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Jeff
For years the Fair Trade movement, and consumers, have grappled with issues around labels, certification systems, and credibility. This summer such debate is heating up, especially in Europe, where most international certification organizations are based. The following recent developments evidence mounting attention, concern and opportunities related to label issues:
Equal Exchange, the largest Fair Trade organization in N. America, recently switched its label and certification system to IMO’s Fair for Life from FLO/TransFair USA’s Fair Trade Certified. Equal says that one reason is to submit its own company to the comparable scrutiny of producer organizations. That provides customers with an extra level of information and confidence about the final seller as well.
Ecocert, based in Europe like FLO and IMO, launched a new certification and label that the organization describes as Fair Trade, solidarity and responsibility. FTRN has not yet confirmed that other Fair Trade Organizations recognize the new label, Ecocert ESR, as Fair Trade. In Belgium, one company, Ethiquable, has launched its first Ecocert ESR certified products: potato crisps from Peru, as well as a chocolate bar from Ecuador. Further details in Trade for Development Centre article.
Earlier this year, the World Fair Trade Organization certified its first member to pilot WFTO’s new certification system for handicrafts, called SFTMS, and use the interim label “Certified Fair Trade.” Details at WFTO.
During much of 2010, TransFair USA has been developing a pilot apparel certification, to benefit cotton farmers and sewing workers. The Fair Trade Certified label would be available for the first time on apparel. Details at TransFair USA.
FLO has begun a year-long process revamping its framework for Fair Trade Certified standards. Expert comment is now being welcomed at FLO.
In France, the world’s first government authority on Fair Trade has been established. The official agency, the National Fair Trade Commission (CNCE), lends legal and statutory support to Fair Trade. It appears to recognize at least 3 Fair Trade identification systems: FLO; Ecocert; Artisans du Monde. Further details in Trade for Development Centre article.
On June 10-11 in the Netherlands, key organizations debated the future role of eco-labels, the evolution of organic and Fair Trade certification, carbon & water footprints, ethical sourcing, sustainable packaging, retailer strategies and ethical consumer behavior. Details at Sustainable Foods Summit.
At Fair Trade Futures, expected to be the largest Fair Trade conference in N. American history, one of the key debates is titled “Is Certification Compatible with Fair Trade?” Other workshops and debates are likely to focus on labels and certifications as well during the September 10-12 conference outside Boston. Details at Fair Trade Futures.
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Jeff
by Jeff Goldman
The latest round of wider discussion about the state of Fair Trade has been initiated by one of the pioneers of the Fair Trade Certified system, Frans Van der Hoff . He recently declared a “Crisis in Fair Trade”, and began proposing steps to improve the system for advancing social justice. Check it out, and comment if you can, at:
Blog at Equal Exchange
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Jeff
 by Burton Bollag
The most recent data show that the sale of Fair Trade Certified products continued growing strongly last year—an expansion that has been slowed but by no means halted by the current economic recession. This both heartens Fair Trade advocates and suggests future growth in the amounts and range of products that consumers are willing to pay more for in the name of social justice.
While the limits to that expansion are hard to predict, several indices–sales data, an international survey of consumer opinions, and the recent large-scale involvement of major corporate retailers—suggest the phenomenon has considerably further to go before exhausting its potential for growth.
In 2008, $1.1 billion of Fair Trade products were sold in the United States. That compares to considerably less than $100 million in 1996, the year TransFair USA was founded as the only independent certifier of Fair Trade products sold in the country.
Despite the onset of the deepest economic recession in two generations, US sales in 2008 grew by 10 percent over the previous year. This should “put to rest any thought that Fair Trade Certified is a boom-time luxury,” said Paul Rice, TransFair’s chief executive, in a written statement. Sales are expected to expand further this year.
Globally, the sale of Fair Trade products grew 22 percent in 2008 to $4.3 billion.
In April the results of the first international survey of consumers’ attitudes on the subject were released. The survey, commissioned by Fairtrade Labelling Organizations International (FLO), the organization that coordinates labelling at an international level from its headquarters in Bonn, Germany, questioned 1,000 randomly selected consumers in each of 15 rich countries.
Opinions in the US and the other countries were remarkably similar. Over half of those questioned said they have rewarded companies for being social responsible. 57 percent of Americans (and 60 percent of all respondents from all 15 countries) said they were willing to pay at least five percent more for Fair Trade Certified products.
Yet the reduced growth of Fair Trade sales in the United States in 2008—the 10 percent hike was smaller than in previous years—shows the movement is vulnerable to larger economic trends. Shopping in the produce section of a Safeway supermarket in Washington DC one recent afternoon, Carolyn Stouamire, a 52-year old financial assistant, reflected the ambivalence that many people may feel. She said she knew about Fair Trade, and could accept slightly higher prices for bananas or other products if the premium goes to community development projects for small farmers growing the food.
But she added, “with the economy going the way it is, it’s hard to pay more.”
Still, merchants have felt a strong enough demand among their customers that more and more major retailers are adopting or expanding Fair Trade lines. “The entire spectrum of retail stores … are charging ahead to try to offer Fair Trade products,” says Michael E. Conroy, an economist and senior Fair Trade organizer.
“Both Whole Foods and Walmart are pressuring TransFair USA to expand the range of products with Fair Trade certification,” says Conroy. He adds that FLO recently responded by relaxing its rules to allow TransFair USA to set temporary standards for new products.
Companies often like to paint their adoption of Fair Trade products as a sign of corporate social responsibility. But Susan Koehler, Senior Manager of corporate communications at Sam’s Club, the membership-only retail warehouse club of Walmart, adds that carrying Fair Trade products before competitors do can bring a marketing advantage. The move is “an opportunity for us to be different in the market place.”
Sam’s Club began carrying Fair Trade coffee in 2006, two years before Walmart did. Sam’s Club officials explain their earlier adoption of the item by the fact that the better-educated, more affluent customers they cater to tend to be more interested in Fair Trade.
Since starting with coffee, Sam’s Club has expanded it selection of Fair Trade products to about a dozen items including bananas and wine—a wider selection than is yet available at Walmart. Sam’s Club officials say they expect to expand both the volume and selection further, but add they have no way of knowing how far that expansion will go.
Shawn Baldwin, Sam’s Club vice president of fresh merchandising, says that some of his colleagues predict customer demand for the Fair Trade line may go the way of demand for organically-produced foods. Five years ago, he says, demand for organic items was growing strongly. But “now it is slowing down.”
Many Fair Trade products are also certified Organic, and could therefore satisfy demand for both lines. Still, says Baldwin, demand can be fickle. “I guess the tide could go up and down, depending of what customers ask for.”
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Jeff
 by Jeff Goldman
There has been active debate for years about how to set minimum prices for Fair Trade Certified products, such as coffee, the dominant FT commodity. A recent article in Time magazine’s October 5 issue, titled “What Price for Good Coffee? Fair Trade practices were created to help small farmers. But they may have hit their limits”, is the latest example of high profile concern.
The current worldwide Fair Trade Certified price of nonorganic coffee, as set by the Fairtrade Labelling Organization (FLO), is $1.35/lb., or 9 cents higher than the minimum price for the past few years. The current price is about 10% higher than the global market price.
Farmer advocates have urged FLO to raise prices to cover costs of production, or to a level that enables farmers to escape subsistence. The latter price would be around $2, according to researcher Christopher Bacon.
FLO and TransFair USA counter that a higher price would serve much fewer farmers, perhaps tens of thousands instead of millions as demand decreased. The labeling initiatives prefer to increase market share for more farmers rather than the returns for each farmer. Consumers, especially in an economic downturn, would be hesitant to pay even more for Fair Trade Certified products.
So, what minimum price strategies seem best to you for the short- and long-term for advancing Fair Trade Certified’s benefits to vulnerable farmers?
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Jeff
 (Artisans Amina Rajab and Dehiya Farash in Uganda - photo courtesy of SERRV )
by Jeff Goldman
With a main goal of empowering vulnerable artisans and farmers, and improving their quality of lives, Fair Trade has struggled for decades with how to include producers in movement planning. While the will may be strong for many Fair Trade leaders and organizations, the implementation is quite challenging. Barriers often include costly logistics (communications, visas), low capacity (skills and knowledge) and competing interests.
Some FT organizations have experimented with types of solutions. These have included producer ownership (Divine Chocolate), board representation (Fairtrade Labeling Organization), tours to network with industrialized country FT leaders (Green America and Partners for Just Trade), and other involvement. However, lots of Fair Traders argue this hasn’t been enough.
So, please suggest any creative and practical ways to include producers in appropriate levels of FT movement planning.
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Jeff
by Jeff Goldman
 For the most part, one Fair Trade product label is prominent in N. America, the one licensed by TransFair USA. Anytime we simplify complex issues into one brief message, lots of information gets lost in translation. In Fair Trade, the lost information includes the extent of a company’s commitment to Fair Trade. For example, Equal Exchange sells close to 100% of its products as FT, whereas Dunkin’ Donuts something less than 5%. Other lost information includes what exact standards of FT are practiced in producing the labeled good. For example, members of the Fair Trade Federation are required to be open to public accountability, whereas those using the Fair Trade Certified label are not. Would consumers care enough to get this kind of information from a product or company label or mark?
Some people would argue that it gets too confusing, in an already crowded market of socially responsible labels. Others would argue that any group of labels would still leave out other important information. Another group would say that there are just too many ways to measure the benefits of Fair Trade to neatly identify high, medium and lower standards. Any gold standard, and regular standard, would have lots of different definitions.
So, how do we balance the benefits of distinguishing between good, better and best with the desire for efficiency, simplicity and practicality of Fair Trade choices and labels?
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Jeff
As the cost of producing bananas rises, many farmers in Dominica are turning away from Fair Trade as they are failing to earn high enough profits. Last year, there were over six hundred farmers selling Fair Trade bananas, but now that number has decreased to three hundred and fifty farmers. Many feel the drop in farmers is the result of the global market and not the fault of the National Fairtrade Organization. The farmers are in need of greater support and assistance to reduce costs and increase prices. See the full story in Dominica News Online.
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Jeff
by Jeff Goldman
There is often debate about whether Fair Trade is effective, fair, and the best way to empower vulnerable farmers and artisans. Others argue whether it helps environmental sustainability, or reduces demand for producers’ products. While such debate is crucial, all sides would have stronger arguments if their cases were made with comprehensive, robust research and data. Observers are often criticizing one another for having opinions based on theory without evidence, conclusions drawn from anecdotes and not thorough study, and narrow case studies. So, as Fair Trade continues growing substantially, who should bring the proof?
We have seen glimpses of parts of the answers. Several academics have written articles, many listed in the online catalog Fair Trade Institute. A few people have written books on specific situations, like Daniel Jaffee’s Brewing Justice about coffee farmers in Oaxaca, Mexico. The largest labeling organizations, such as FLO and TransFair USA, publish statistics of how much money has gone to Fair Trade farmers. Many FT vendors, like Ten Thousand Villages USA, have published stories of how FT has helped their suppliers.
However, all of these glimpses haven’t settled many disputes. Last year we saw point and counterpoint in Europe from the Adam Smith Institute and Alastair Smith, author of a publication funded by the Centre for Business Relationships, Accountability, Sustainability and Society. Just last month several Fair Trade advocates wrote letters disagreeing with Jacob Levin’s article in an Indiana Univesity student publication, The Ryder.
Options to carry out the research seem to include Fair Trade businesses, academics, think tanks, labeling or certification organizations, international development agencies, government economists and others. Since Fair Trade means considerably different things to different people, it would be difficult to study all important definitions and methods. However, a lot of progress could come from thorough research into one or two widely accepted versions.
In all versions, the stated beneficiaries of FT are the vulnernable farmers and artisans, who certainly can’t be expected to pay for such research. As for many initiatives that are created to benefit marginalized people, charitable foundations and government agencies, in partnership with interest groups (FT associations, free market outfits), should fund academics to do such work. If successful, these stakeholders would save us future energy debating the merits of FT, so we can invest it in whatever ways best empower those with few opportunities. If this suggestion is good, where have they been?
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Jeff
10 leading FT organizations in N. America are organizing a Fair Trade Futures conference, scheduled for September 10-12, 2010, that will bring together at least 751 current and prospective Fair Trade entrepreneurs, students, academics, interested non-governmental organizations, media representatives, producers, consumers, and activists. The first such conference, hosted in Chicago in 2005, attracted 750 attendees.
The aims of the upcoming meeting are to have participants:
- Acquire and build their knowledge base as appropriate to their various roles (i.e. consumer, entrepreneur, student, development professional, etc.)
- Leave with a clear and inspired understanding of how they can implement and increase their commitment to-and perhaps their passion for– to Fair Trade
- Pledge to fulfill that commitment to change in large and small ways in their communities.
The organizers have contracted the Fair Trade Federation, and FTRN, to plan and host the event. Organizers will announce further details soon. For now, save the date: September 10-12, 2010!
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Jeff
In late July, EE FT bananas came to store shelves, trying to compete with 5 companies that sell 96% of the non-FT bananas bought in the U.S. EE became part owner of the first FT banana company in the United States, Oké USA. EE wanted to offer consumers a choice within FT besides Dole’s FT certified brand. See more reasons at Equal Exchange’s blog.
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