So this is a combination brainstorm-blog. I need to write a second blog for the university in the middle of the project, i.e. now, but I also am starting my first interviews for work on Monday, trying to develop the concepts of fair trade and solidarity trade that the commission I am working for will look to implement. I figure the last blog will be a resume of my trip here in Guatemala, so you will have to wait longer still for what is, probably, more interesting than another semi-journalistic discussion on macro issues. Sorry.
The first fair trade label was created in 1988 in cooperation between a Dutch NGO and coffee cooperatives in the developing world. The market for certified fair trade products has since grown dramatically, cornering significant shares in almost all the world’s wealthy markets and including producer groups from across the South. In 1997, the Fairtrade Labelling Organisations International (FLO) was established to consolidate the twenty plus national fair trade labelling agencies in the North and Mexico. Its basic principle is that consumers pay a premium for a product that is certified as fair trade. The conditions for certification are the payment of a minimum price to producers and provision of credit in a guaranteed contract. The producers who must be organised democratically within a cooperative, in the case of coffee, and they must also receive a social premium for each portion of coffee sold, which the cooperative may reinvest in its own operations or the community as its members see fit. Fair trade is intended as a different kind of market where producers are treated justly and empowered to produce development outcomes in their own communities.
This alternative market is, however, at a crossroads. Two distinct visions are seeking to seize the advantages of the label for two completely different, and some would say absolutely contrary, objectives. The first group is best represented by the cooperative that first developed certified fair trade in 1988, the cooperative la Unión de Comunidades Indígenas de la Región del Istmo (UCIRI), whose academic spokesperson is the Catholic priest and subsistence farmer Francisco VanderHoff Boersma. Boersma views fair trade as a social movement that seeks to transform the capitalist market. His organisation recently launched a more “producer-friendly” alternative label to conventional FLO certification. The opposite view places fair trade within the neo-liberal paradigm as a means to achieve poverty reductions among producers through free consumer choice, as opposed to government interference in the market. Thus, fair trade is a market niche; a product that is essentially more expensive because it provides consumers with an additional boost in self-esteem since they feel they are contributing to improving the lives of producers.
These two visions of fair trade are diametrically opposed, but both contain significant contradictions. The reality is that fair trade does little to transform the capitalist market and the neo-liberal view is gaining traction. Nevertheless, for fair trade to achieve its real objectives of empowering producers and producing community led development, in the sense of improving living standards among producers’ communities and upsetting entrenched forms of exclusion, fair trade must steer a course that entrenches these progressive social objectives in the label to protects it from the machinations of the mass-markets agents who must be involved.
Boersma worked as a university professor in Ottawa for a time, but later moved to Oaxaca, bought a small plot of land to work as a coffee farmer and became one of the founders of the UCIRI. The UCIRI became the first fair trade coffee cooperative in 1988 under the Dutch brand Max Haavelar. The principles they established for fair trade were fourfold.
The first: efficiency. Producers must be efficient in their production from a commercial perspective but also in terms of social efficiency. Products must be of high quality and produced and marketed in innovative ways to best take advantage of available resources.
The second: environmental sustainability. All ecological costs of production must be incorporated into the price of the product. Competitiveness cannot come at the expense of the environment and future generations. The four key practices are protection of biodiversity; no contamination of ground water and erosion prevention; control, reduction and eventual elimination of chemical pesticides and herbicides; and reduction, recycling and transformation of organic waste into compost.
The third: social sustainability. All social costs of production must be integrated in the price of the product. Fair trade thus resituates production in its social context and also by changing the process of production that local producers have greater control through their organisation in cooperatives and their connections with other actors in the commercial chain.
The fourth: the relationship between organised producers and organised consumers. These are the two “pillars” of fair trade. To reposition the economy within society it is essential that consumers be allowed to concretely demonstrate their support for the alternative market. The social distance between producers and consumers must be reduced so they can enter into as direct a relationship as possible. In this way, consumers acquire greater social control over the market to express their preferences.
These principles outline the general theory of fair trade. The elimination of intermediaries between consumers and producers is key, both for creating solidarity between these two groups but also to make trade more economically fair. The low prices traditionally received by producers, particularly compared to the high final prices paid by consumers, are often attributed to the excessive number of intermediaries or coyotes who crowd the supply chain. The elimination of these actors is key to improving outcomes for producers. It is also important to note that regardless of one’s philosophical perspective, no one is suggesting that Fair Trade should be anything but a market whose products are competitive and of high quality. Fair trade is not intended to be charity. It is the purchase of products for prices that more closely approach what the products cost to produce both environmentally and socially but also their quality.
Fair trade may increase producers’ incomes dramatically, such as is the highly notable case of UCIRI whose members’ incomes more than doubled. However, most producers are making so little to start with that their greater incomes remain insufficient to guarantee their security. UCIRI members, who have enjoyed one of the most impressive success stories, had their incomes expand only from $1.50 per day to $3.50 per day. They remain very poor.
The organisation of producers in cooperatives is perhaps a more important element of fair trade and is obligatory for certification. In reality, small producers are at the mercy of better-informed buyers without a cooperative structure and also have very little access to credit. Cooperatives provide their members with information on markets, access to agronomists, access to credit and means of processing their products for higher value such as transforming the coffee berries into pergamine (a latter stage of coffee beans where the skin of the berry is removed) or even roasting. In the context of fair trade, coffee cooperatives receive additional resources to whatever dues they may absorb from members in the form of the social premium. Studies provide myriad different examples of programmes cooperatives have undertaken with this money. Consistent themes are investments in processing infrastructure, administering long-term credit for use by producers or short-term credit for community members (loans for groceries, for example), the opening of community grocery stores or supply stores, the contracting of agronomists and investments in the education of members’ children through scholarship funds or direct investments in local schools. Cooperatives have even invested in the public transportation in their communities. Cooperative members also gain a strong political voice to demand government accountability and services and even change inappropriate laws, such as in one case a tax that is misapplied to small-scale coffee farmers because they live in the same area as much larger haciendas. Fair trade’s norms in terms of price, a minimum salary and prohibition of child labour have also had significant results within the cooperatives’ communities. The minimum salary has often had the positive externality of forcing up salaries for workers on other farms around the community.
I recently visited a major CIDA-funded project here in Guatemala, which was looking to renovating plots of decades-old coffee plants. These older plants were providing harvests three to five times lower than optimal production because of their age. The idea was to remove all of the plant except the base of the trunk down so that in three years the plant would re-grow in three years to already be more productive and then five times more productive another two years later. In the two years before the coffee plants would be producing though, the farmers would have to grow vegetables and legumes on their land, which is far more labour intensive, to maintain their incomes, with the extra benefit of producing a food-crop that could be used to feed their families all year long.
This project almost seems very obvious and easy, but the farmers face significant risk in such a project. The new crops could not take or perhaps the coffee plants could not grow back. The farmers do not have the luxury of being isolated from the experiment’s failure and coffee farmers are also well known as not being professional farmers with extensive skills in horticulture. Another interesting factor, however, is that in many cases the coffee plants were planted and cultivated by their fathers, or their grand-fathers and they have spent their whole lives harvesting them. There is a major emotional element to renovating the fields. The coffee growers need to show a great deal of confidence in the agronomists from the Canadian NGO, although in this case the Canadian NGO that is assisting them will ensure they are insulated from significant negative consequences.
This example is highly illustrative. In reality, small-scale coffee farmers are notoriously risk-averse because of their vulnerability to price swings and unfavourable climactic conditions. This often blocks them from making investments for the future, such as renovating their fields, household improvements or spending on their children’s education. Regardless of how important and straightforward these investments appear, their insecurity leads them to be highly focused on the present. However fair trade has been shown to greatly increase producers’ confidence and encourage investments in the future. This is largely because of the relationship with the buyer in the long-term, which guarantees producers a market. It also allows them to get feedback on the quality of their product. Some producers begin to feel that it is not their coffee that is certified so much as themselves, which leads them to take greater pride in their production and work harder. Fair trade farmers consequently make greater investments in product quality, as well as in the education of their children and in their homes, such as by buying better cooking equipment. Research with fair trade producers has consistently shown that the long-term relationship with buyers and improved access to credit, either through the cooperative or because of greater credibility with local lending agencies, are the two primary benefits of fair trade, before the minimum price. The importance of the minimum price depends entirely on the market price, especially when considering the significant cost of FLO certification. Fair trade cooperatives were insulated during the price historic shocks of the 1990s, when many of their neighbours were forced to leave their farms to find work in the cities. However, when the market price is high the guaranteed price may provide little or no advantage.
Returning to Boersma, he most values fair trade for its revolutionary potential, the possibilities it provides for the empowerment of the cooperative’s indigenous members. He highlights the cooperative’s ability to invest in the education of its members’ children and in badly-needed services, but he is even more enthusiastic about the voice it gave to these producers to fight for accountability and services from their government. Boersma strongly opposes poverty reduction as an objective of fair trade, preferring to consider poverty as a mere symptom of the unjust global system he feels that fair trade transforms. He brings out very important elements. I believe fair trade must fundamentally seek to overthrow diverse forms of exclusion, a theme that will be discussed in more detail later. However, his further assertion that free trade will transform capitalist market relations is not convincing.
Extensive amounts have been written on this topic, suggesting that fair trade proposes a different kind of market and breaks with Marx’s commodity fetishism. Marx’s notion was that in capitalism individuals are alienated from the means by which the commodities they buy are produced so that their relationships in the market place become relationships between things; the only means of deciding what commodity to buy is by judging one’s own needs in relation to the commodity. Popular belief is that because fair trade breaks with this practice by resituating commodities within their process of production, by educating consumers about the producers who are filling their cups. There is some truth to this. As I recently noted to a friend, when you have two coffees to choose from and one is fair trade, the realization that buying the fair trade coffee pays farmers $3.50 a day to its producers instead of merely $1.50 does make you think about why people are only making $1.50 per day to produce coffee.
I think there is some power in this idea, but there are a number of fundamental problems to fair trade as a revolution. Firstly, why is it that the quality of life of the producer; whether or not he or she lives in abject poverty and can feed his or her children, is decided by the consumer? What right does the consumer have to make that choice? In an interview with CBC radio Boersma spoke about your dollar being a vote for the kind of world you would like to see, but this is clearly a very capitalist notion because in that context whoever has the most dollars wins and the producers are still subject to the whims of others! This is a very narcissistic view. Narcissism is the psychological state in which individuals under a capitalist system are alienated from family and traditional institutions and become desperate for approval and reinforcement. Overwhelmed by the enormity of their bureaucratic governments and the power of large corporations they feel powerless and that any kind of political activity is futile. They are pushed to buying as a means of soothing their own misery and to boost their confidence, and this is exactly what fair trade coffee seizes upon. For the average consumer, the premium price they pay for their fair trade coffee is a means for them to feel better about themselves and to feel as though they are contributing to something. In reality though, they remain powerless individuals and their contribution only extends to a few cents a day.
Secondly, what kind of solidarity is created by fair trade? There are some instances where coffee shops in the North undertake programmes to educate their customers, but in the majority of cases the customer’s solidarity once again does not extend beyond paying a little extra. What is more market research demonstrates most people who purchase fair trade coffee are upper-middle class women. There is very little persuasive evidence that these purchasers who have little or nothing in common with coffee producers will have any notion of a common struggle against the global system whose consequences they share, because they do not share the consequences of oppression under the global system. Even more contradictorily, the wealth of fair trade’s market is built precisely upon the unequal distribution of wealth that fair trade is supposed to be challenging. Thus the $1.50 realisation at this point seems very unlikely to produce any form of political action.
Thirdly, stories about how producers are benefiting from fair trade and the power of the label in reality commodify the producers themselves. Their story becomes the key marketing angle. You are not only selling the coffee, you are selling the producer. The feeling of helping someone is what the higher price buys for you. Instead of undoing the fetishism of commodities, fair trade commodifies decommodification!
Finally, it can be questioned whether fair trade is in reality fair. All the fair trade products (coffee, bananas, honey, handicrafts) are low priced agricultural and handicraft goods. Their development perpetuates the global issue of the terms of trade; that is the sale of these low value goods from the South to the North while the North continues to sell value-added industrial goods to the South. The fair trade network is in fact been particularly proud of its development around bananas and coffee precisely because of the long history of colonial exploitation. One academic, Mark LeClair, contacted a number of alternative trade organisations to see if they considered the terms of trade while deciding what constitutes a “fair price”, clearly a futile exercise since no business would ever even considering charging a similar amount for coffee or a wooden zebra as they would for a computer, an ipod or a car. The difficulty remained in trying to decide what constituted a fair price and in many cases the producers do not decide in the end, but instead the Northern fair trade organisations do. In the case of the FLO, the fair trade minimum price only increased once between 1988 and 2007, it was not matched to inflation. Is that fair?
I focus on coffee within this essay because it is the primary fair trade product, but my worries about the second most important fair trade product, handicrafts, are even more serious in terms of promoting a disadvantageous market position. I believe this is a very marginal product for its price, one which is very vulnerable to market variations, although I acknowledge its cultural importance and the fact that when working with the most marginalized people, indigenous women, it is not surprising that what is produced is a highly marginal product. Nevertheless, a product that earns only a few dollars for hours of work and has to compete with hyper-cheap Chinese manufactures is not a sustainable source of social security. At least coffee is an agricultural good, demand can only increase and the plots have value for food production just in case.
In reality, fair trade is hardly transformative at the macro level. There is some limited potential for education purchasers about the realities of the capitalist trade regime, but in the end it maintains the alienation of its actors instead of transforming them from producers and consumers into citizens. Since consumers have little in common with producers, the purchase of fair trade products is little more than a form of charity on the part of the wealthy. It is in fact ironic that the demand for the supposedly revolutionary fair trade products overwhelmingly comes from the upper classes who profit from the unjust market system. Unfair distribution of wealth is integral to fair trade’s market niche.
To clarify though, I do not wish to make the argument that fair trade goods are only accessible to upper-class consumers in the north, but instead that in the current reality these are the only group that purchase them. This insinuates that we cannot afford to pay a price for our goods that allows their producers to feed and educate their children and enjoying a decent standard of living. The reality is that fair trade is a window upon the way in which the world should operate, but the more time you spend considering the topic the more you realize the window is barred, we remain imprisoned in a stark paradigm. Fair trade represents what we yearn for, but not really an avenue for getting there. The major obstacle, the wall to which the bars are bolted, is the reality that Northern citizens refuse to buy the necessities of life: food, clothing and shelter, for the same portion of their income as the global average, for what they truly cost. They have been convinced that they have a right to some combination of a fancy television, foreign vacations, larger than necessary houses and multiple vehicles (or even one vehicle). The poverty of some within these countries becomes justifies the exploitation of peoples in other countries so that lower income people in the north can access cheap goods that provide them with a decent standard of living. The cost of goods is subsidized at the expense of Southern producers and future generations so that the difficult questions of why the world harbours such dumbfounding inequality are averted.
This consideration introduces perhaps the primary issue facing fair trade, the need to convince more and more people to buy fair trade products. I am working here in Guatemala for a commission that seeks to integrate more Guatemalan producers into the fair trade network because we want more to benefit from fair trade’s impressive socio-economic results. Also, currently most fair trade cooperatives only sell roughly one-third of their coffee through fair trade; the rest is sold through conventional channels. However, the European market appears to be saturated and while the American and Canadian markets still have room for growth, that growth can only reach a certain point. Consequently, within fair trade coffee, more and more producers are crowding into a limited marketplace, reducing the benefits to individual cooperatives. This issue has led FLO and a number of cooperatives to develop relationships with companies like Starbucks and Nestlé. These companies have the means for mass-distributing coffee, they make purchases are exponentially more sizeable than the smaller roasters could ever by, benefiting many producers.
There are clear problems with including large corporations though. These are the companies whose exploitive practices created the need for fair trade in the first place. They also threaten the ethical and social advantages of the label. Starbucks has been a particularly interesting case. Public pressure has forced them to participate in fair trade against their will, but they have since been producing alternative labels in an effort to undercut FLO certification. These alternative labels have fewer social objectives for producers, but do serve to confuse consumers with different messages on production ethics, which has been denounced as “fair washing”
It should be noted as well that the participation of companies like Starbucks highlights a major, paternalistic contradiction in fair trade; beyond the fact that they represent the absolute pinnacle of fair trade commodification since there is no chance they will try to educate of their consumers about trade injustice. There are numerous requirements on Southern producers in order to acquire certification, including democratic cooperative governance and fair wages, requirements that are not imposed upon Northern buyers and certainly do not describe Starbucks. You might question the assertion that Starbucks does not pay fair wages, but they for example have hired cheap prison labour in the US for the preparation of Christmas packages and have had no problem historically buying coffee at miserable traditional prices.
The most vocal opponents of corporate participation in fair trade, represented in this article by UCIRI and Francisco VanderHoff Boersma, do present some contradictions themselves though. Boersma’s cooperative has previously signed a deal with Carrefour for an unidentified amount of coffee under fair trade conditions but without certification, which constitutes participation in a blatant attempt by a corporation to subvert the brand and lend legitimacy to Carrefour, since UCIRI is one of the most well known fair trade cooperatives. Also, Boersma and his cooperative are isolated from the fair trade network’s need for market growth since they have traditionally sold almost 100% of their coffee through fair trade channels because of their status as a successful founding fair trade cooperative.
Even more seriously though, the decision of UCIRI to found a new fair trade label that is more respectful of producers only further discredits and divides the fair trade network, to the benefit of companies like Starbucks. The reality is that while FLO certification has significant problems and its cooperation with large corporations, FLO conditions for certification remain significantly better socially than the conditions being proposed by the corporate-sponsored alternatives. FLO has recently taken steps to improve its services to cooperatives and better include Southern producers in its decision-making processes. It is clear that FLO is far from perfect, but unclear whether attempting to undercut the organisation is a good idea either. UCIRI’s new certification legitimizes alternative certifications in general by further confusing consumers with limited information. What is needed instead of even more alternative labels is for work to be done within FLO to push back against corporate influence while nevertheless expanding their market. To do so, they must clarify their identity as a network that seeks to do more than just improve the economic conditions of Southern producers, but also to empower them against traditional forms of exclusion.
On the market-expansion front, the challenge is massive. Northern citizens must attempt to sidestep the most highly developed marketing apparatus in history to encourage their suppliers to buy only fair trade, but most of all to educate their fellow citizens and make political change so that people have less and less of a choice between buying fair trade coffee or not. If more producers are going to enjoy the advantages of fair trade corporate participation is necessary. Big business controls far too much of the market. It would be great if everyone only bought from small fair trade coffee shops, but reality hurts. Back in Canada, for example, most Canadians clearly buy their coffee from Tim Horton’s, Starbucks, Loblaws, and I cannot see that changing any time soon. However, these corporations must not be allowed to infect the fair trade network. I even hold some hope that instead they might be infected themselves with some principles of fair trade, though it is very unlikely.
FLO must hold its ground on certification and refuse to bend to the will of corporate buyers. I believe that the most important element to fair trade coffee is how it favours the development of cooperatives. These cooperatives empower their members and their communities, allowing them to decide how they want their communities to move forward and what services they value; ultimately they take control over their own lives and their production. This is the revolutionary power of fair trade. It changes isolated individuals who are imprisoned to a certain way of life by their lack of resources and knowledge and their consequent extreme vulnerability, and it brings them together in organised institutions that allow them to make choices about their production and their communities’ paths. Further more, many cooperatives work to develop this communal culture with the funds they receive from fair trade, educating their members in how to work together democratically and to avoid behaviours that undermine the whole cooperative together, such as the sale of coffee to coyotes who offer high initial payments but do not ultimately pay as much as the cooperative. Cooperatives must remain at the centre of fair trade certification.
This is the key element to clearly identify fair trade proposed by J. McMurtry, what he calls “ethical value-added”. Ethical value added is the progressive rejection of traditional forms of oppression and exclusion, durable changes in power relations that produce long-lasting cultural changes. Maintaining this fundamental component within the FLO label should rebuff corporate contamination and produce a truly “ethical” label.
Another powerful example of ethical value-added that McMurty highlights is the case of Café Feminino, a brand of fair trade coffee that is produced only by women who own their land. Fair trade coffee has always held as a primary theoretical objective the empowerment of women, but it has produced few practical results. Men have traditionally dominated coffee cooperatives both politically and economically. Women have in many cases been made members simply for certification purposes, but then been given very little voice. Fair trade’s greatest results for women have conventionally come from projects where they were helped to produce handicrafts, thus earning an income and empowering them within their family-economies. Despite my scepticism about handicrafts, I have observed incredible value-added results here in Guatemala from handicrafts organisation. One woman described to me how her association educated her and her husband about her rights and once her husband would hardly let her leave the house but now he respects her more and will let her travel to other communities to participate in fairs.
Café Feminino provides perhaps an even more dramatic example of value-added through women’s empowerment though. It is a coffee brand produced by a fair trade cooperative that also includes men. The women in the cooperative realized, however, that if they took over a portion of their families’ lands to produce their own coffee they would have a marketing advantage precisely because of its value-added. This led to incredible changes within the community and the cooperative. Women gained control of a significant proportion of their family income, which was better invested in the community’s development. Parents began leaving their land to bother their sons and daughters, women won greater representation in the cooperative and men began to undertake activities that very clearly belong traditionally to women, such as cooking meals and taking care of the children while their wives attended cooperative meetings! The changes fair trade coffee produced within this community are dramatic and underline the sort of improvements that fair trade should always seek to produce. Other examples of value adding could include changing paternalistic relationships between local communities and their governments, educating cooperative members about their environment or cooperatives ensuring their children attend school. Fair trade may not be a sustainable source of development, it is too dependent on an outside market, but the value-added component to fair trade should allow communities to take advantage of the network to produce local changes that are more profound and enduring.
I believe this article should provide a great deal of information on the debate which rages within the fair trade movement. I worry about the future of fair trade with corporate participation, but I am working here to try to promote the movement because I know it can provide producers and their children with revolutionary opportunities at the community level. I have provided my view on how fair trade could maintain its ethical value while nevertheless integrating the corporations it was founded to oppose, we will see what happens and try to be optimistic. In the short term, everything depends on the strength of the FLO, they control the recognized label and thus they still hold a great deal of power to define with their members from the South, what fair trade will be. The corporations have been a little late getting into the fair trade game, they may have trouble changing the rules. Let us hope so.
Sources:
Fort, Ricardo; Ruben, Ruerd and Guillermo Zúñiga-Arias. (2009). “Measuring the impact of fair trade on development”. Development in practice 19(6). 777-788.
Fridell, Gavin. (2007). “Fair-Trade Coffee and Commodity Fetishism: The Limits of Market-Driven Social Justice”. Historical Materialism 15. 79-104.
LeClair, Mark S. (2003). “Fighting Back: The growth of alternative trade”. Society for International Development On-line Dialogue 46(1). 66-73.
Lyon, Sarah. (2008). “We want to be equal to them: Fair-trade Coffee Certification and Gender Equity within Organizations”. Human organization 67(3). 258-268.
Lyon, Sarah. (2007). “Maya Coffee Farmers and Fair Trade: Assessing the Benefits and Limitations of Alternative Markets”. Culture & Agriculture 29(2). 100-112.
Lyon, Sarah. (2006). “Fair Trade Coffee and Human Rights in Guatemala”. J Consum Policy 30. 241-261.
McMurtry, J. J. (2009). “Ethical Value-Added: Fair Trade and the Case of Café Femenino”. Journal of Business Ethics 86, 27-49.
Ronchi, Loraine. (2002). The Impact of Fair Trade on Producers and their Organisations: A Case Study with COOCAFÉ in Costa Rica. Prus Working Paper No. 11. Poverty Research Unit at Sussex, University of Sussex. Acquired, October 2nd, 2009 from www.fairtrade.net.
VanderHoff Boersma, Francisco. (2009). “The Urgency and Necessity of a Different Type of Market: The Perspective of Producers Organized Within the Fair Trade Market”. Journal of Business Ethics 86, 51-61.