A funny thing happened on the way to the (Fairtrade) market…

A few years ago I was in a meeting which had a pre-release view of the now ubiquitous fairtrade label seen on coffee and tea around the developed world. When it flashed up on the screen I actually burst out laughing and blurted ‘looks like a dead fish!’. It also on quick reflection looked like an animated little enzyme that regularly ran across our black-and-white TV screens in Australia in the 60′s (yes I’m that old) gobbling up germs to advertise some cleaning product or other.

FLO fairtrade label

FLO fairtrade label

It wasn’t until it was pointed out to me by others in the meeting that the figure with hand raised in triumph, silhouetted against the sky, materialized in the logo for me. Black figure – happy little vegemite knowing he or she is being properly rewarded for his/her coffee or cocoa crop. I guess if the European designers of the logo had been exposed to early TV advertising from downunder – or more dead fish – they may have designed it differently.

But there’s the rub with fairtrade. Some of those who drive the fairtrade labeling system these days seem too focused on their own narrow marketing and commercial imperatives to expand the fairtrade concept, with little understanding of, or concern for, their impact outside their own realms – even sadly to the detriment of those producers the system was designed to benefit. To understand this, you need a little history… bear with me.

The original idea for the fairtrade label came from a Dutch priest who was living and working with impoverished coffee growers in Mexico, at a time when the international coffee price was so low it was costing those small-scale farmers more to harvest their crops than they got for the crops, driving them further into poverty. He set up a supply chain through already existing fair trade shops in the Netherlands, but the market was small and the farmers had no choice but to sell most of their produce at unsustainably low prices. He thought if he could show the Dutch consumers that the importers of the coffee had paid a fair price for the farmers’ crops, they would be prepared to pay a little more and he could expand the market for their relatively expensive product beyond the existing small-scale, feel-good ‘alternative trade’ shops they had. To do this you needed to audit the supply chain to show the importers had paid an agreed ‘fair’ price, and that this was indeed passed down to the producer in the form of higher returns at the farm gate than the international market was providing. And you needed to say so at the point of sale. You needed a label.

It was a simple and effective idea which grew and spread to other European countries, the UK, North America and somewhat later to Australia and New Zealand and beyond. In each country concerned organizations (mostly NGOs or already existing fair trade networks) set up their own parallel systems to audit and label the goods.

Eventually these individual groups formed Fairtrade Labeling Organisations International (FLO) to try and harmonise the standards, systems and the prices paid for labeled products, but each in-country initiative retained autonomy in marketing and auditing. There were initially several different labels and names used among the 15 or so country members, but within a few years they agreed to a common name and label, and the dead fish/enzyme/black man was born. The FLO board was set up with one representative from each participating organization, and no producer representation at first. Later a token three producer representatives were invited on, representing the three producer regions (Africa, Asia and Latin America), and still later it became a bit more equitable with changes to their governance, but it could be argued that the importing countries still hold most of the (money and therefore) power in decision making. And two member countries always had the biggest sway – the UK and North America.

Relationships between the somewhat purist European members and the more expansionist marketers in the UK and USA were always strained. Eventually the US and UK members allowed larger importers and wholesalers like Nestle and Starbucks to use their label, despite allegations of dubious human rights records, arguing that these bigger markets were necessary to expand the benefits of labeling to more producers. However, again market clout meant that rules could be bent and licensing fees often needed to be reduced for these bigger licensees to get them on board. Some insiders also questioned whether (the still relatively little) FLO could realistically audit supply chains of someone as big as Nestle, and asked also what it meant for the label to be used for such a small percentage of a company’s products. What, for instance, does it say about the other 95% of Nestle coffee, that isn’t labeled fairtrade? Is all of that unfair? And if so, why should they be able to use the label at all?

At the same time the membership and auditing fees for producers to participate became more expensive – too expensive for many small-scale producers to join or remain, so they were forced to either organize themselves into larger co-operatives or miss out – and more and more large scale plantations began to be certified (actually, needed to be certified) to satisfy the growing demand for fairtrade labeled products driven by the northern marketers themselves.

Tensions over decisions like these eventually led the USA member to split from FLO and set up their own system in 2011, so they could expand the range of producers they support to include many more plantations and hired labour organizations, without the encumbrance of the other FLO members who disagreed with those policies.

Following this split the three major producer networks in FLO, representing around a million producers in 60 countries that supplied the products for labeling, issued statements strongly opposing Fair Trade USA’s decision to withdraw, and especially for doing so without consulting them. In addition, the Latin America networks strongly opposed FTUSA’s strategy to expand certification to hired labor in coffee and other product areas in Latin America. They urged that FLO reconsider its policies of allowing plantations and contract labour in some products in Latin America (such as bananas, tea and flowers), and allow only small self-organized producers to participate in FLO labeling.

The World Fair Trade Organisation (WFTO) also responded saying: ‘We see little evidence of dialogue, transparency or respect (key aspects that define Fair Trade) in the unilateral decision of Fair Trade USA to widen the scope of Fair Trade in ways that will surely negatively impact those currently involved. This action seems more to satisfy and enrich the very people whose actions caused Fair Trade to be established in the first place, at the expense of the small farmer/producer. The Fair Trade supply chain should be relational in nature, with equal input and ownership by all parties; the changes proposed by Fair Trade USA would reduce this to a conventional supply chain with a price premium that will concentrate all the power at the top.’

‘It is undeniable that many workers on plantations and in factories are in desperate need of improvements to their working conditions. However, formal employment is covered by local country laws and ILO conventions, and it should be those instruments that Fair Trade USA should turn to for improvements rather than widening the scope and watering down the principles of Fair Trade. If these types of operation are included in the Fair Trade system, then small producers (farmers and artisans) will not be able to compete against the scale of operation of larger enterprises. It is not unthinkable under this scenario to have a multinational operation own the entire supply chain and be able to label it as Fair Trade. This is completely unacceptable to the WFTO.’

Does all this mean the whole thing’s a sham and we should boycott fairtrade labeled products? Probably not – there is no doubt in my mind that the fairtrade system has benefited hundreds of thousands of producers. But it is also true that the push to expand fairtrade certification too quickly has disenfranchised the smaller, most impoverished producers it was originally meant to benefit. As WFTO also said, ‘In effect, the certification systems have changed Fair Trade to such an extent that sales of products are the main measure of success instead of the welfare of producers.’ I would add that at the same time they have allowed opportunistic multinationals like Nestle to ‘fairwash’ their sometimes tarnished brands to a naïve public.

Aiding and abetting this disturbing trend is the skewing over time of the original fairtrade labeling system so that it now focuses more on requiring producer organisations to prove their fair trade credentials, rather than the importers. The burden of proving that fairtrade labeled products do indeed comply with fairtrade principles now lies primarily with the poorer southern producer organisations, rather than the richer northern buyers and distributors, who in most countries have to do little more than cough up a license fee to benefit from the scheme (and even that can often be negotiated down, if you’re big enough).

After the fairtrade label was introduced into Australia, Oxfam backed it with a campaign that told consumers to ‘just look for the label’. And sure, in the absence of other evidence of fair trade credentials for a product this may be well and good, but if consumers want to benefit the poorest producers they really need to look behind or beyond the label. Fundamentally, Fair Trade is about transparent and respectful relationships between organizations that have the producers’ welfare and development at heart – not just about particular products with a sticker on them, and certainly not just about the prices paid for them, or adherence to a set of one-size-fits-all rules of production that many impoverished producers can’t meet. It’s about allowing those producers to have more influence over the supply chain of their products, and particularly ownership of how and at what price they produce and sell their goods.

Back in April I wrote on this blog about Silence and their Fair Trade work with disabled artisans in Kolkata, driven by Chanchal Gupta. Chanchal was one of those people who wouldn’t truck with adherence to principles imposed from above if they got in the way of meeting the needs of the handicapped workers he strived all his life for. And it cost him dearly personally – born with a severe congenital heart condition just getting to work was often a trial for him, but he never ever lost the smile on his face and his commitment to improve the lives of others less fortunate than himself. Until the end: he lost the battle with his fragile heart a couple of weeks ago. He will be sadly missed by all in the Fair Trade community who learnt much from him. Maybe the mandarins running the FLO systems should also take a leaf out of his book as they work on the future direction of fairtrade labeling.

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Disclaimer – I sat on the WFTO board from 2003 to 2011, worked with Oxfam Trading in Australia from 1995 to 2005, and since then for New Internationalist. The views expressed here are my own and do not necessarily reflect those of any of these organisations.

2 thoughts on “A funny thing happened on the way to the (Fairtrade) market…

  1. The FT label is a women carrying a food basket (presumably Fairtrade food) on her head, the food is not in the picture but you can see her arm holding it up.

    I agree there are varying levels of co-operation in the FT certified farms and make it my priority to know which ones are really bringing benefits. Of course not all consumers want or have the time to know this information but filtering it into daily life is a step forward.

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