Behind the Label

As the fair-trade movement evolves, farmers, activists and others fear that the meaning of the term will become corrupted

By Grace Hood (editorial@boulderweekly.com)
Leonardo Bravo and Luis Loja are different from most banana farmers in Ecuador. In contrast to workers on big plantations, many of whom are paid little and are exposed to dangerous pesticides, Bravo and Loja work in a small farmer cooperative works in tandem with the fair-trade movement to ensure they receive fair prices for their goods.

Fair trade is an international movement that directly supports improvements for farmers living in developing countries. Through environmental sustainability work, fair pricing and direct trade, many small farmers like Bravo and Loja are able to grow individual products like bananas, coffee or tea and compete in the global marketplace under better working conditions than they might otherwise experience.

But after more than a decade of activism in the United States, the fair-trade movement is experiencing growing pains. This was perhaps most evident at a recent United Students for Fair Trade (USFT) Conference in Boston, which Bravo and Loja both attended. Previously silent, fair-trade farmers like Bravo and Loja are starting to demand a place at the negotiating table. "We came here to bea presence and a representation of the voice of small-scale farmers, and we want to grow the marketplace," says Loja.

The fair-trade movement has grown exponentially in recent years thanks to popularization and participation by Starbucks, Wal-Mart and other corporate giants, which have filtered millions of dollars into fair-trade certified products.

As fair-trade farmers' voices grow stronger, so do those of mission-based organizations like that of Jonathon Rosenthal, managing director of Oké USA, a company that imports and sells fair-trade bananas in the United States. Managing the growth of the movement while ensuring that it maintains its core principles has proven difficult in recent years, says Rosenthal.  "There's competing models of what we're about," he says. "One of the dangers is that the fair-trade movement could splinter, [with] smaller more idealistic companies splitting off [and] doing something different."

For better or for worse, the fair-trade movement has reached a crossroads. The more voices that join the debate about what "fair trade" means, and what it should be, the more the need arises to have real dialogue, he says. "It's similar to the organics movement. It was about community-based agriculture. Now it's about certified products and larger corporations, so [fair-trade] pioneers are asking, 'How do we reclaim our movement?'" says Rosenthal. "Organics is gone, so there's a danger that fair trade could head in that direction."

Enormous growth
The roots of the U.S. fair-trade movement can be traced back to World War II, when religious organizations developed relationships with World War II refugees and sold their hand-made crafts. Decades later, in 1986, Equal Exchange, the nation's first fair-trade company was founded. First and foremost, Equal Exchange was a company founded on a set of guiding principles, which encouraged social and economic improvements for farmers who earned a pittance in developing countries. In light of the social and political unrest in Nicaragua during the late 1980s, Equal Exchange picked their first product for the U.S. market: fair-trade Nicaraguan coffee.

In those early years, long before "fair trade" was a buzzword uttered by top executives at Starbucks and Dunkin' Donuts, Equal Exchange struggled to sell their concept to customers. According to Rodney North, spokesperson for Equal Exchange, food co-ops across the country were the first to embrace the fair-trade concept. "They're like the midwives to the fair-trade movement—it was the food co-ops that embraced [fair trade] when it came out in the 1980s," he says. "After that, other retailers and companies got involved."

Equal Exchange lucked out during the 1990s when the specialty coffee boom took off in the United States. More individual coffee brewers adopted the fair-trade model and in 1998, TransFair USA, an affiliate of the Fairtrade Labeling Organization (FLO), entered the scene as a certifier of fair-trade products.

Over the past nine years, fair-trade certified products have exploded into the U.S. marketplace. A market that once traded coffee beans has gone on to embrace other commodities such as tea, coca-based products, rice, sugar, vanilla and fresh tropical fruits. And it's only going to get bigger, says Nicole Chettero, spokesperson for TransFair USA. "Already in the last two years you see signature brand Costco fair-trade certified coffee, all espresso at Dunkin' Donuts is fair-trade certified, and it's starting to show up at Sam's Club," she says. "It's going to keep growing within the cooperative grocery store and keep developing, but it's also going to bleed into the mainstream."

The expansion is win-win for everyone, explains Chettero. Fair-trade certified products set a price floor for impoverished farmers, encourage small, democratic farmer cooperatives and offer farmers financing that can be used to invest and grow their businesses. As large manufacturers like Starbucks and Sam's Club, owned by Wal-Mart, take on the fair-trade label, millions of Americans are introduced to fair-trade products. Residents of Mobile and Omaha now have access to fair-trade products; two years ago most probably didn't even know what the term meant.

The beauty of fair-trade product certification is that standards are controlled by one entity—TransFair USA, says Chettero. This stands in direct contrast to the organics movement, which has encountered consumer confusion in recent years as to what constitutes "organic." "It will always be the same, no matter where it shows up. So you always know that the same environmental standards, the same price floors, the same demand for democratic transparency—all of that is the same no matter where it shows up," she says.

In the coming years, Chettero says TransFair is considering the introduction of flowers, garments and wine to its fair-trade product portfolio. Just like the organics movement exploded five years ago and went straight to the heart of middle America, Chettero sees fair trade following in its footsteps. American consumers, she says, are ready. "More and more Americans are not only asking themselves as they walk down the grocery isle, 'Is this good for me,' they're also asking, 'Is this good for others and the environment?'" she says. "We find that we can vote and protest and do all sorts of things, but where we spend our money is one of the most powerful decisions we can make."

Growing pains
With growth comes a challenge. Consumer education is perhaps the biggest obstacle that TransFair USA needs to tackle in the coming years, says Chettero. Many companies claim to offer fair-trade prices or have fair labor practices, but the only way consumers can be sure that a product is fair-trade certified is if TransFair's logo appears on the package, she says.

For handicrafts and textiles, which are not products within TransFair's domain, consumers should look for the seller's membership to the Fair Trade Federation (FTF), a membership-based organization that is founded on peer- and self-verification, says Chettero. Some companies like Equal Exchange, which sell all fair-trade certified products, but are particularly dedicated to the fair-trade movement, also belong to FTF.

The distinction between companies that happen to carry fair-trade certified products and companies that live, breathe and work by the fair-trade principles will be the important element for consumers to grasp in the coming years, says North of Equal Exchange. "One of the growing pains has been as large corporations get involved like Wal-Mart, Starbucks or Nestle, there's concern that they will want the marketing advantage of using the fair-trade seal, but they won't really support the goals of fair trade," he says.

Big corporate involvement in the fair-trade movement is a double-edged sword for mission-based companies like Equal Exchange. On the one hand, corporate giants have purchasing power that dwarfs most companies. If Starbucks purchases a small percentage of their coffee as fair-trade certified, they lift the rest of the market along with them. But then there's the issue of tokenism, says North. "You want them to get on board at a high-bar level, and not at a low-bar level," he says "Unfortunately, we've seen the tokenism, and it's the role of the fair traders and the public to keep pushing for more." For example, when a customer buys a latte at Starbucks, that customer won't receive fair-trade certified coffee unless he or she specifically asks for it. That means that most of the coffee flowing out of Starbucks is not fair-trade certified.

For Trina Tocco, campaigns coordinator at International Labor Rights Fund (ILRF), a nonprofit that educates the public about international labor-rights issues, the fair-trade movement is headed in the same direction as the organics movement: consumer confusion. "It's the exact thing that happened in the organics movement," she says. "As more and more entities came into the mix, it watered down the actual standards and the integrity of the term and the label itself." The more watering down there is, the more consumer confusion that results, she says. "We have to get into the nuances with customers about what all these labels mean and how is one better or worse than the other," she says.

For Chettero, these fair-trade issues direct a somewhat unnecessary level of frustration and ire at TransFair USA, which focuses solely on certifying products—not companies. "We never claim to certify companies. If ever our logo is used in a way that [is] misleading, we always encourage consumers to let us know about it," she says. "When we see it, we always notify companies and advise them to use it in a way that doesn't deceive consumers." From Chettero's perspective, there are other key players that are
working to inject core principles back into the fair-trade movement, like OXFAM USA and United Students for Fair Trade, which organized last weekend's conference. "These are organizations that, when we all work together in concert but focus on our individual roles, we're most effective."

The coffee buzz
In no industry is the fair-trade debate more pronounced than coffee. Currently, fair-trade coffee is the fastest growing segment of the specialty-coffee industry, which is the fastest growing segment of the overall coffee industry. According to TransFair USA, the estimated retail value for fair-trade certified coffee jumped from an estimated $50 million in 2000 to $750 million in 2006.

With large companies carrying fair-trade certified coffee, smaller roasters committed to the fair-trade mission have started to question how the fair-trade movement can maintain its core principles. Some roasters, like Matt Earley, cofounder of Just Coffee in Madison, Wisc., have decided to split from the mainstream.

Once a carrier of the TransFair USA logo, Just Coffee stopped paying dues to TransFair several years ago. Earley and Just Coffee felt that TransFair could have done more to maintain the ideas behind the fair-trade movement. "I feel like TransFair USA and FLO in Bonn, Germany, have taken their eye off the ball on some of the broader goals and [focused] solely on growth," he says. "In doing so they have sold the label too cheap to transnational companies who are part of the problem—and aren't interested in being part of a solution."

And Just Coffee isn't alone. Currently, Just Coffee belongs to Cooperative Coffees, a co-op ownedby about 20 small roasters that have direct, fair-trade relationships with coffee bean farmers. Some roasters in Cooperative Coffees pay to use the TransFair USA label. Others, like Just Coffee, don't.
While Earley doesn't have the fair-trade certified logo on his coffee, his business is the textbook definition of fair-trade practice. Under the auspices of Cooperative Coffees, Just Coffee offers prefinancing to coffee bean farmers, which ensures that farmers won't have a cash shortage during the farming season. Just Coffee engages in long-term partnerships, meaning that it works with the same farmers every year for economic stability. It visits its farmers regularly throughout the year and encourages ecologically sound practices. Over the years, the large corporations that carry fair-trade certified coffee have diluted these principles, says Earley. Participation in Cooperative Coffees enables Just Coffee to reengage these core beliefs, he says.

Bill Harris, president of Cooperative Coffees, adds that not only have partnerships between buyers and producers been reduced in the fair-trade movement, they're no longer assumed to be direct.
"As soon as the buyer and the seller do not know each other, a completely different relationship exists. Traditional fair-trade relationships required a personal relationship. Without this, the buyer puts price or supply pressure on the middle person, who often must transfer this pressure to the seller," he says.
In contrast to bigger companies that deal in fair trade, Cooperative Coffees also offers a higher price than the fair-trade certified floor price, about 20 cents more, says Harris. The minimum floor price was set in 1989 and adjusted in the '90s. "We raised the minimum last year, and we're hoping to raise it this year," he says. According to Chettero, the wheels are in motion for changing the fair-trade certified price.
"It's moving forward. It was not denied so much as they have to go back to the drawing board," she says. "There are wheels in place, and a price increase is very likely, but when is not clear." In terms of refinancing, Chettero says that it's available to farmers, just not always supplied directly from the importer. "It works the same. It's no more of a financial burden to work with an organization as opposed to working with a direct importer," she says.

Encouraging big corporations to establish long-term relationships will take some time, she says, but the learning curve will be worth it. "I would argue that in trying to get more mainstream importers and
roasters, we're trying to introduce the concept of a long-term trade relationship," she says. "If we can introduce that at the mainstream level, that's a good thing."

Ultimately, no one questions whether exposure of fair-trade products to middle America is a good thing, says Harris. However, he does question how lax those corporations are at following fair-trade principles.
"Of course it is healthy to have fair-trade coffee available in Nebraska, as long as the standards for fair-trade claims have been followed and are clearly communicated at all levels," he says. "Traditionally, fair trade meant disadvantaged farmers, long-term relationships, prefinancing for the crop, fair price, direct relationship at a minimum. Are all these tenets represented in the Sam's Club product?"

Transparent process

Here in Boulder, coffee retailer Allan Kupczak is struggling with a different fair-trade problem. Kupczak is owner of Veloce Coffee, a roaster that buys 100 percent TransFair fair-trade certified coffee beans.
Kupczak wants to distinguish his coffee business as 100 percent fair trade, as opposed to companies that deal with a percentage of fair trade, but finds that consumers aren't that educated on the issue and don't know what questions to ask.

"There's no amount or percentage for your company to be a fair-trade certified company," he says. "Whenever it's in a product that contains the logo, it should be 100 percent. Companies might have one or two products of their line that are 100 percent, or maybe one or two [products] have 20 percent. They'll use their logo with all their marketing, saying they're a fair-trade company." Sometimes it's corporate giants like Starbucks, but other times it's other small, local roasters that make ambiguous claims about their commitment to fair trade, he says.

Kupczak hears roasters claim that they pay a fair-trade price, they don't want to join TransFair and use its logo because they "don't think they're doing anything and don't know where the money goes."
"Who are we to believe?" he says. "It's a nonprofit. You can check their website." In fact, there is growing concern from roasters and the fair-trade community about TransFair's certification process, which confirms that companies are paying fair-trade prices. According to some roasters, like Earley, it could be doing more to regulate the industry.

A shining example in the fair-trade world is TransFair Canada, which recently took steps to beef up its auditing system. According to TransFair Canada Executive Director Rob Clarke, there were more than 450,000 kilograms of coffee sold last year that had no TransFair certification label. Not paying licensing fees is an issue because that's what supports the farmers, says Clarke. While Canadian companies claim that farmers are being compensated, the issue for Clarke is creating a paper trail for the overall industry.

"I call it half pregnant. Individuals in the North are saying, 'I pay a higher price, and it's coming from a fair-trade producer, so that's my definition of what fair trade is,'" he says. If more U.S. fair-trade companies leave the TransFair label, it will complicate how the U.S. fair-trade market can track products and project growth. According to Chettero, TransFair USA performs a double-blind audit, checking both the farmer's and the manufacturer's books to ensure that fair-trade farmers are getting paid the right price. However, Earley and others question just how transparent TransFair USA's audit is. They may very well perform double-blind audits on all companies, but the question of "how often" and "when" those audits are performed comes up often for large multinational companies.

There's room for improvement in the United States, say Earley and others. One possible suggestion would be to follow TransFair Canada's lead, which plans to spin off its auditing and certification arm to a separate, third-party group. This is important, says Clarke, because there's a conflict of interest when one organization markets to individual companies, and then certifies them.

"In theory, I think I'm a good salesman," he says. "If I have a certification guy come to me, and I've been working on trying to get a major grocer to come on board, the grocer says, 'I don't want to do the audit once a year, I want to do it once every three years.' In my role, I could turn around and say to my certification guy, 'You're only going to audit them once every three years.'"

TransFair USA isn't considering, nor does it see a need, for a third-party audit system, says Chettero. While some information dealing with supply-chain issues is kept confidential, most information about businesses' fair-trade practices is available on www.transfairusa.org. Any additional information can be requested through TransFair USA, she says. TransFair USA may happen to have its marketing arm and auditing arm under one roof, but that's where the similarities stop, she says.

"We are separate departments. Our core charge is to make sure that our auditing is as stringent as possible—that's the bedrock of what we do," she says. "We would never sacrifice what we do."

Shaping the movement
For Earley, who recently returned from the USFT conference in Boston, it's becoming more and more clear where the fair-trade movement needs to go. For years, TransFair USA, and its affiliate FLO, filled the power vacuum during record growth in the industry.

"We in the fair-trade movement basically allowed them to do that, trusting that they would make the best decisions for the movement," he says. "A lot of us are now realizing it wasn't the best decision to make—it was sort of made by default." Earley says that in the coming years, grassroots organizations in the movement will become increasingly important in filling the power vacuum. "Much like producer groups, we need to organize groups, realizing what our power is in the movement, and open up the certification aspect to a more democratic process," he says. "It's very undemocratic and very untransparent—there's no accountability."

In addition to more transparent auditing, Earley and others in the movement want to see TransFair USA incorporate voices from fair-trade farmers and representatives from grassroots organizations into TransFair's board of directors. "TransFair USA is run like corporation," he says. "It has CEO, [and] it has a board appointed by the CEO. It has no democratic accountability." TransFair USA is open to incorporating more diverse voices on its board, says Cheterro. Ultimately, certification of fair-trade products
should be a starting point for the entire movement, she says. Much like the organics movement, organic certification was the beginning. From there, mission-based organizations began discussing how far the produce traveled from origin, and whether it was grown on a small- or large-scale farm.
"What would the organics movement be today without certification?" she says. "In the same way organics has to have the certification movement and the notion of 'beyond organics,' fair trade has to have fair-trade certification, but it's a starting point," she says. "Beyond that you have to have a discussion about fair trade. It can't be either/or. These are aspects of the whole solution."

In order to prevent the growing schisms in the movement, Joe Kurnow, national coordinator for USFT, says there needs to be "deep listening" in the coming years. "Whether that's listening to producer cooperatives or listening to the grassroots," says Kurnow. "I think if there's not a real commitment to communication and being responsible, then the labels may lose legitimacy with their core supporters."

While deep listening is important, all parties in the fair-trade movement are finding themselves discussing uncomfortable topics—particularly when it comes to class, race and gender. What does it mean for a movement based on democratic principles and equality to exclude farmers and other stakeholders from its board of directors? How can the mainstream movement explain maintaining the same floor price for fair-trade certified coffee for more than a decade? And how loudly do farmers like Bravo and Loja have to talk before the rest of the movement will listen?
There are a lot more questions facing the fair-trade movement than answers.
For Earley and others, perhaps the best piece of advice for the movement comes from asking even more questions. How have other social movements evolved, and why did certain groups splinter? What happened to the organics industry? Why did certain groups have to split from mainstream organics to maintain their mission?
Making mistakes in fair trade is one thing, says Earley. What will be crucial in the coming years is learning from them. "TransFair is a little bit behind the eight-ball, but we see good people who are going to recognize that this isn't an 'if,' but a 'when' and a 'how,'" says Earley. "We all have to take responsibility for what's going on—we have responsibility as stakeholders to shape this movement."

How do I know if I'm buying fair trade?
It's a complicated marketplace these days. Going to the grocery store used to mean buying the foods that you wanted to eat. Now it means deciphering words like "all natural," "organic" and "fair trade." According to Nicole Chettero, spokesperson for TransFair USA, all fair-trade certified products should have the black and white TransFair logo on them, or "bucket boy," as TransFair folks lovingly call the logo. Current products that are fair-trade certified include coffee, tea, coca-based products, rice, sugar, vanilla and fresh tropical fruits—like bananas, mangos and pineapples.

There are companies that sell textiles and handicrafts—items that can't be fair-trade certified. On these items, look for the Fair Trade Federation logo, says Chettero. Just like everything there are ifs and buts. Some companies make claims about paying "fair trade prices" or having "sweatshop-free labor."
As consumers, it's important to ask questions about what the labels really mean, says Trina Tocco, campaigns coordinator at International Labor Rights Fund (ILRF).

"I've gone to my local coffee shop and they have 'fair trade' all over the coffee beans they're selling, but it won't have the TransFair certification. When I get into a back and forth, I ask 'how do you know,' and they say, 'Well, they told us it was.' It's easy if you ask one or two basic questions—the store should be able to prove it," she says. "If there's any ambiguity then you as a consumer should do further research."
Thanks to search engines like Google, it isn't that challenging these days to research companies. TLRF recently released a report card on manufacturers in the chocolate industry and regularly reports on the flower and garment industry. TransFair and the Fair Trade Federation have websites that list members and guidelines that their organizations follow.

When in doubt, ask questions, says Tocco. "It's by consumers asking questions that companies and retailers realize that the demand exists, and that will continue to allow for products to be available," she says. "Ask questions, and hopefully you'll get answers. If you don't get answers, then it also tells you something."

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