which caused the need for fair trade is being recreated within Fair Trade. And it is not the case that organized small producers are not supportive of the causes of plantation-workers, on the contrary, in many cases they are literally brothers and sisters. But if the introduction of plantations to Fair Trade is causing the organized small producers to loose their way of living and this causes migration of these farmers and pushes them to engross the population of (legal or illegal) plantation-workers in the South and in the North, we will end up without small-scale sustainable production and without the possibility to build strong local economies and with an increase of the different problems related to domestic and international migration. That has not been and cannot be the idea of Fair Trade. This is why small fair trade producers have been advocating in favor of the improvement of labor-conditions for plantation-workers and at the same time striving for the strenghtening of Fairtrade as a motor for profound changes in communities of small producers, organized in co-ops or in one of the many existing associative organizational models. The 300 organizations of Fairtrade producers, part of the Latin America and the Caribbean Network of Fair Trade Producers, CLAC, have been struggling for many, many years to show the value, importance and transformational power of horizontal, democratic organization. This kind of organization is pricisely what makes the difference between a small producers association and a (big) private company. They operate in fundamentally different ways, have different goals and values, different forms of decision-making, governance and distribution of benefits.
    So, small producers will keep on doing their work and will keep on fighting for real Fairtrade which keeps on building a different society and economy together with consumers and using labels which operate with a strong and representive, democratic effective participation of organized small producers in their structures.
    Jerónimo PRUIJN.

  4. Maybe it was unintentional but Nick’s comment sheds an interesting light on the situation. If I’m reading it right he suggests splitting the Fair Trade market into two – with some like Equal Exchange adhering to the original small farmer co-op model of Fair Trade while Wal-Mart, Dole and others source their “Fair Trade” products from plantations.

    However this brings to mind the knock-down-drag-out fight many of us went through when the rules for organic certification were being fought over in the late ‘90s. What if back then we had similarly adopted a twin-track approach? Some “organic” farmers and food companies could use GMO seeds, or irradiate their products, while the “purists” followed organic techniques as we all now expect. Then, too, the argument was that if we set the bar too high too few farmers, too few food companies, etc, would participate and the opportunity for “real” scale would be lost.

    How long do you think it would have been until the low-road, less expensive, GMO-grown & irradiated “organic” products and brands simply pushed the real organic farmers and purveyors out of the market? When you try to win market share by accommodating the market and adopting more conventional thinking and methods and structures (which is what Fair Trade USA is today promoting) you have to expect that you’re going to get more conventional results.

    To be really concise (albeit necessarily at the expense of nuance) this comes down an issue of the 99% vs. the 1% . In agriculture, the world over, the 1% call the shots and pocket most of the wealth, whether its large landholders in Guatemala, or gigantic commodity traders/processors like Cargil or ADM, or the famous Fortune 500 brands like Nestle and Kraft. And – no surprise – whether you’re a picking peppers in Mexico, or growing coffee in Peru, or packing boxes at Hershey’s the system doesn’t work for you.

    But for the last 25 years we’ve had this rare exception – the Fair Trade movement – where the rules were intentionally tilted to the benefit of the small farmers who had never had access to the market, let alone good prices and such. And in a capitalist environment that always favored (intentionally or not) the concentration of wealth, control and decision-making, here was a market alternative that intentionally gave preference for the little guy – at least until now.

    What’s more is that it actually gave preference for groups that were organized democratically. Imagine how this market intervention was steadily, incrementally putting its invisible finger on the scales and shifting the balance of power – finally – away from the plantation owners and foreign corporations who historically dominated these rural communities in poor countries.

    Thanks to Fair Trade more and more small farmers could keep their land (instead of losing it and having to work on the plantations), more and more farmers were banding together and forming agricultural enterprises that they actually owned, and that worked for them (rather than them working for it). And while Fair Trade wasn’t the only cause here are two key data points for consideration.

    #1 When Paul Rice was still working with Nicaraguan coffee farmers (about 1990) that country’s farmer co-ops exported just 1% of the nation’s coffee. Today ‘ about 20%. That is the kind of shift in power we ought to be striving for and that Fair Trade has made helped to make possible.

    #2 Similarly, about 20 years a few wealthy families had a strangle hold on the cocoa exports from the Dominican Republic. But since then a remarkable small farmer co-operative, CONACADO, has captured a full 25% of that country’s cocoa exports. What’s more their cocoa is mostly organic and of a much higher quality. In fact, today they’re the world’s #1 producer of organic cocoa. That’s change we can believe in. It is also the change that – ‘til now – Fair Trade has helped foster. But it would have happened if the big commodity traders and brands could have had their “Fair Trade” cocoa from more conventional sources. And it is exactly the kind of change that Fair Trade USA is today putting at risk when they extend the Fair Trade label to plantations.

    ~ Rodney North
    worker owner
    Equal Exchange
    http://www.equalexchange.coop/small-farmer-campaign

    • Philipp Wickey says:

      Did you mean,

      But it would “NOT” have happened if the big commodity traders and brands could have had their “Fair Trade” cocoa from more conventional sources.” ?

  5. Marc Gunther says:

    Thanks for this comment, Rodney. It reminds me of something that I left out of the story–the fact that cooperatives need not be small and that with the proper support and management, they can be major market players. If I’m not mistake, Ocean Spray, Sunkist and Organic Valley are all examples of successful US-based coops that have built brands and claimed space on supermarket shelves.

    • 1st – a correction
      In my 2nd-to-last line in my comment above I meant to say about CONACADO “…But it would NOT have happened if the big commodity traders and brands could have had their “Fair Trade” cocoa from more conventional sources. ”

      2nd – That’s right Marc. OceanSpray, Sunkist & Organic Valley are all farmer-owned co-ops, and they’re just a few of the thousands of co-ops worldwide who have demonstrated that co-ops can very much ‘go to scale’, just as do large estates and private firms. Oceanspray’s HQ is down the road from us in SE Mass. They’re a billion-dollar enterprise. Organic Valley has over 1,700 dairy farmers as farmer-owners nationwide and $500,000,000 in annual sales.

      In the U.S. alone co-operatives run the gamut from small worker-owned bike shops to the Land O’Lakes, REI, the Associated Press and everything in between. For example we at Equal Exchange are a worker co-operative with 103 members working in 8 states and just celebrated our 26th year in business. See:
      http://www.ncba.coop/ncba/about-co-ops/research-economic-impact

      And in other countries co-operatives have gone to scale in a variety of sectors, including farming, retail, banking and manufacturing.
      http://www.ica.coop/coop/statistics.html

      However, the fate of co-ops can vary greatly country to country. Some, like Italy, Spain, Canada and Costa Rica are supportive and do not create extra hurdles for their co-op sectors, which are thriving. Others like Paraguay & China much less so. The U.S. lies somewhere in between.

      The co-operative model could be called a “third way” – neither traditional winner-take-all capitalism, nor state-owned & distributed socialism. It consists of private enterprises democratically and locally owned and governed, where the benefits you derive from your membership in the co-op are in proportion to how much you use your co-op, not to how much capital you’ve invested. See: http://www.ica.coop/coop/index.html

      And, by the way, 2012 is the United Nations International Year of the Co-operative. See http://www.2012.coop

  6. Marc, thanks for the insightful look inside some of the tensions within fair trade that have come to the fore with Fair Trade USA’s decision to allow coffee plantations into the certification system. I want to clarify that Thanksgiving Coffee is in fact opposed to the direction taken by Fair Trade USA in their “Fair Trade for All” campaign. Our experience working with family farmers and their cooperatives raises a number of red flags when it comes to certifying plantations. Rodney’s comment in your article summarizes these concerns: if the heart of fair trade is about empowerment, plantations that rely on seasonal migrant labor are an unlikely place to see workers organize, leverage their power, and achieve a real seat at the negotiating table.

    When one stops to look at the energy and commitment of fair trade supporters, be there consumers, students, or retailers, it’s clear that the integrity of this certification is held to a higher practical and moral standard than most if not all other certifications. This is our greatest source of strength as we seek to grow the market to support ever more farmers, and the risk of alienating consumers comes as much as collateral damage in a battle over competing certifications as it does from taking a path that may compromise this movement’s history of integrity.

    That said, it’s important to be clear that the core of our opposition to Fair Trade USA’s direction is not their desire to expand and evolve the model. We are well aware of the need to scale the kind of impact that fair trade has had. The core of our opposition is the lack of participation by a diverse cross section of stakeholders in the governance, policy development, or ownership of Fair Trade USA. Ultimately, the vision of fair trade is of a more just and democratic world. Without a more democratic Fair Trade USA—which could be achieved by a more democratic and representative board of directors—Fair Trade USA will hold on to power that should be shared, and runs the risk of excluding critical voices that in the end will guide smart, inclusive, and ultimately, the evolution of the model for the future that will truly be fair for all.

  7. Steph S says:

    Re: Nick’s comment about a small-producer label, this is evidently the intent of Equal Ex et al’s campaign asking the major Fair Trade commodity certifiers limit their certification to small farmer co-ops. (Nick also seems unclear that EqEx is not a certifier, but a brand.) The Latin American and Caribbean Network of Small Fair Trade Producers (CLAC) has introduced a seal to designate small-farmer products as well.
    http://smallfarmersbigchange.coop/2011/10/04/small-producers-launch-their-own-seal/

    Stating that these labels are competing with brands seems like an incorrect analogy. They’re simply one of many eco/social labels, and really just compete with other such labels for marketplace support. Consumers and brands are demanding them, and this demand continues to grow.

    Re: the general issue of Fair Trade, it seems like a few clarifications might help readers who are not working in the center of this issue.

    1. Describing FLO as “a federation of fair trade groups” seems to position it too broadly. It simply oversees one of several defined “fair trade” standards (Fairtrade), limited to specific commodities. As for its structure and function, it has two “independent” arms: Fairtrade International, which comprises the non-profit standard setting body and the labeling initiatives that license buyer/brand usage of the label in consuming countries, and FLO-CERT, the for-profit producer certifying body. Brands generally pay the labeling initiative in their country, which pays Fairtrade International. Producers pay FLO-CERT.

    2. Another Fair Trade certifier, IMO, allows large farms for all crops, and also works with co-ops. They accept FLO’s certification as equivalent and, by and large, use FLO’s producer network. Equal Exchange switched from FairTradeUSA to this certifier for some of its commodities/products and many small-farmer-only fair trade advocates (e.g., Fair World Project) have endorsed the certification. This seems curious, even hypocritical, given the criticism they’ve directed at FTUSA. (EqEx’s small farmer fair trade campaign does reference IMO and FLO, but this is the extent of the critique.)

    3. Certifications do not necessarily guarantee a premium price or any specific price to the grower. Fairtrade is the only label that specifies a defined minimum price and a separate social premium to be paid to producers, but this is paid to co-ops, not farmers, in the case of small farmers, with no requirements about what must be paid to co-op member farmers (co-ops vote on a payment system, and farmers can get very different prices per pound as such). Rainforest Alliance does not address terms of trade. IMO does not define an exact minimum price, though the standard includes guidelines for price differentials versus market prices.

    • Marc Gunther says:

      Stephanie, thanks for this comment, especially (3). I now realize that you’re right, that certifications other than Fair Trade do not guarantee a premium price to growers.

      Re (1) and (2) I think the complexity of the system is a problem for outsiders. Can we expect even the conscious consumer to sort through the differences between FLO, FLO-CERT, Fairtrade International, IMO, UTZ (which is a potato chip brand at my supermarket), etc.? The risk for the Fair Trade movement, which has accomplished so much, is that people will throw up their hands in despair.

      • Steph S says:

        Hi Marc,

        I think consumers can and should learn what and who are behind any* labels they are drawn to support. In the least, they should read certifiers’ websites to see the basic requirements, understand the verification process and look for evidence of outcomes. I don’t think most will do what’s needed to sort out the differences sufficiently, as this requires reading the standards and the certification process protocols. Certifiers’ websites have many oversimplifications, overstated claims, selectively chosen outcomes and messaging designed to show how that label is just as good or better than relevant competitors. There are a few eco/social label comparison sites, but these are based on info from certifiers (not independent reviews) and are not well-known to consumers. Good Guide and other raters provide their assessment of various certs, but I would disagree with their evaluation of labels relevant to eco/social/trade for commodities.

        Brands should dig deeper, reading the standards and verification protocols, looking at efficacy research and talking to producers to discern ROI, efficacy, etc. If not, they can add to confusion and misinformation, and have effects that fail to support, or even run counter to, their intended goals.

    • Two small corrections, Steph.

      “Describing FLO as “a federation of fair trade groups” seems to position it too broadly. It simply oversees one of several defined “fair trade” standards (Fairtrade), limited to specific commodities.”

      Actually, Mark had it right. FLO was formed by labelling organizations in several countries years ago, each with its own ties to FT civil society, etc. Years later (almost a decade ago now), three democratic networks of producers also became members of FLO.

      It’s role is also broader than you have it – standards development is one major aspect, but more than 40% of its budget actually goes to direct producer services,. Then there are initiatives like the recent Producer Access Fund as well as other non-standards-related activities.

      “As for its structure and function, it has two “independent” arms: Fairtrade International, which comprises the non-profit standard setting body and the labeling initiatives that license buyer/brand usage of the label in consuming countries, and FLO-CERT, the for-profit producer certifying body.”

      Actually, Fairtrade International and FLO are the same organization. FLO changed its name in January of last year to Fairtrade International. Among other reasons, the new name better reflects that the organization is made up of more than just labelling organizations. FLO-Cert is owned by Fairtrade International, and exists as a separate body in keeping with best practices in certification.

      Michael Zelmer
      Fairtrade Canada

      • Steph M says:

        Thanks for the clarifications, Michael, and thanks especially for referencing the producer development work that FLO/FI has increasingly made an investment in. It’s particularly wonderful to see FLO opening producer support offices at origin.

        My first statement about Marc defining FLO/FI more broadly than its actual coverage relates to the fact that it is one of many fair trade organizations, others being IMO, FTF, NEWS,EcoSocial, IFAT, etc., and the fact that the broader universe of fair trade includes crafts and other goods that FLO/FI is not engaged in.

        My statement about the two components of the Fairtrade system referred to FI and FLO-CERT.

  8. Chris Gregory says:

    Instead of trying to combat the negatives in the argument of who gets the rights to what label and what-not; as a consumer I consider one thing and one thing only. Are the companies using this label adhering to the rules and regulations that are transcended by the labels of “fair-trade”, “organic”, or “equal-exchange”. On the user-end, this is what is important. If a large company’s future is threatened by the rising consumer demand of such products and adheres to such rules and regulations themselves…..isn’t that the ultimate goal. “If you can’t beat’m, join’m”, as the cliche goes. Should we simply say, NO, you can’t join in our reindeer games? Just to force the large company to down-size or close to elevate the smaller, individual farmers.. Even if the larger one is willing to change to follow all the expectations required for such labeling. That would have a negative economic impact on that community, which would be hypocritical in all aspects of the larger picture. I get it, there are communities that don’t have the resources to combat with the large financial backing of the bigger businesses. But who is justified here? Business is business, but there’s no justification in discriminating against a large company simply because it is large. That’s a very backwards perspective in regards to the financial security of the world. If all that existed was small and local, can you even begin to fathom the complexity of imports, exports, trade, and in general business if the entire world was reduced to microeconomics. Every market would be jam packed full of competing products and certain products would cease to exist in and from certain foreign localities simply because the businesses themselves weren’t able to grow to a financial strength to do so. I don’t have an MBA or anything, but such an economic organization would be a disaster. I already have a hard enough time trying to pick-out which peanut butter to buy. I think moderation between big and small is the key, but we can’t play favorites and penalize the large businesses unless they aren’t willing to pay fair wages, be non-discriminant on all levels, and are willing to create their products organically and sustainably. Would we penalize McDonalds if they paid fair wages to all employees no matter what country it was located and they only used humanely raised meat and used organic produce. I would be at McDonalds everyday if that were to happen. I don’t care who it’s from.

  9. Dear Marc,

    Thank you for presenting a wide variety of perspectives on this complicated, yet increasingly important topic. We appreciate your interest in Fair Trade, and welcome the open, honest debate this piece has sparked. In reading the commentary on your article, there are a few points that we would like to elaborate on, in effort to provide your readers with more information.

    First, while we have heard opposition from the leader’s of the CLAC, who voice legitimate concerns, they do not necessarily represent the sentiment of all Fair Trade cooperatives, nor do they represent all Fair Trade farmers in Latin America. We would like to direct some attention to the many voices of support coming from the producer community. “We believe that Fair Trade, in order to fulfill its mission, should be more inclusive and cover other models alternative to the cooperative model” says Coope Tarrazu, a Costan Rican coffee cooperative in their open letter of support (http://bit.ly/JDJJJa). Additionally, as we learned at the recent SCAA Producer Forum, cooperative leaders generally believe that farm workers should be included in the benefits of Fair Trade, if it can be done in a way that doesn’t harm co-ops. Many are reassured by our ongoing efforts to strengthen cooperatives, and well as our slow, careful approach to innovation.

    Second, while some try to paint Fair Trade for All as a response to pressure from large businesses, nothing could be further from the truth. Fair Trade USA’s 800 business partners, who range from small local roasters to large global companies, returned almost $22 million in community development premiums to farmers and workers in 2011, up over 50% from 2010. While we are proud of these results, Fair Trade can and must do more. Approximately 2 billion people still live on less than $2 a day, and Fair Trade reaches less than 1% of them. It is our moral obligation to extend the benefits of Fair Trade to more farmers and workers around the world.

    The Fair Trade movement is united by a common mission to alleviate poverty through trade. We believe that diverse perspectives on how to achieve this mission will make the movement stronger. Having more Fair Trade products on store shelves (whoever the certifier may be) means more opportunity for consumers to choose Fair Trade and more impact back to farmers and workers.

    Rather than assuming that any one group has a monopoly on the best way to achieve our common mission, we hope that through collaboration, open dialogue and multi-stakeholder participation – rather than through boycotts and petitions, which simply harm the farmers that we collectively aim to serve – we can move forward together to create a more just and transparent system of trade, one that provides more benefits to more farmers and workers around the world.

  10. The model of Fair Trade that Fairtrade International (FLO) works to is dynamic, diverse, global and pursuing constant innovation and change.

    The cooperative model is at the heart of Fairtrade. But we are open to other ways of working. Our standards don’t ask Fairtrade farmers to form a cooperative, just that they organize/unite and make decisions democratically. Three quarters of the small farmer organizations in Fairtrade are cooperatives simply because this is the model that works best for them.

    We support other types of producers where this makes sense, including workers, wild collectors, miners, timber harvesters, and more. Last summer we launched a project to include new types of small producers, for example indigenous groups in Colombia with traditional ways of working. Fairtrade International and the three Fairtrade producer networks who represent Fairtrade farmers and workers across three continents are co-leading this project.

    I believe this is what makes the international Fairtrade system exceptional. We are a participatory system and we make decisions together with our partners and especially producers. Our 22 members span 6 continents and represent everyone from producers to consumers. Producers are at the heart of decision-making in our board, on our global executive team, in our general assembly and on our standards committee.

    There will always be different ideas within Fair Trade about how to achieve our goals, but I believe we are always stronger when we work together. That’s why we work closely with partners across the spectrum to continue building a different, fairer model of trade.

    Martin Hill
    Executive Commercial Director
    Fairtrade International (FLO)

  11. Thank you Marc, for scratching below the surface of this “schism” and for opening up this dialog to a diversity of opinion.

    Since 2002, I have worked as producer relations manager at CoopCoffees – a fair trade importing cooperative owned by 23 local, coffee roasting companies in Canada and USA. We have worked through the systems of Fair Trade USA, Fair Trade Canada, FLO-International, Fair Trade Federation, World Fair Trade Organization and IMO Fair for Life… and also provide “total transparency” via our own traceability system http://www.FairTradeProof.com

    I enjoy coffee, but I came to this work because of farmers. Over the course of 10 years living in Central America and Mexico and working with small-scale farmer organizations, I learned about the countless obstacles small-scale farmers face and the critical importance for them to become united in well organized and economically viable cooperatives.

    It’s a catchy phrase for us to talk about “changing the world one cup at a time” but we should remind ourselves that purchasing coffee at fair prices is only the first step of a very long road. The transformative work has only just begun in farmer communities…. and the possibility for that work to continue depends on our collective capacity to support locally based, farmer organizations.

    This current debate is not a question of “who owns fair trade”, nor is this a question of big verses small companies “being allowed to play”. I believe that at the crux it is a question of intentions. Are you using your company to promote fair trade? Or are you using fair trade to promote your company?

    Years ago I had a conversation with the VP of Beverages at Nestles. He said his company was “interested in Fair Trade…. but trying to figure out how to do it without changing their sourcing.”

    Agreed – changing habits is hard. But that is precisely what Fair Trade has been trying to accomplish! Unfortunately over the course of history, we have not seen enough success of Fair Trade changing the practices of large companies, and far too much evidence of large companies exerting their economic clout to change Fair Trade – and leading us ultimately to the current context.

    I’m surprised no one else picked up on Marc’s comment about the $5million credit debt Fair Trade USA owes the Ford Foundation…. by the way, add at least another $1million that Fair Trade USA owes FLO International for past service bills that were apparently easier to walk away from than to honor. All tolled, you see a pretty convincing incentive for Fair Trade USA to want to “go big” and fast! Unlike organics, Fair Trade certifiers get paid by how many of their certification labels they place on product; the bigger the client, the greater the income coming into their offices.

    And unfortunately, under the new Fair Trade USA system, the consumer has no right to know what the label guarantees – whether the bag of coffee they just purchased comes from a small-holder, or a large plantation, or something in between. Similarly to the current battle consumers are waging around their right to know if a product contains genetically modified organisms (GMOs), current criticisms directed at Fair Trade USA could be summed up as a simple demand for “truth in advertising”.

    And for those of us who actually believe in Fair Trade, we really would like to avoid having consumers feeling disempowered or deceived once they discover that the premium price they paid to “support farmers” – actually went to some of the world’s most privileged coffee plantations or most rapacious multinational traders… and potentially lose confidence in the entire concept of being able to shop according to your values.

    As you have seen – there is a lot of passion amongst Fair Traders. That is because a lot of blood, sweat and tears have gone into building this movement. There is also a lot of interest in hijacking the concept of Fair Trade. That is because there are people who realize that while this is a “tiny niche market” – there is a huge value. Yes, it is true that Fair Trade has only penetrated a small percentage of the global market; but that already represents a multi-billion dollar market share… and for some companies an even greater value to their image.

  12. Since the Fair Trade movement is bigger than just the international coffee trade, I’d like to get a better understanding from FTUSA and others as to how they see the proposed changes at Fair Trade USA impacting other commodities and industries by setting precedents and new standards.

  13. Carlos A. Vargas says:

    Hi Marc.
    For many years the FairTrade Model has involve workers in others certified products, but not in coffee. Why not? Are there differences between a tea or flower worker and the coffee worker?
    As a member of the BoD of FairTrade USA, I have visit and seeing the benefits of the FT model for the workers in flowers.. why cannot the coffee workers, also participate in Fairtrade, and improve their quality of life, as happens with workers in other products. Farm workers are the most needed people in the value chain of coffee industry.
    I grew up in a coffee farm, an actually with my family, own a small coffee farm, I am a member of a coffee co-op and have being working at management level of co-ops for more than 33 years, so obviously this is the business model that I support and consider it, as the best to empower people. But I do not think that is a reason to monopolize the FairTrade system.
    If the mission of FairTrade is to secure a better deal for farmers and workers, (as is stated in the FLO Mission) the road for it, is to facilitate access to market and make it grow to a larger scale, to benefit of as much people as possible.
    I have support the Fair Trade for All proposal because a I really think is a step in the right direction, to make the FT model more inclusive and delivering more benefits to people. There are risks and challenges to face, but nothing is easy.
    Small and pure, sounds great, for the ones that are already in, but for sure not, to the thousands of small farmers that are not part of a cooperative or farm workers on coffee plantations.

  14. Xiomara J. Paredes says:

    Dear Marc and everybody,

    Thanks for your opinions and comments. I’ve worked for several years for Small Producer’s Organizations, and I completely agree with the CLAC conclussions about what will ocurre with a vision of expansion of the FT or what is known as “Fairtrade for All”:

    “- The expansion of Fair Trade based on the theory that the entrance of other actors into the system (plantations and producers who do not form part of organisations) will generate more benefits for small producers goes against the market reality and the basic principles of fair trade.
    – Fairtrade certified producers only export a third of their production in Fairtrade conditions (FLO GPM data, 108,000/358,000 TM) and for this reason it cannot be argued that there is not a sufficient supply of small producers to provide the Fair Trade market.
    – The only way to empower small producers is through their forming organisations. Other methods generate dependency (for example contract production).
    – An “extended” vision of Fairtrade would result in less participation from small producers (displacement), the weakening of SPOs, and an increase in unfair competition.
    – The growth in supply and the entrance of other competitors into the system will also be to the detriment of prices, whereby the security of a minimum price and a premium threatens to disappear.
    – Confusion is being generated among consumers in the north, who are no longer aware which products come from small producers and which come from plantations, nor which come from transnational corporations buying from individual producers under contract production rules”. (you can read the complete document here: http://clac-comerciojusto.org/media/descargas/clac-communique-on-the-ft-situation-in-the-usa-pdf-2012-04-02-11-32-54.pdf)

    By other side, Fair Trade born for small producers organized, as a separate market, to support disadvantaged producers; the plantations for example, are not in disadvantaged, have economies of scale (low production costs, working capital, easy access to credit, etc), so they should not have more advantages. It is not a matter that doesn’t want to support the workers, of course they deserve a dignified and fair treat, but there are labor laws in all countries for this. In a plantation the most benefited are the owners not workers.

  15. Carol Rosskam says:

    Hello Marc,
    You may want to interview Dean Cycon of Deans Beans in Orange, Mass..

  16. Rob Cameron says:

    First, I have to declare an interest: until January 2012 I was Chief Executive of Fairtrade International (FLO) so these issues are, well, somewhat familiar. There’s no need to reiterate what many have said so far so instead I want to get back to Marc’s opening point: that Paul Rice is a man on a mission. I would go further and to the surprise of some say clearly that, in my view, Paul Rice is a genius. To have achieved the level that Fairtrade has reached in the USA is extraordinary. Paul is a great social entrepreneur and it shows what one man with immense self-belief and charisma can do. And what’s all the more impressive is that these achievements have been made despite the broken relationships and mistrust left in Paul’s wake as he has single mindedly ploughed forward. His analysis is that leaving FLO and adapting standards is necessary to achieve scale in the USA market. That is where we part company. In the UK, Fairtrade is extraordinary successful. Of course the markets are different but lessons can be learned. The UK Fairtrade Foundation is, like FT USA highly entrepreneurial (if not more so). But it also has built powerful, supportive and enduring relationships with other NGOs and the 100% Fairtraders who are able to co-exist with the big brands. And it has nurtured a network of grassroots supporters willing to campaign on producers’ behalf. This combination of commercial acumen and campaigning is possible in the USA. I was hugely impressed with the potential for cross sector collaboration in the USA in my final months in FLO. The message from all sectors was clear – “we have been held back from working together; all of us – NGOs, brands, 100%ers – want to open the USA market and we can do it – together”. The problem is that FT USA and specifically Paul continue to talk about multi-lateralism but have been poor at putting it into practice, preferring instead to rely on the cult of personality. My guess is that the market place could be much bigger for producers if there was such a combination at work in the USA.

    That said, there ARE problems with the international system. Yes, FLO is slow. Yes it is very frustrating and even inconsistent at times. Yes, keeping everyone in the tent is slowing it down. Yes, there is a sense at times of a “closed shop”. But the fact is that Fairtrade only succeeds in the field and in the market where there is collaboration despite differences. The pity of it all is that such collaboration is only possible now that FT USA has left the international system.

    Paul says that the real driver behind his move is “business”. I’m with Monika and amazed that there has not been much not more scrutiny on the debts of FT USA, the pay back periods and the pressure to drive up licensing incomes. The risks associated with leaving the system are so great that ultimately, my guess is that FT USA’s survival is the real driver behind the schism. Producers first? I don’t think so.

  17. As passionate supporters of sustainable coffee farming, we at Reunion Island Coffee are very interested in the different views on this debate. In a recent program on Canada’s national public radio, Paul Rice and Fair Trade Canada (FLO) director of communications Michael Zelmer debated the topic and presented a clear comparison. Its about 25 minutes and is available at http://bit.ly/M4WhuO.

    As a disclaimer, Reunion Island Coffee currently markets Fair Trade coffees certified by Fair Trade USA.

  18. Speaking from the side of Fairtrade that is out there at the grass roots trying to educate and convince, this move comes as a great blow. Fairtrade as it stands needs time to sink in before people understand the depth of what it does.
    Now there is another level of explaining that needs to be done. I wish Paul Rice would have simply left and created his own labelling system and left Fairtrade unified across the world doing their own thing. One player has pursued his own agenda to the detriment of us all and the confusion of those on the outside of Fairtrade.

Trackbacks

  1. […] A schism over Fair Trade – Fair Trade USA has split from the traditional model of Fair Trade (governed by the Fairtrade Labelling Organisation) which only accepts produce from grower-owned co-operatives to include buying from collections of small farmers and even coffee estates, or plantations that are deemed to be worker-friendly. Strong opposition is raised by other Fair Trade groups who attest that “Fair Trade is designed to change commerce,…We shouldn’t be changing Fair Trade to accommodate commerce”… and that … “this strategy means that small farmers will now be forced to compete with large plantations for market access”. A core questions is whether the goal of Fair Trade is a fair price or fair participation in communities of production and work. This move seems to be driven by a genuine concern that  Fair Trade is failing to penetrate markets in a significant way, but risks pushing Fair Trade USA close towards the benign, opportunist, ‘greenwashers’ such as the Rainforest Alliance and UK Farm Assured. […]

  2. […] the moment, in fact, the fair trade movement is going through a bitter split. One group, Fair Trade USA, wants to expand the label so it can include coffee from individual […]

  3. […] in the movement, though, are just worried about the effect of a split in an already small market, and the confusion it may cause among […]

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