What is FairTrade.
And Is It All Good?
Let’s talk about certifications and programs for ethical and transparent supply chains and production. Although there are many types we’re going to focus on FairTrade and its umbrella company, FairTrade Labelling Organizations International (FLO).
What is FairTrade?
FairTrade is a nonprofit that’s dedicated to vastly improving the working and living conditions of families in developing countries.* FairTrade’s approach enables farmers and workers to have more control over their lives and decide how to invest in their future. For farmers and workers this means, minimum prices of their products, the FairTrade Premium, decent working conditions, regulations and advanced credit.* The FairTrade Premium is an extra sum of money paid on top of the selling price to invest in businesses or community projects of their choice.*
What are the flaws of FLO and FairTrade?
FairTrade has led to an increasing focus on fair trade, equal pay and protection of workers throughout the chain, as well as increased pressure on large companies to be transparent about their supply chains and responsible business practices.***** This led to other certifications and programs forming to focus on ethical and fair supply chains, such as C.A.F.E( Starbucks’ program that defines socially responsible business guidelines for their buyers) and Technoserve which improves the business practices of farmers, giving them a higher percentage of their proceeds, up to 60% more than FLO.
Private estate farmers and multinational companies like Kraft and Nestlé, cannot be certified as FairTrade coffee even if they make the requirements.**** Companies that are following the same practices as FairTrade won’t have the same visibility given to them due to certification labels. A part of the FLO certification process is, framers are a part of a cooperative, and companies like Kraft don’t meet this requirement.**** Cooperatives are “people-centered enterprises owned, controlled and run by and for their members to realize their common economic, social, and cultural needs and aspirations.”******* FairTrade cooperatives vote to make decisions with the goal to “enable farmers to take more control over their futures.”******** Cooperatives also make decisions about what they are going to do with their FairTrade premium.*******
The quality of some products, like coffee beans, has deceased in FairTrade’s certified label due to farmers selling their lower quality beans for the minimum price under FairTrade’s certification, and selling their higher quality beans for more money in the open market.***** Dennis Macray, the former director of global sustainability at Starbucks Coffee, stated, “For some cooperatives, the FairTrade price became the ceiling, not the floor. … Many FairTrade buyers do not see a reason why they should pay any more than the FairTrade price for the value that is FairTrade.”***** These problems are linked, when farmers are only being paid a minimum by FairTrade, and not competitive pricing, it leaves them to focus on producing higher-quality products for the open market to earn more for it, and lower-quality product for FairTrade as they’re guaranteed the minimum price for their product.
Another flaw is the migrant workers on these farms don’t always reap the benefits and protection FairTrade offers.***** FairTrade’s certification failing to ensure that all farms meet the standard that states, “The producer organization must pay wages in line with or exceeding national laws and agreements on minimum wages or the regional average” to “all those employed, including casual, seasonal and permanent workers”.****** Luuk Zonneveld, Managing Director of FairTrade Labelling Organizations International (FLO) in Bonn states “No certifier is able to check that at no time are workers paid below minimum wage,” meaning, there are loopholes to avoid having to pay their workers at all. 4 in 5 certified farms pay their casual labourers less than minimum wage.
FairTrade and FLO have made some great steps towards more ethical business practices and regulations in many industries. It is easy to stop and only see the possible positive effects of FLO, but the main question is, what impact is FLO having on farmers and workers at the beginning of the supply chain? Paul Rice, founder, and president of FairTrade USA never wavered from his view that FairTrade’s “central goal is to alleviate poverty,” but many individuals who have worked with FairTrade or FLO didn’t see any progress toward the goals set out by the non-profit.***** With the struggle to guarantee that minimum wage and ethical labor is happening all year, one can question how FLO can improve their system to better protect and help farmers and workers under their label. To continue reading on this conversation around FLO and its impact, start with these articles: ssir.org/articles/entry/the_problem_with_fair_trade_coffee ssir.org/articles/entry/fair_trade_a_model_for_sustainable_development#
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Footnotes
*https://www.fairtrade.net/about/how-fairtrade-works
**https://www.businessnewsdaily.com/10937-become-fair-trade-certified.html
***https://www.takepart.com/flashcards/what-is-fair-trade/index.html
****https://files.fairtrade.net/HL_EN.pdf
*****https://ssir.org/articles/entry/the_problem_with_fair_trade_coffee
******https://www.ft.com/content/d191adbc-3f4d-11db-a37c-0000779e2340
*******https://www.ica.coop/en/cooperatives/what-is-a-cooperative
*******https://www.fairtrade.net/news/cooperating-to-create-change
