Fractures in Fair Trade: Fair Trade USA leaves Fairtrade Labeling Organization
Fair Trade in the News: What is the significance of Fair Trade USA’s split from the Fairtrade Labelling Organization?
If you follow Fair Trade news you may have noticed that some pretty important things have happened in the Fair Trade world in the last few weeks – namely the decision of Fair Trade USA to leave the Fairtrade Labeling Organization in favour of its own certification system. I would like to take a few minutes and use this space to explain a bit more about this decision, and explain a bit more about what sort of implications this might have for Fair Trade in the coming years.
What happened?
Two things happened last week that really made the headlines in Fair Trade:
- 1. Fair Trade USA (the national Fair Trade body in the United States) independently decided to open the certification of Fair Trade coffee to hired labourers and plantation workers (September 12th); and
- 2. Fair Trade USA and the Fairtrade Labeling Organization announced that Fair Trade USA would be leaving the FLO certification system.
How were Fair Trade USA and the Fairtrade Labeling Organization connected before?
Beginning roughly around the 1940s, Fair Trade as we know it today, began in reaction to the exploitive trading relationships and harsh working conditions that were common in many tropical commodities industries (coffee, chocolate, and sugar to name a few). Direct trade relationships were initiated by church and community groups in order to create direct trade relationships with producers, effectively creating an alternative trading route parallel to conventional trade. These alternative trade relationships created direct partnerships among producers and consumers and were defined by better prices, longer-term contracts and personal relationships.
The movement spread to countries all around the world — including the US, Canada, countries in Europe, New Zealand and Australia — and, eventually, national Fair Trade groups such as Fair Trade Canada were formed. In 1997, these national groups joined under one umbrella organization called the Fairtrade Labelling Organization headquartered in Bonn, Germany.
In 1998, the Fair Trade label was born in order to help producers access more markets for their products, which catapulted Fair Trade towards the success it’s had to date. The Fairtrade Labeling Organization in Germany sets the standards for Fair Trade products, and FLO-Cert ensures that these standards are met by producers’ organizations around the world. In all the respective countries where Fair Trade goods are sold, local organizations (like Fair Trade Canada here, or the Fair Trade Foundation in the UK, for example) ensure that only products that meet the FLO standards bear the Fair Trade label.
So what does this have to do with certifying Fair Trade coffee?
One of the Fairtrade Labeling Organization's most important functions has been to set Fair Trade standards, which has ensured, that from Vancouver to Beijing, consumers know exactly what the Fair Trade label represents. The system hasn’t always been perfect, and the FLO, along with its member organizations, have done a lot to reform the standards to ensure that all stakeholders in Fair Trade are represented – especially producers and producer groups. Fair Trade’s most famous standards have been financial ones: the Fair Trade minimum price and the Fair Trade social premium, but that’s not all Fair Trade is about. One of the most celebrated Fair Trade standards has been the requirement that producers organize themselves in democratically run co-operatives, where all members have an equal voice in the way business is done and the way the Fair Trade premium is spent. These cooperatives have become powerful forces in Fair Trade, and have helped producers pool together resources and discover power in numbers that otherwise might not be available if they were working independently.
This is why Fair Trade USA “going it alone” is significant.
- 1. This is the first time since the birth of the FLO that any national organization has decided to leave the unifying umbrella network that the FLO has provided since the late 1990s.
- 2. This is the first time ever that a national organization has decided to split from the FLO to unilaterally develop its own standards for a given product. Furthermore, the standards that Fair Trade USA has decided to develop for coffee do not include a requirement for producers to be organized in democratically run cooperatives.
What does this mean for Fair Trade USA, the Fair Trade Labelling Organization, and for Fair Trade producers?
Fair Trade USA is pioneering a new way to approach Fair Trade, and only time will tell how it pays off and for whom. The organization announced last week the launch of its “Fair Trade for All” campaign, where they have pledged to double the sales of Fair Trade goods in the USA by 2015. On one hand, that is really exciting! The more Fair Trade products sold, the more producers receive the benefits of the Fair Trade system, and the stronger the system. On the other hand, by allowing plantations and hired labour to be certified in the coffee system, Fair Trade USA has made a trade-off between the quantity of coffee it will now be able to certify as Fair Trade, and the importance of certifying only democratically run cooperatives (some might argue, “quality”). FTUSA has assured consumers that their plantation standards will be modelled after the FLO’s standards used in the production of cotton, rice and other goods that cannot be grown by small-scale farmers. All in all, by altering the standards for coffee, Fair Trade USA is putting themselves in a great position to reach their goal of doubling sales by 2015 — which could be great news for coffee producers currently working on medium or large scale plantations.
As for the Fairtrade Labelling Organization, their online statements and open letter from their CEO clearly indicate disappointment about FTUSA’s decision to go it alone. The integrity of the Fair Trade label has always laid in its unified and trusted standards, and honestly, the fact that the FTUSA label may now indicate different standards than those everywhere else in the world only adds to consumer confusion about what the label really means. After years of campaigning to teach consumers about Fair Trade, the label, and cultivating brand awareness this move could be a big step back. That said, there remains strong support for the FLO, and its current networks will continue working together alongside producers to strengthen the Fair Trade movement and to increase Fair Trade sales around the world. In the meantime, the FLO must certainly be hoping that this move is not going to lead to a chain reaction and dismantling of the FLO-led system.
What has been left out of this discussion?
While Fair Trade USA and the FLO release statements, and those in the Fair Trade movement try to evaluate what’s going on, there remains one voice that has been conspicuously absent from this discussion: representatives of Institute for Marketecology’s Fair for Life certification. IMO’s Fair for Life certification has been gaining ground in Fair Trade certification within the last 10 years, and similarly ensures that social responsibility and Fair Trade labour standards are ensured with all their certified products. While their organization is similar to the FLO in many ways, Fair for Life has been celebrated for being faster, stronger, and more efficient than the FLO system by many Fair Trade vendors and producers. I have to wonder, could Fair for Life be facing an opportunity to demonstrate themselves as the certifying authority in Fair Trade? Again – only time will tell!
All in all, I maintain my faith in the integrity of the Fair Trade label and encourage FTUSA in its mission to spread the benefits of Fair Trade to as many producers as possible. So long as Fair Trade (regardless of who’s in the driver’s seat) maintains strong, producer-defined standards, expanding the market to its outer limits is a great way to maintain momentum throughout this already very successful network.
If you are interested in reading the original news reports from last week, I've provided the links below. Nearly all of them come from my favourite Fair Trade authority – the Fair Trade Resource Network. If you’re interested to stay tuned to Fair Trade current events I highly recommended subscribing to their RSS news feed, and join as many blogs (like ours!) as you can.
Thanks for reading!
MP
**Update**
Thanks to FairTradeSleuth for letting us know that CLAC representatives have released a number of statements in reaction to this news, almost uniformly in disappointment with the news.
Read CLAC's letter here.
Read Red Cafe's statement here.
Red CAN Alliance's statement here.
Links of note:
September 12th - FTUSA Opens Certification to Coffee Workers While FLO Will Not
Fair Trade for All Innovation Strategy from FTUSA
September 15th - FTUSA To Leave FLO System
September 16th - An Open Letter from CEO on Changes to the Fair Trade System
September 19th - FLO & FTUSA Clarify What Their Split Means for Stakeholders
Comments
Just to let you know, the coffee branch of the CLAC producer network, and CAN (the three joint producer networks), issued statements yesterday:
http://clac-comerciojusto.org/noticias/
(available in English and Spanish)
Thanks for posting that link, FairTradeSleuth. It doesn't appear as though the CLAC are not quite as optimistic about FTUSA's move as FTUSA is. Great to hear an opinion directly from producer groups. I'm going to be following CLAC more closely from here on out!
It is helpful to have reflective experience shared.
I would raise two issues more. Firstly finance and secondly goverance.
Firstly, over the last couple of years the Fairtrade standard of pre-finance has become critical in maintaining coops sustainability. Min price was left behind as prices rose and premium as proportion of price became much less attractive. Plantations already have market access , skills and finance. I worry that within the FT market new conversions will seek this easier cheaper 'FTlite' route without the most important finance requirement. High commodity prices and lack of finance are weakening Fairtrade. Allowing more plantations in at this time wil make coops more vulnerable at a time when they find it very tough to compete in the market. You must remember that coop members need paid for their coffee. Cash is always king for the poorest sectors. In times of shortage, loyalty to coops weakens and 'coyote' middlemen with dollars in hand wil always stregthen.
Secondly, FLO has 3 regional stakeholder groups which have a voice in all FLO governance and certication tools. The strongest in coffee is CLAC, predominantly Latin American coffee cooperatives. Why don't you invite them to comment? Many have been pioneers in Fair Trade. The key issue issue is ownership and governance surely as that drives legitamacy. Having fought for greater producer power in FLO for the last 5 years we hear stories that FTUSA is largely self appointed without the same stakeholder institutions as FLO. Is that true? Who holds their Board to account?
In Europe, large licensees are tending to buy from the largest and strongest groups. It is easier and cheaper and risk free. This is especially true in tea where Indias largest tea grower is now FLO certified. The system does not require inclusion of a proportion of weaker smallholders who find market access very difficult despite the growing market. They remain excluded by plantation licensees and their trader partners who control supply chains to market. Quality issues are usually quoted to disguise choice, but fewer demands are made, reducing competition and defending status quo. Few large buyers (brands) are prepared to compromise trusted global traders suppliers with new channels and even fewer traders are prepared to take the risks of working with weaker coops.
I fear FTUSA stratgey is driven primarily by the business norms of global brands not the need to create market access for new farmers. I think it is time to differentiate fair plantations from fair democratic farmer organisations. Keep licence fees higher for the plantations because they can already afford them! This will help keep the bar for entry high.
We must work hard to deepen awareness of the competitive issues driving growth.
It is helpful to have reflective thoughts experience.
I would raise two issues more. Firstly finance and secondly goverance.
Over the last couple of years the Fairtrade standard of pre-finace has become critical in maintaining coops sustainability. Min price was left behind and premium as proportiona of price much less attractive. Plantations already have market access , skills and finance. I worry that within the FT market new conversions will seek the easier cheaper 'FTlite' route without finance requirement.
FLO has 3 regional stakeholder groups which have a voice in all FLO governance and certication tools. The strongest in coffee is CLAC, predominantly coffee cooperatives. Why don't you invite them to comment?
The key issue issue is ownership and governance surely as that drive legitamacy. Having fought for greater producer power in FLO for the last 5 years we hear stories that FTUSA is largely self appointed without the same stakeholder institutions. Is that true? Who holds their Board to account?
In Europe large licensees are tending to buy from the largest and strongest groups. It is easier and cheaper and risk free. This is especially true in tea where Indias largest tea grower is now certified. The system does not require inclusion of weaker smallhoders who find market access very difficult despite the large market. Quality issues are usually quoted to disguise choice, but fewer demands are made, reducing competition and defending status quo.
I think it is time to differentiate fair plantations from fair democratic farmer oned organisations. Keep licence fees higher for the plantations because they can already afford them!
Hmmm, the only voice missing is IMO? What about producers and workers currently producing on FLO certified farms and the workers who will potentially be covered by Fair Trade USA certification on plantations? What is there take? How does Fairtrade currently impact their lives and what will be the affect of new standards developed by Fair Trade USA? Isn't that the most important voice of all?
Great point and I most certainly agree that producers voices are too-often excluded from these discussions. From what I understand the FLO has been reforming its system (albiet slowly) to improve producer voices in both its standard setting practices and feedback loops (browse here to learn more about FLO standards), and by extension improving producer partnership and voice in the network. This is why I suggest that strong standards remain a critical factor for FTUSA as they continue forward. It will be up to FTUSA to explain how, and to what extent, producers and producer groups are involved in setting their new standards in order to demonstrate in whose interest they are acting.
I would be very interested to read or hear producers or producer groups' reactions to this news, positive or negative. If you come across anything I would encourage you to share here or on our Facebook, and I'll do the same.
@mpemberton and all;
following the links below you can read the statements issued by all the different Producer Networks that form part of the Fairtrade system. The first one comes from CAN, which is the alliance of the 3 producer networks (Clac-Africa-Nap)
Then you have the individual statements from the 3 groups:
NAP stands for Network of Asian Producers, CLAC is the Coordinating body for Latin American and the Caribbean, and Fairtrade Africa represents producers from Africa.
There is also the statement from the Red Cafe (Coffee Network), a subgroup representing coffee producers, mainly from Latin America and the Caribbean.
http://www.fairtrade.net/fileadmin/user_upload/content/2009/news/CAN-sta...
http://www.fairtrade.net/fileadmin/user_upload/content/2009/news/Fairtra...
http://www.fairtrade.net/fileadmin/user_upload/content/2009/news/NAP_FLO...
http://www.fairtrade.net/fileadmin/user_upload/content/2009/news/CLAC_FL...
http://www.fairtrade.net/fileadmin/user_upload/content/2009/news/Red-Caf...
You can read at the link below how the General Assembly of FLO (Fairtrade International) has recently taken a groundbreaking decision to change their representation system to make producers fill 50% of the General Assembly.
here; http://www.fairtrade.net/single_view1.html?&no_cache=1&tx_ttnews%5Btt_ne...
Best, Julie
Fantastic, Julie. Thanks for sharing those links.
I too, saw the story of Fairtrade International's vote to increase producer partnerships in their General Assembly, and I think it's fantastic. It's a very interesting time in Fair Trade and generating a lot of great discussion and reflection on the movement and the label.
Marianne
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