Fair Trade: Questioning Assumptions
During a recent trip to my local Whole Foods store for coffee beans, I was amazed to encounter a bewildering array of official-looking labels as I wandered down the crowded coffee aisle. In addition to the now-ubiquitous black-and-white TransFair label, there were also a variety of other labels which, as far as I could tell, made similar claims as to each product’s fair trade provenance. As I stood in the aisle, somewhat overwhelmed by the number of choices offered, my inclination was to purchase a brand carrying a TransFair label, since this is the label with which I am most familiar. But as I pondered my decision, I found myself wondering why only some of the brands carried the TransFair label, and whether it was in fact more credible than other labels which I did not recognize.
Fair trade is an organized social movement which promotes standards for international labor, environmentalism, and social policy in areas related to production of Fair-trade labeled and unlabelled goods. The movement focuses in particular on exports from developing countries to developed countries.
Fair trade’s strategic intent is to deliberately work with marginalized producers and workers in order to help them move from a position of vulnerability to security and economic self-sufficiency.
The most widely recognized definition of fair trade was created by FINE, an informal Association of the four main fair trade networks (Fair-trade Labeling Organizations International, International Fair Trade Association, Network of European Worldshops and European Fair Trade Association)1
Fair trade is a trading partnership, based on dialogue, transparency and respect, which seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South. Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.
Most consumers—especially those who shop at Whole Foods—do not regularly think along these lines. The concept of socially responsible consumerism has permeated our cultural mindset to the extent that many of us now embrace the practice of “voting with our dollars”—that is, demonstrating our support for socially responsible business practices by choosing to purchase products produced by farmers who were paid a premium for their labor. Labels like TransFair make this easy for us. Very few of us have the time to research how our food was produced, so TransFair does the work for us, enabling us to purchase products bearing their label with a clear conscience. Nothing could be simpler for the socially responsible consumer, right?
Unfortunately, it’s not that easy. The current fair trade system in the United States, while laudable in many ways, has its downsides. The fact that fair trade has become mainstream in America is certainly positive, and the fact that consumers have easy access to fairly trade products is even better. Yet the apparent simplicity of the current system does hide some shortcomings, and while they are not serious enough to outweigh the positives, they do need to be addressed by the socially responsible consumer.
To begin with, fair trade in the United States is dominated by the Oakland, CA based TransFair USA, which is the only third-party certifier of fair trade products in the country.
Other certification agencies include Rainforest Alliance, Utz Kapeh, and several others.
TransFair is a member of Fair-trade Labeling Organizations (FLO) an association of 23 organizations worldwide. In the United States, our knowledge of fair trade has largely come to us through the TransFair’s aggressive marketing tactics, which are a double-edged sword in the fair trade movement. On the one hand, TransFair is largely responsible for increasing consumer awareness of and demand for fairly traded products. On the other, TransFair has promoted itself as a brand unto itself, and the TransFair logo has, to many consumers, become synonymous with fair trade.
This in itself is problematic. First, it leads consumers to mistakenly assume that only TransFair-labeled products are fairly traded. Second, it promotes TransFair’s model for procuring fairly traded products to the exclusion of other models. Third, it makes it difficult for alternatives to TransFair to enter the fair trade arena.
While it cannot be denied that TransFair’s marketing efforts have encouraged many companies to convert to fair trade, we should not forget that there are also a number of companies which demonstrated fair and sustainable business practices long before TransFair was established in 1998. For coffee roasters, TransFair’s certification fee is about $0.10 a pound. For example, the price for a fair trade organic coffee has long been fixed at US$1.41 per pound. Due in large part to TransFair’s marketing, these companies feel pressured to purchase TransFair certification in order to remain competitive in the coffee market, despite having utilized fair and responsible business practices all along.
Moreover, TransFair extends its coffee certification mostly to small scale co-operative farms which meet its criteria. However, certification programs like TransFair are beginning to certify large plantations, or fincas, raising fears from the smaller co-ops who are concerned they may lose their competitive advantage2. According to TransFair’s website, “By getting organized into democratic cooperatives and participating in Fair Trade, coffee farmers are able to gain access to international markets, earn higher prices, invest in their farms and communities, and strengthen their organizations.” All of this is true. However, requiring farmers to organize into co-ops is somewhat restrictive, given the number and variety of individuals who grow coffee. Suppose an individual farmer or small family-owned farm does not wish to join a co-op? A co-op necessitates sharing profits among members. If a small farm is thriving on its own, the farm owners have no reason to join a co-op. Should the individual or family of coffee growers be shut out of the fair trade market on this basis?
Moreover, some farmers and some existing co-ops already have existing relationships with buyers who pay them fairly, and paying for TransFair’s label would reduce their profits. A 2004 Seattle Times article3 profiled such a co-op in Nicaragua, which at the time received $1.61 a pound for their coffee. This is far higher than TransFair’s current minimum coffee price, which is $1.21 a pound in Africa, Asia, Mexico and Central America, and $1.19 a pound in South America. An extra $0.15 is added if the coffee is certified organic and coffee importers must pay an additional $0.05 per pound, which is returned to the co-op for community development projects.
While it is good that TransFair ensures that a portion of the price is used for development purposes, organizations such as the co-op in Nicaragua, being paid higher than the minimum TransFair price, are able to apply much more than the requisite $0.05 per pound toward improving their lives and developing their communities. Yet because their coffee does not bear TransFair certification, most consumers will assume that it is not “authentically” fair trade. And if consumers are to pay extra for fair trade coffee, most look for the TransFair label as a guarantee that they are in fact supporting fair trade business practices.
However, according to a recent Economist article, only a small amount of the mark-up on fair trade food products actually makes it back to the farmer—most goes to the retailer. Socially responsible consumers must therefore be discerning. If we are truly committed to supporting fair trade practices with our dollars, then we should spend a little extra time in the coffee aisle reading the labels. While the TransFair label assures us that at least some fair trade practices were followed, there are a number of alternatives out there. Some companies, such as our co-op in Nicaragua, actually return a larger percentage of their profits to the farmers. But most of us would pass over their products for their lack of TransFair certification.
Therefore, the next time you find it necessary to buy coffee beans, take a little time to pause, read and reflect. Rather than being overwhelmed by all the labels, take time to understand the differences between them. After all, isn’t this socially responsible consumerism is all about?
–Peter M. Guyer
Briony Nguyen is the Marketing Manager of Athena Marketing International (athenaintl.com/wp), an international marketing, consulting and business development firm that helps U.S food and beverage companies build profitable, sustainable brands. Peter Guyer is the Founder & President. Tel. (206) 749-9255, E-mail: [email protected]
1 European Fair Trade Association. (2006).
2 Malkin, Elisabeth. “Certification eases coffee growers’ burden.” International Herald Tribune, April 23, 2007.
3 Batsell, Jake. “Bumper Crop of Coffee Labels.” The Seattle Times, September 20, 2004.