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Is Fair Trade Working?

Is Fair Trade Working?

By Megan Byers

The global free market ensures that every American has a cup of coffee on the way to work. It connects Connecticut to Columbia, Iowa to the Ivory Coast, Tennessee to Thailand. Some believe that the only form of fair trade is free trade, but time and time again we see that free trade isn’t really fair – it’s a nice theory, but the global economy is more complicated than the principles of free trade can accommodate successfully.

In reality, the wealth of the global free market tends to accumulate in wealthier countries at the expense of poor ones. That’s why Fair Trade (FT) came along in the late 1980’s to ensure that the wealth of free trade trickles back toward the people who make all these wonderful things possible.

In a nutshell, Fair Trade makes free trade work for everyone. Right? Well, not everyone agrees.

The Fair Trade Standard

Fair Trade products in the United States are certified by one of two organizations: FLOCERT (the independent company that operates Fairtrade International’s certification system) and Fair Trade USA (formerly TransFair USA).  

Fairtrade International’s (FTI) model focuses on small to medium sized cooperatives and increased participation of producer representation in the governing mechanisms on the FT system. FTI’s model is favored by most other industrialized economies, nonprofits, and faith-based groups. 

Perhaps tellingly, the Fair Trade USA (FTUSA) camp is predominantly populated by multi-billion dollar corporations like Whole Foods, General Mills, Pepsi Beverage Company, and Frito-Lay. FTUSA, now the dominant FT certifier in the United States, broke away from Fairtrade International at the end of 2011 when the two groups disagreed on standards for certification. FTUSA decided to include larger producers and plantations under an initiative called “Fair Trade for All” - a decision that has been simultaneously celebrated for expanding the scope of Fair Trade and lambasted for diluting the movement and violating the principles of transparency and dialogue.

Both organizations require only 20% of ingredients to be certified for a product to carry a FT certification label. But FTI does also require that certified ingredients be used if they are available, even if the supply typically comes domestically from non-certified sources, and the percentage of certified ingredients must be displayed on the packaging for composite products. FTUSA, meanwhile, has no equivalent labeling or sourcing requirements.

Furthermore, producers hold a 50% share in decision-making with FTI, but have virtually no voice with FTUSA. FTI’s governance system has proven to be flexible to the needs of producers, while FTUSA’s “Fair Trade for All” framework fails small farmers, as the promise of improved wages and working conditions under this policy have yet to be realized. Large plantations certified under FTUSA do not provide the same health, safety, and economic benefits available to cooperative members and often employ intimidation tactics against collective bargaining. Furthermore, FTUSA’s low standards have enabled so many certified goods to enter the market that the current supply outpaces demand – this means that few certified goods are sold at true FT prices, which forces small cooperatives to sell their goods for cheap despite having worked hard to achieve a high FT standard. According to the Latin American and Caribbean Network of Small Fair Trade Producers, FTUSA’s certification strategy “threatens the empowerment, development and self-management of small organized producers.”

Does Fair Trade actually improve wages & working conditions for laborers?

Clearly, FT is working for high end retailers in developed countries. When I visited Ten Thousand Villages, one of the world's largest FT retailers and a founding member of the World Fair Trade Organization, I asked one of their managers whether they believe the model is working – their answer was: “yes it is, we’ve been in business since 1946 and have expanded to over 30 countries.” As it turns out, this answer exposes the profound dissonance between the promises FT organizations make and the reality that many laborers experience.

Research across multiple FT commodities in Malawi reveals huge complications for FT laborers with few encouraging developments. Researchers in Ethiopia, meanwhile, found that in 2009 FT cooperatives increased farmers' wages compared to private trade. But by 2014, researchers in Ethiopa and Uganda revealed that FT organizations have made little to no difference in improving the wages and working conditions of manual laborers, and that a high proportion of FT laborers actually earn significantly less than equivalent workers on large plantations.

One thing that researchers do seem to agree on is that there are many challenges to FT as it stands: Globally, FT sales are still limited and thus the benefits to laborers overall have been small and diluted, prices reaching laborers are too low, workers who aren't part of cooperatives are too dependent on their patron organizations, and high audit fees are a significant barrier to entry into the FT market for small cooperatives, FT does not guarantee a better quality product, environmental/natural resource management is almost universally weak, and widening economic gaps within producer countries may lead to social unrest. Finally, research into gender equality and environmental impact is lacking, and currently does not substantiate claims that FT as a whole fosters environmental sustainability or enhances women’s education or status in society.

While these current realities pose serious challenges to the equalization claims of FT, small cooperatives do demonstrate a strong dedication to improving these conditions and appear to be the better at redistributing wealth and benefiting communities than large private entities.

What You Can Do

Trying to disrupt a global economy that systematically screws over rural laborers by buying a few somewhat ethically sourced goods at the supermarket is like trying end agribusiness by patronizing a farmers' market once. Yet, as the FT market grows significantly every year, FT is increasingly entering the public awareness and there is clearly rising demand for fairly traded goods (particularly among Millennials). If you want to see the Fair Trade movement improve as it grows, you as a consumer need to:

  1. Rethink your needs. Do you really need a banana and a cup of coffee every day for breakfast? If you treat goods that cannot be produced locally as a luxury rather than a necessity, you’ll reduce the insatiable demand that creates unfair, unsustainable economies AND have more capital to spend on high quality items for yourself.
  2. Vote with your dollar. Fair Trade currently has serious flaws, but by purchasing fairly traded goods, you are casting your ballot into the direction the free market will take.
  3. Do your research. Not all fair trade certifications are created equal, but most organizations do publish their standards. Take a moment to look up the organization certifying your product and figure out whether their practices are up to snuff with your values.
  4. Contact your Fair Trade certifier. Let them know that you want their labeling to clearly state how much their growers are actually making with your purchase, how often their practices are independently inspected, and whether laborers have access to resources like labor unions, childcare, and paid maternity leave.
  5. Demand more from your representatives.  Strong, comprehensive regulations on the market for internationally traded goods and/or a publicly managed certification system may be the best path to ensure just pay for laborers. Either way, all new entities must possess the teeth to enforce the FT standard and discipline bad actors.

When you have to take a moment to look up a certifying organization’s standards or groan at the price of true fairly traded goods–remember that a little extra work on your part is vital to growing a new economy that supports the communities behind your purchase. 

Megan Byers is a sustainability specialist based in Massachusetts.

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