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“Is the goal of fair trade to have every roaster use five percent fair trade coffee, thereby dooming the other 95 percent of farmers to deepening debt? Or, is the goal to transform the world coffee market into a more just system of trade?” Dean Cycon Founder, Dean’s Beans

© International Fair Trade AssociationWhile the fair trade movement has grown into a global operation with an estimated $1 billion in retail sales in 2004—and many of the small farmers and producers involved have seen marked improvements in their lives—its worldwide impact has remained small. Nonetheless, it is a growing industry and, as such, many leaders in the fair trade movement are now struggling with the way forward: how to extend the reach of the industry without selling out its founding principles of working closely with small producers to ensure they continue to reap the benefits of trade.

Much of the recent growth in the global fair trade market can be attributed to the institution of a certification system intended to clarify for consumers that, in the production of goods, certain ethical guidelines were met and producers were paid a fair price for their work. Certification was also seen as a way to grow the industry—at a time when leaders in the fair trade movement recognized that more than fifty years of solidarity-based trade had yielded profound connections, but that both sales volume and international development impacts remained limited. Thus, certification offered a way to permit wider participation and to mainstream the industry.

Debates over the certification system, however, have begun to highlight differing opinions among fair trade advocates about the future of fair trade, with some poor country producers even beginning to forego international certification while continuing to sell through fair trade channels. Perhaps the greatest danger for producers is that all of this threatens to muddy the waters for already confused consumers—many of whom are just finding out that fair trade even exists. Additionally, the large corporations that dominate traditional global markets are now gaining increasing shares of the fair trade market—threatening to dominate the very industry that developed in opposition to their economic hegemony and raising serious questions about who is ultimately deriving the most benefit from the fair trade certification process.

Establishing Fair Trade Labels

Once conceptualized in the late 1980s, the initiative to certify fair trade products grew quickly—with Northern countries forming national fair trade labeling organizations and Southern producers accessing these networks. In 1997, these organizations saw the need for more uniform global standards and formed Fairtrade Labeling Organizations International (FLO). FLO has become the main worldwide body certifying that products meet fair trade principles and pledges that its process is “transparent, independent, [and] competent.” Certification standards vary depending on the crop and whether the producer is a large farm or a cooperative, but they share minimum guidelines for fair treatment of producers and social and economic development. There are now some twenty national affiliates under the FLO umbrella, including TransFair USA and the Fairtrade Foundation U.K.

National divisions charge their licensees—the sellers of fair trade products—a fee for using the Fairtrade Certified™ label. Though initially free, producers are beginning to also pay a fee for certification, a change that has imposed an extra financial burden on many small farmers.

The expanding list of Fairtrade Certified™ products includes coffee, cocoa, tea, fruits, wine, sugar, honey, bananas, and rice. Coffee was among the first products certified and still accounts for a large portion of retail sales. Even for the industry’s most established product, however, fair trade has only captured 1.8 percent of the U.S. coffee market and 4.1 percent of the specialty coffee market, according to TransFair USA. As low international coffee prices have inspired many farmers and roasters to seek fair trade certification, supply is currently outpacing demand, although both are growing.

As the fair trade industry grows, certification labels have become increasingly valuable to both companies and organizations. The FLO certification will tell a consumer whether a given product is fair trade or not, but it does not help consumers distinguish between companies that are entirely committed to fair trade and those that do some fair trade business, yet might be using the logo to imply that they are more fair-trade friendly than they are. Compare Equal Exchange, for example, which is a 100-percent fair trade coffee company, with Green Mountain Coffee Roasters, only about 20 percent of whose coffee products are fair trade.

To clarify these differences, the Fair Trade Federation has developed a label that signifies that 100 percent of a company’s products are fair trade. Another group, the International Fair Trade Association, certifies the organizations that advocate for fair trade and has developed its own distinct label. It sets apart mission-driven groups whose core activity is promoting fair trade from commercial businesses that have jumped into the growing industry.

Big Companies into the Fray

The entrance of large companies into the fair trade field has sparked even more debate. Where coffee is concerned, for example, companies like Starbucks, Nestlé, Proctor & Gamble, Dunkin’ Donuts, and Walmart’s Sam’s Club are now all distributing fair trade lines of coffee. Some assert that this demonstrates the success of fair trade products, proving that consumers are more willing than ever to make ethical choices about their purchases. In contrast, critics argue that the FLO labeling organizations are sidling up to multinational corporations at the expense of the movement’s founding principles while the corporations themselves are simply using the fair trade image for their own marketing purposes.

In September, more than 650 activists, civil society organizations, 100-percent fair trade businesses, and others tackled this and many other issues at the Fair Trade Futures Conference in Chicago. While some argued that it is critical to move ahead—even if only incrementally—with the largest corporate actors that dominate the commodities markets, others believe it has become increasingly difficult for fair trade to remain true to its original ideals. Many have questioned, for example, if empowerment of local communities—and democratic decision-making processes—can really occur when large corporations are involved. Others in the industry have pointed out that, as they hold a majority of the world’s economic power, it would be a mistake to leave multinational corporations out of the equation.

Global Envision, an advocacy division of the humanitarian aid organization Mercy Corps, reported that “some sellers [at the conference] welcomed the increase in fair trade sales. They hoped to ride on the coattails of what they expect to be an expensive marketing campaign launched by corporate coffee to promote their new ‘socially conscious’ line. Others who consider themselves purists decided to break away from TransFair USA and a certification process they no longer believe marks an alternative to traditional trade.”

© Fairtrade Labeling Organizations International 2004-2005 Annual ReportSome small companies, and a few big corporations, now self-certify their fair labor practices rather than going through the international certification bodies. As writer and social justice advocate Carol Estes explains in the newspaper of the Puget Consumers Co- Op, “these self-certification programs can reflect serious commitment to the fair treatment of workers and sustainable growing methods, but they are open to criticism that no independent certifier is validating the claims and could be simply a marketing tool.” Competing labels and claims often make the issue of fair trade that much harder for busy consumers to understand.

Common Efforts

There is no question that the market for fair trade products is growing, but there is still not sufficient demand to meet supply and many fair trade farmers continue to sell a significant portion of their crops through conventional channels. Additionally, there is still work to do in measuring the impacts on—and ensuring the full participation of—indigenous producers, who are one of the most active—and often marginalized—subgroups within the fair trade movement. (See article on “The Fair Trade Movement.”) These are remaining challenges upon which many in the fair trade business can agree.

But, there is good news too for fair trade advocates. Fair trade has, for example, served as a starting point for further innovations to support the farmers and growers at the beginning of the global supply chain. In addition to fair trade between the North and the South, many local, regional, and domestic initiatives have emerged to create alternative markets closer to home. In Mexico, for example, a number of business-savvy fair trade cooperative unions, certifiers, and other investors have joined together to launch Comercio Justo—the first domestic fair trade initiative in a country that primarily exports fair trade products. More such domestic initiatives may spread throughout the global South.

Educating consumers about fair trade has brought its own rewards as well, explains Laura Raynolds at the Fair Trade Research Group at Colorado State University (who is also the expert reviewer for this edition of Perspectives). Raynolds asserts that the direct advocacy behind fair trade—in particular highlighting examples of programs that are working—is potentially as important in the long run as the direct benefits to those producers currently involved in the fair trade movement.

In the United States, most consumers have traditionally chosen products without taking into account where they came from, or why some are cheaper than others. Greater consumer awareness about sweatshops, poor labor conditions, rural poverty in developing countries, and unfair competition faced by small farmers has led to a movement for more ethical buying choices. Regardless of differing opinions about where the fair trade market should go, that is certainly a success story.

Editor’s Note: Additional thanks to Christopher Bacon, Department of Environmental Studies, University of California, Santa Cruz, for his help with this article.