As the fair trade movement matures, deep rifts are appearing. But despite intense disputes, the collective impact continues to be for the good

Fair Trade USA, the American-based certification group that recently broke off from the world’s largest fair trade oversight group, Fairtrade International, is again in hot water with purists.

It has been the target of more doctrinaire fair trade advocates since it decided two years ago to pursue a strategy that relaxed some restrictions, certifying certain larger estates and plantations that were barred from certification under Fairtrade International standards, on condition that they raised wages and sustainability standards. Now it’s butting heads with groups that claim its ingredients label is too lenient on the sourcing of sugar.

The fair trade market is sizable – estimated worldwide at almost $7bn, mostly in cocoa, sugar, coffee and bananas. Cut flowers is a rapidly growing category. Britain and the Netherlands are the world’s largest markets, with South Korea, South Africa and the US the fastest growing.  

What a fair trade label really means to consumers is anyone’s guess. Bonn-based Fairtrade International, the recognised global heavyweight, is perceived as purist. Fairtrade International and its allies refer to fair trade as a philosophy and a way of life.

The objective is “to build a new system to ensure fairness and market access” for small-scale farmers and workers, writes Equal Exchange, a US ally of Fairtrade International in the wake of the breakup with FTUSA. Its supporters believe that conventional trade had systematically marginalised “global south” workers, devastating the environment and baking in economic inequality. Fairtrade International is in the process of establishing a new membership organisation in the US – Fairtrade America – which is the only body licensing use of the international Fairtrade mark in the US. 

Fairtrade International’s major rival is the World Fair Trade Organisation (WFTO, formerly the International Fair Trade Association), which registers producer cooperatives, exporters, importers, retailers, national and regional fair trade networks and fair trade support organisations, but does not label individual products. FTUSA is aligned with WFTO and both have more liberal certification and labelling philosophies than Fairtrade International. While the two organisations – Fairtrade International and WFTO – do have clear differences in approach, they have cooperated on some aspects of developing the fair trade movement. 

Trade not aid

The fair trade movement has its modern roots in 1960s student activist protests targeting multinational corporations and “neo-imperialism”. The slogan at the time, “trade not aid”, gained international recognition in 1968 when it was adopted by the United Nations Conference on Trade and Development (UNCTAD) to put the emphasis on the establishment of fair trade relations with the developing world.  

Campaigning entrepreneurial businesses such as Ben & Jerry’s and Body Shop pioneered micro-projects in the developing world, including novelty handicrafts, adopting the Trade Not Aid moniker as marketing slogans. But their projects were small-scale, not sustainable and rife with operational problems. While well intentioned, they sometimes did more harm than good, which spurred calls for a formalised fair trade structure.

Sales of fair trade products only really took off with the arrival of certification initiatives. The first certification, Max Havelaar, was created in the Netherlands in 1988, opening the door for goods to be sold into a mainstream market. Fairtrade International was formed in 1997 as an amalgam of budding global organisations, and launched a certification mark in 2002. It set minimum “safety net” prices for farmers and producers, to protect them against market fluctuations, and charged a premium (for example 20p per pound for coffee) that cooperatives could invest in infrastructure improvements or social projects, such as local schools.  

Fairtrade International estimates it now touches 1.4 million people annually in more than 70 countries. The organisation says that, in 2012, producers received more than €80m in premiums from Fairtrade products, and says it has helped raise living and education standards.

In contrast, FTUSA (and WFTO) talk less about challenging global corporations and promoting “social justice” and more about improving wages and working conditions, size be damned. “If we accept the premise that co-ops are never going to be widespread enough to impact systemic change by themselves, and indeed, that they need protection to survive as a going concern, then how meaningful will they be for the life of the average worker?” writes one FTUSA supporter in the kind of heated online discussion that is now common as the fair trade brawl unfolds.

For FTUSA founder Paul Rice, who after graduating from Yale University earned his lefty bona fides as a soldier-volunteer in the Nicaraguan revolution in the 1980s, the movement should be as much about fair labour as fair trade. That means getting the “big boys” – corporations such as Kraft and Nestlé, which service large retailers including Costco, Wal-Mart, Starbucks and Whole Foods – to invest more in their workers.

Rice calls it a “do good” rather than a “feel good” strategy. “Do we want [fair trade] to be small and pure or do we want it to be fair trade for all?” he asks in the New York Times. Rice also justifies the break with Fairtrade International, complaining that the latter squanders licensing fees on wasteful overheads, limiting the money flowing back to workers. He believes the fair trade market in the US could double over the next few years, with the extra dollars from its expanded labelling initiative flowing substantially to the poorest of the poor.

Hogwash, say traditionalists. Rick Dickinson, president of Equal Exchange, calls FTUSA a “betrayal”, lambasting Rice for embarking on what he sees as an ego trip.

Sumak Kawsay, a Fairtrade International supporter, writes in a heated blog exchange: “The point isn’t to make it easy for the established status quo of trade regimes and transnational corporations to make the trendy shift to a slightly less unfair international trading environment.”

Halo effect

In fact, over the past decade, the focus of fair trade has gradually shifted from small products to larger corporations that see a market opportunity – fair trade sales are growing – but also a branding bonanza, as the ethical glow throws a halo over their entire product line. For example, Starbucks is a major global buyer of fair trade coffee, but it represents less than 3% of its total coffee purchases.

That shift is problematic to some observers. “The [small scale] fair trade model provided some protections from the unequal conditions of the open market,” says Nicki Lisa Cole, a sociologist and fair trade expert at Pomona College, CA. But welcoming large-scale plantations into the model “re-creates the problematic conditions for small producers that spurred the creation of the model in the first place”. Indeed, Cole and other Fairtrade International supporters say they believe opening up the label to goods produced by corporations will eventually squeeze out smaller co-ops, essentially killing the original fair trade vision.

But the horse is already out of the barn. Most fair trade programmes and similar initiatives around the world, including from Rainforest Alliance, one of the largest of the go-it-alone organisations with more than 250,000 certified producers, already allow such products as bananas, tea and flowers to be grown on larger farms, and they work closely with transnational corporations. While Rainforest Alliance is not strictly a fair trade organisation, adopting a more holistic approach and without a price floor, its ultimate goals are similar. 

In 2005, the UK’s FairTrade Foundation, which is a member of Fairtrade International but appears to have some ideological similarities to FTUSA, put its label on flowers produced in Kenya for corporate retailer Tesco, and then subsequently blessed coffee and Kit Kat biscuits made by Nestlé. Stressing impact over idealism, Harriet Lamb, then CEO of the FairTrade Foundation (and currently CEO of Fairtrade International), told the BBC in 2009 that some 6,000 west African cocoa farmers would receive hundreds of thousands of pounds more each year as a result of the more flexible label.  

“The significant volumes of cocoa that go into making Kit Kat,” she said, “will open whole new possibilities for these farmers, giving them a more sustainable livelihood and the chance to plan for a better future.”

Starbucks, Green Mountain Coffee and Whole Foods in the US have all resisted appeals to drop their affiliation with FTUSA, so the split is now permanent.

A virtuous cycle?

What does this mean for consumers? Bickering aside, these parallel initiatives are improving the lot of workers. Consumers are taking notice and purchases are up. We may be at the beginning of a virtuous cycle, as fair trade initiatives are extended from commodity products such as coffee into the more complex clothing and textile industries, which employ far more workers, amplifying the possibility of materially changing people’s lives.

In other words, the fair trade experiment continues. “I think it will work, I hope it will work,” Rice wrote recently about his Fair Trade for All label expansion scheme. “But if it doesn’t work, we won’t continue it.”

Jon Entine is a senior fellow at the Center for Health & Risk Communication at George Mason University, and founder of the sustainability consultancy ESG MediaMetrics.


Editor's note: Readers should note that this is a slightly amended version of the original piece. A few small factual errors have been corrected.  

Ecolabels  Fairtrade  supply chains 

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