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Some Insights Into What FTUSA Leaving FLO Means for Producers and the Movement-Part 1 with FTUSA

On October 12, FTRN produced Webinar 117: A Community Discussion of What FTUSA Leaving FLO Means for Producers and the Movement-Part 1 with FTUSA.  The panelist was Paul Rice, CEO of Fair Trade USA, and moderator was Jeff Goldman, Executive Director of Fair Trade Resource Network. Part 2 with FLO, and Part 3 with both FTUSA and FLO, are expected as webinars in coming weeks. You can download the 50-min recording of webinar 117, or register for upcoming webinars, at FTRN webinars.

Some of the speakers’ main points from the webinar include comments below.

Jeff:

Fair Trade seems to be in a once in 25-year moment to reaffirm, or redirect, where Fair Trade is going.

Paul:

Diversity of models in Fair Trade is a strength of the movement.

New “Fair Trade Certified” product label will be rolled out in coming months.

Producers and businesses now have more choice in certifications due to FTUSA splitting from FI.

The main change to FTUSA standards, for now, is in coffee, to allow hired labor and unorganized farmers to participate in the system. There are no changes at present in environmental standards from FI. Some producers have complained that the costs of compliance with environmental standards exceed the financial benefits, so FTUSA will consider how to make compliance more cost-effective for producers.

I’m not sure if FTUSA will accept IMO “Fair for Life” certification for producers, but I am talking again tomorrow with the CEO of IMO to explore things. I’m actually talking to others too to explore how we can move the field forward.

Participant question:

Much of the discomfort about your departure from FLO surrounds the unilateral nature of the decision.  Producer networks such as CLAC (Latin America producers), Fairtrade Africa, Network of Asian Producers, and WFTO have all come out publically against it.  Will you publish who among your stakeholders you consulted with prior to the decision, and what stakeholders will transparently help you set the new course for unorganized farmers, domestic farmworkers, etc.  As you go forward, with or without stakeholders, how will you be accountable to the movement (NGOs, FT Towns, etc) who promote your FTUSA brand?

Paul:

We seek input from multiple viewpoints through Advisory Committees on issues, initiatives or crops; through our Board of Directors; and, through our relationships across various stakeholders. I can’t publish a list of all the people we spoke to, that wouldn’t be appropriate. I met with leaders from all 3 producer networks, some in the elected structure, but with more leaders outside those elected structures. We also met with those without a formal voice, like farmworkers. About 20-30 producer coops sell the majority of volume into the US, and we’ve reached out to almost 100 coop leaders in the past few weeks.

The decision to leave FI was not so much a political decision, but a business decision. The level of service from FI didn’t justify the cost, financially as well as through the constraints of membership.

Participant question:

What evidence, or rationale, do you have that hired labor needs Fair Trade USA to generate benefits for them, when smallholders in coops may not have enough benefits yet?

Paul:

In many cases smallholders and hired laborers are from the same families, the same communities. IMO works with farms of all sizes, organics or Rainforest Alliance work with estates of hired labor, and FLO works with hired labor in certain products. When Fair Trade bananas opened to estates, Fair Trade sales increased for coops too. Many coffee businesses already source from both coops and estates. We’re not going to flood the market by opening supply from 100 estates, we’re going to do 5-10 estates in 1-2 countries in the first year. Then we’ll build on what we learn from the data, publically available, of sales from coops v. sales from estates. If coop sales don’t increase, we’ll have to adjust course.

Participant question:

To use the “Fair Trade Certified” label on a multi-ingredient product, will FTUSA require that all commercially available ingredients that could be FTC, are FTC, as FLO 2.2 requires?

Paul:

No, we disagree with that approach, and FTUSA has always had a different approach to ingredients. US market conditions are different from those in Europe. About 8-9 years ago the chocolate companies we were hoping to partner with said that they wouldn’t do both FTC cocoa and sugar, because the sugar quota and tariff system in the US market made sourcing sugar too difficult and expensive. Now, as supply is growing slowly, those companies are sourcing some FTC sugar too.

Participant question:

Could the product label distinguish between 50-100% ingredients being FTC, and minority % being FTC? Could the label distinguish between ingredients produced by coops and ingredients produced by estates/plantations?

Paul:

Labels can only pack so much information into them before they break down. Transparency will be available on the website with information about % of ingredients that are Fair Trade. We’ve heard many proposals about using color coding, number of stars, etc., to distinguish organic from not, 100% Fair Trade companies from not, coops or hired labor, and such information is better communicated by companies on their packaging. Most companies don’t think their customers care for that level of detail.

Participant question:

How are you incentivizing companies to climb the ladder and increase their Fair Trade commitment?

Paul:

Historically, many in the movement saw Fair Trade a partnership between producers and consumers, and businesses were a necessary evil. We see the business community as an equal partner, and work with them over time. Our experience with Ben & Jerry’s validates our approach, as we were patient at first, not making unreasonable demands like converting all their sugar to FTC. Then the company commited fully to Fair Trade after 5-6 years.

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