Fair Trade USA
||This article's lead section may not adequately summarize key points of its contents. (December 2012)|
|Headquarters||Oakland, California, USA|
|Key people||Paul Rice, President and CEO
Ron D. Cordes, Chairman of the Board
Founded in 1998 by the Institute for Agricultural Trade Policy (IATP), Fair Trade USA’s mission is to "enable sustainable development and community empowerment by cultivating a more equitable global trade model that benefits farmers, workers, consumers, industry and the earth". Fair Trade USA audits transactions between US companies offering Fair Trade Certified products and the international suppliers from whom they source, in order to guarantee that the farmers and farm workers behind Fair Trade Certified goods were paid a fair, honest price. The Fair Trade model requires rigorous protection of local ecosystems and ensures farmers receive a harvest price, which will allow them to practice sustainable agriculture. In addition, annual inspections conducted by FLO-CERT ensure that strict socioeconomic development criteria are being met using increased Fair Trade revenues, in addition to sustainable farm management, environmental stewardship and democratic decision-making. The Fair Trade model seeks to empower farmers and workers around the world, keeping families, local economies, the natural environment, and the larger community strong today and for generations to come. Fair trade certified products encompass many different commodities including coffee, cocoa, and textiles. These commodities differ in location and types of labor used.
During the 2005–2010 period, over 450 million pounds of Fair Trade Certified coffee was imported to the United States. This has provided coffee farmers in developing countries with approximately $40.9 million in Fair Trade premiums to reinvest towards family and community development, education, and environmental and productivity projects.
Although coffee remains the most popular Fair Trade product in the United States, Fair Trade USA has also certified tea and herbs, cocoa, rice, vanilla, sugar, flowers, fresh fruit (bananas, mango, pineapple and grapes), wine and apparel.
In 2006, Fair Trade Certified sales amounted to approximately US$499 million in the United States, a 45% year-to-year increase. And in 2010, data confirmed that mainstream consumers were increasing commitment to Fair Trade Certified products, with a 24% sales increase in grocery stores.
Split from Fairtrade International
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On September 15, 2011, Fair Trade USA announced that it would split off from its international peers and Fairtrade International (FLO International) in Bonn. Chief Executive Paul Rice says it will be easier to make business-friendly decisions and double fair-trade sales by 2015. On the heels of this announcement, Fair Trade USA launched a new set of standards called Fair Trade For All. As part of this strategy, Fair Trade USA launched pilot projects to extend their certification mark to groups in the coffee industry that are currently excluded by FLO standards: plantations and unassociated smallholder farmers. At the same time, Fair Trade USA launched Co-Op Link, an initiative that FTUSA claims will strengthen producer organizations by providing cooperatives with increased market opportunity in the U.S., improved access to capital and an expanded range of capacity building and quality improvement initiatives.
Paul Rice told Triple Pundit: “The challenge for us all now is how we can evolve the Fair Trade model in order to make it bigger, more scalable and to have greater impact on hard working farmers and farm workers around the world. And so toward that end we’ve recently launched Fair Trade for All, which is our effort to evolve and innovate the Fair Trade model in order to make it more scalable. ‘Innovation for impact’ is really the way we’re thinking about it.
Fair Trade USA announced a partnership with Scientific Certification Systems on September 27, 2011 to conduct audits and certify new producer groups that now will be able to join the Fair Trade movement.
Criticisms of Fair Trade
Critics claim that Fairtrade is unethical. Consumers are willing to pay more for Fairtrade products in the belief that this helps the very poor. The main ethical criterion of critics of Fairtrade is that this money is diverted from the very poor farmers to businesses in rich countries, to moderately poor farmers, to employees of cooperatives or are used for unnecessary expenses, so there is inevitably an increase in death and destitution. This informs criticisms that there is reason to doubt that much of the extra money paid reaches farmers, and that there is reason to believe that Fairtrade harms non-Fairtrade farmers. There are criticisms of what is designated Unfair Trading under EU law. There are also criticisms using many other criteria.
The evidence is that little of the extra money paid by consumers reaches the Third World, let alone farmers there. The Fairtrade Foundation does not monitor how much extra retailers charge for Fairtrade goods, and retailers almost never sell identical Fairtrade and non-Fairtrade lines side by side, so it is rarely possible to determine how much extra is charged or how much reaches the producers, in spite of the Unfair Trading legislation. In four cases it has been possible to find out. One British café chain was passing on less than one percent of the extra charged to the exporting cooperative; in Finland, Valkila, Haaparanta and Niemi found that consumers paid much more for Fairtrade, and that only 11.5% reached the exporter. Kilian, Jones, Pratt and Villalobos talk of US Fairtrade coffee getting $5 per lb extra at retail, of which the exporter would have received only 2%. Mendoza and Bastiaensen calculated that in the UK only 1.6% to 18% of the extra charged for one product line reached the farmer. All these studies assume that the importers paid the full Fairtrade price, which is not necessarily the case. Many counter-examples would be needed to show that these are not typical. FLO’s own figures  are compatible with this. They claim that 1.53% of retail prices reach the Third World, and, since Fairtrade charges a 3% licencing fee at wholesale, the maximum that reaches the Third World, even if traders charge low margins is 50%. This would be unacceptable to most charities.
The Fairtrade Foundation does not monitor how much of the extra money paid to the exporting cooperatives reaches the farmer. The cooperatives incur costs in reaching the Fairtrade political standards, and these are incurred on all production, even if only a small amount is sold at Fairtrade prices. The most successful cooperatives appear to spend a third of the extra price received on this: some less successful cooperatives spend more than they gain. While this appears to be agreed by proponents and critics of Fairtrade, there is a dearth of economic studies setting out the actual revenues and what the money was spent on. FLO figures are that 40% of the money reaching the Third World is spent on ‘business and production’ which would include these costs, as well as costs incurred by any inefficiency and corruption in the cooperative or the marketing system. The rest is stated to be spent on social projects, rather than being passed on to farmers. There is no evidence that Fairtrade farmers get higher prices on average. Anecdotes state that farmers were paid more or less by traders than by Fairtrade cooperatives. Few of these anecdotes address the problems of price reporting in Third World markets, and few appreciate the complexity of the different price packages which may or may not include credit, harvesting, transport, processing, etc. Cooperatives typically average prices over the year, so they pay less than traders at some times, more at others. Bassett (2009)  is able to compare prices only where Fairtrade and non-Fairtrade farmers have to sell cotton to the same monopsonistic ginneries which pay low prices. Prices would have to be higher to compensate farmers for the increased costs they incur to produce Fairtrade. For instance, Fairtrade encouraged Nicaraguan farmers to switch to organic coffee, which resulted in a higher price per pound, but a lower net income because of higher costs and lower yields. The claim that Fairtrade ‘Fairtrade guarantees a fair price for the producer’ is not supported by the evidence.
There have been very few attempts at Fair trade impact studies. It would be methodologically and logically incorrect to use these attempts to conclude that Fairtrade in general does or does not have a positive impact. Griffiths (2011) argues that few of these attempts meet the normal standards for an impact study, such as comparing the before and after situation, having meaningful control groups, allowing for the fact that Fairtrade recruits farmers who are already better off, allowing for the fact that a Fairtrade cooperative receives aid from a dozen other organizations – Government Departments, Aid Agencies, donor countries, and NGOs, and allowing for the fact that Fairtrade may harm other farmers. Serious methodological problems arise in sampling, in comparing prices, and from the fact that the social projects of Fairtrade do not usually aim to produce economic benefits.
One reason for low prices is that Fairtrade imposes an inefficient marketing system. Farmers are forced to sell through a monopsonist cooperative, which may be inefficient or corrupt – certainly some private traders are more efficient than some cooperatives. They cannot choose the buyer who offers the best price, or switch when their cooperative is going bankrupt. There are also complaints that Fairtrade deviates from the free market ideal of some economists. Brink calls fair trade a "misguided attempt to make up for market failures" encouraging market inefficiencies and overproduction.
Low prices may also occur because the Fair Trade marketing system provides more opportunities for corruption than the normal marketing system, and less possibility of, or incentive for, controlling it. Corruption has been noted in false labelling of coffee as Fairtrade by retailers and by packers in the developing countries, paying exporters less than the Fairtrade price for Fairtrade coffee (kickbacks) failure to provide the credit and other services specified theft or preferential treatment for ruling elites of cooperatives  not paying laborers the specified minimum wage.
A common criticism is that Fairtrade helps the rich rather than the poorest farmers. Fairtrade is profitable for traders in rich countries.It is also aimed at richer farmers. In order to join Fairtrade, cooperatives must meet quality and political standards which means their farmers must be relatively skilful, educated and well capitalized, and critics point out that these farmers are, therefore, far from the poorest farmers. The majority of Fairtrade suppliers are in the higher income or middle income Third World countries, such as Costa Rica and Mexico, with relatively few in the poorest countries. Mexico has 70 times the GNP per head of Sierra Leone. The minimum wage of agricultural workers in Peru is $3 a day and the average income of Fairtrade farmers in Bolivia was US$900/year, very much higher than normal agricultural incomes in Africa and much of Asia. Again, critics say this is diverting money from the poorest farmers.
Critics argue that Fairtrade harms all non-Fairtrade farmers. Fairtrade claims that its farmers are paid higher prices and are given special advice on increasing yields and quality. Economists state that, if this is indeed so, Fairtrade farmers will increase production. As the demand for coffee is highly inelastic, a small increase in supply means a large fall in market price, so perhaps a million Fairtrade farmers get a higher price and 24 million others get a substantially lower price. Critics quote the example of farmers in Vietnam being paid over the world price in the 1980s, planting lots of coffee, then flooding the world market in the 1990s. The Fairtrade minimum price means that when the world market price collapses, it is the non-Fairtrade farmers, particularly the poorest, who have to cut down their coffee trees. This argument is supported by mainstream economists, not just free marketers. This argument falls away if, as critics and FLO state, farmers do not get a higher price.
Fairtrade supporters boast of ‘The Honeypot Effect’ – that cooperatives which become Fairtrade members then attract additional aid from other NGO charities, government and international donors as a result of their membership. Typically there are now six to twelve other donors. Critics point out that this inevitably means that resources are being removed from other, poorer, farmers. It also makes it impossible to argue that any positive or negative changes in the living standards of farmers are due to Fairtrade rather than to one of the other donors.
The failure to disclose this may be not just unethical but criminal in some countries. Under EU law (Directive 2005/29/EC on Unfair Commercial Practices) the criminal offence of Unfair Trading is committed if (a) ‘it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct’, (b) ‘it omits material information that the average consumer needs . . . and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise’ or (c) ‘fails to identify the commercial intent of the commercial practice . . . [which] causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.’ Griffiths (2011)  points to false claims that Fairtrade producers get higher prices, the almost universal failure to disclose the extra price charged for Fairtrade products, to disclose how much of this actually reaches the Third World, to disclose what this is spent on in the Third World, to disclose how much, if any, reaches farmers, and to disclose the harm that Fairtrade does to non-Fairtrade farmers. He also points to the failure to disclose when ‘the primary commercial intent’ is to make money for retailers and distributors in rich countries.
The Fairtrade criteria are essentially political, and critics state that it is unethical to bribe Third World producers to adopt a set of political views that they may not agree with, and the donors providing the money may not agree with. In addition many of the failures of Fairtrade derive from these political views, such as the unorthodox marketing system imposed. Boersma (2002, 2009)  the founder of Fairtrade, and like minded people are aiming at a new, non-capitalist way of running the market and the economy. This may not tie in with the objectives of producers, consumers, importers or retailers.
Booth says that the selling techniques used by some sellers and some supporters of Fairtrade are bullying, misleading and unethical. There are problems with the use of boycott campaigns and other pressure to force sellers to stock a product they think ethically suspect. Some people argue that these practices are justifiable: that strategic use of labeling may help embarrass (or encourage) major suppliers into changing their practices. They may make transparent corporate vulnerabilities that activists can exploit. Or they may encourage ordinary people to get involved with broader projects of social change.
There are complaints that the standards are inappropriate and may harm producers, sometimes imposing months of additional work for little return.
There have been claims that adherence to fair trade standards by producers has been poor and that enforcement of standards by Fairtrade is very weak, notably by Christian Jacquiau and by Paola Ghillani, who spent four years as president of Fairtrade Labelling Organizations There are many complaints of poor enforcement problems: labourers on Fairtrade farms in Peru are paid less than the minimum wage; some non-Fairtrade coffee is sold as Fairtrade ‘the standards are not very strict in the case of seasonally hired labour in coffee production.’ ‘some fair trade standards are not strictly enforced’ supermarkets avoid their responsibility. In 2006, a Financial Times journalist found that ten out of ten mills visited had sold uncertified coffee to co-operatives as certified. It reported that "The FT was also handed evidence of at least one coffee association that received Fairtrade certification despite illegally growing some 20 per cent of its coffee in protected national forest land. A lot of volunteers do unpaid work for firms, or market Fairtrade in schools, universities, local governments or parliament. Crane and Davies’ study shows that distributors in developed countries make ‘considerable use of unpaid volunteer workers for routine tasks, many of whom seemed to be under the (false) impression that they were helping out a charity.’ Other critics in the Fair trade debate claim that the volunteers cannot know what Fairtrade does achieve and what harm it does, because the information is concealed from them.
Segments of the trade justice movement have also criticized fair trade in the past years for allegedly focusing too much on individual small producer groups while stopping short of advocating immediate trade policy changes that would have a larger impact on disadvantaged producers' lives. French author and RFI correspondent Jean-Pierre Boris championed this view in his 2005 book Commerce inéquitable.
There have been largely political criticisms of Fairtrade, both from the left and the right. Some believe the fair trade system is not radical enough. French author Christian Jacquiau, in his book Les coulisses du commerce équitable, calls for stricter fair trade standards and criticizes the fair trade movement for working within the current system (i.e. partnerships with mass retailers, multinational corporations etc.) rather than establishing a new fairer, fully autonomous trading system. Jacquiau is also a staunch supporter of significantly higher fair trade prices in order to maximize the impact, as most producers only sell a portion of their crop under fair trade terms. It has been argued that the approach of the FairTrade system is too rooted in a Northern consumerist view of justice which Southern producers do not participate in setting. "A key issue is therefore to make explicit who possesses the power to define the terms of Fairtrade, that is who possesses the power to determine the need of an ethic in the first instance, and subsequently command a particular ethical vision as the truth." Some of the criticisms of Fairtrade from the free market approach to economics appear to be linked to right wing political approaches, but this does not mean that their analysis in this particular case is unacceptable to mainstream economists.
Fair Trade Month
October is Fair Trade Month in the United States. This yearly celebration focuses on increasing awareness and building support for Fair Trade in the United States. Throughout the month, manufacturers, retailers, students, NGO organizations and Fair Trade Towns hold events and promotions in support of Fair Trade.
In 2011, Fair Trade USA and partner brands garnered support for Fair Trade with the help of several celebrity ambassadors.
Comedian Jimmy Fallon kicked off Fair Trade Month by hosting ice cream makers Ben & Jerry on the Late Night with Jimmy Fallon. The October 4, 2011 episode mentioned the March episode in which Ben Cohen and Jerry Greenfield introduced their new flavor featuring Fair Trade Certified ingredients, Late Night Snack. Introducing the ice cream flavor, which is made with Fair Trade Certified vanilla and cocoa, gave Ben and Jerry the opportunity to discuss Fair Trade and the company’s goal to use entirely Fair Trade Certified ingredients by 2013.
Green Mountain Coffee partnered with musical groups Michael Franti & Spearhead and Grace Potter and the Nocturnals to broadcast live concerts in support of Fair Trade promoting Fair Trade. Both concerts were streamed on the Green Mountain Coffee Facebook page. Green Mountain Coffee was recognized in September 2011 as the largest purchaser of Fair Trade Certified coffee in the world, having bought 26 million pounds of Fair Trade coffee during 2010.
Also in 2011, pastry chef Malika Ameen of Top Chef: Just Desserts Season 1 joined celebrity dietician Ashley Koff to create three dishes full of Fair Trade Certified ingredients for a live Ustream broadcast during Fair Trade Month. The episode was called “Every Meal Matters” and consisted of a live cooking demonstration using Fair Trade Certified honey, vanilla extract, ground cinnamon, ground cardamom, bananas, mangos, pineapples, quinoa, natural cane sugar, coffee, chocolate, and brown sugar.
Fair Trade USA launched the Fair Trade Finder in October 2011. The first mobile and social app to help consumers find Fair Trade Certified products based on location, the Fair Trade Finder is available for Facebook, iPhone and Android The crowd-sourced app displays Fair Trade Certified products by pinpointing the user's preferred location on a map. Users who find products can help others find them by uploading a photo or location of the Fair Trade products to the app.
||This article has an unclear citation style. (December 2012)|
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