Fair and Direct Trade

Corporate coffee / Fair and Direct Trade

What’s wrong with cheap coffee, in a nutshell

The Fair Trade USA/FLO break-up and its ramifications is seeping into the mainstream media. Recently, for example, the New York Times published an article on the debate on the future of fair trade, and NPR carried a radio segment. A piece in Mother Jones magazine by Tom Philpott summed up the kerfluffle nicely, but what really resonated with me in that article was the paragraph on what sparked the genesis of the fair trade movement. It neatly summarizes (much of) exactly what is wrong with big, cheap, corporate coffee:

Huge, rich-world companies like Nestle and Folger’s (now owned by JM Smucker) dominate trade and drive prices down, reaping windfalls. Production consolidates onto huge plantations that employ workers (often, children) at poverty wages; small producers get squeezed out. And as these high-production plantations expand their monocrops to meet global demand, they gobble up high-quality farmlands that might otherwise be supporting smallholders who grow food staples for domestic consumption along with foreign-exchange-earning crops like coffee.

…and destroy biodiversity in the process, I might add.  Read more about the practices and impacts of corporate coffee here.

Fair and Direct Trade

Fair Trade USA muddies the waters

When it comes to the world of Fair Trade (FT), Coffee & Conservation tries to stick to providing basic information to consumers on what the certification means, the specific environmental standards in FT certification, and major news. A recent announcement qualifies as major news that changes the meaning of “Fair Trade” certification in the U.S., and which may mean changes to environmental standards for coffee certified as FT by Fair Trade USA.

Background

Fairtrade International (FLO) is the organization that coordinates labeling initiatives around the globe. FLO develops the FT standards for all FT-certified products, including coffee. Member organizations in other countries use the standards to license and promote FT-certified products. In the United States, the member organization is Fair Trade USA (formerly TransFair USA).

One of the strengths of FT certification was that FLO provided global standards for FT-certified products (coffee being just one of many). Whether or not you agreed that the standards were the right ones to achieve the stated goals, at least you knew that FT-certified products all conformed to the same standards — everyone was on the same page. Even if many consumers don’t have a full understanding of the purpose and means of FT, this single system, applied consistently, has built their trust in the certification.

Break up

Last week, Fair Trade USA (FTUSA) announced it is resigning its membership in the FLO system effective December 31, 2011. The main departure point is that FT certification for coffee has been restricted to cooperatives; for other agricultural products such as bananas or tea, larger estates and other producer models have been able to get FT certification. FTUSA wants to expand the availability of FT certification, starting with coffee.

FTUSA noted that it may revise some of the standards currently being used for FT-certified products. The language in FLO’s response was much clearer:

“Fair Trade USA has announced a new initiative under the banner Fair Trade For All.’ We wish to clarify that the proposals it contains regarding major changes on coffee certification are the views of Fair Trade USA alone, and do not constitute a change to the policy or standards of Fairtrade International (FLO).”

Therefore, FLO has stated as of January 1, 2012, they (FLO) will “no longer be able to accept FTUSA’s certification for sales into other Fairtrade markets under the global Certification Mark.” FTUSA will continue to recognize producer organizations who hold FT certification from FLO.  Eventually, then, a product in the U.S. may have FTUSA’s seal, the FLO seal, or both. Consequently, consumers will have to figure out what the standards are for the certifications.

The FLO global certification mark (seal).

Recap of current standards

At least initially, it appears that the major changes will have to do with who qualifies for FT certification. How or if this will effect the environmental standards is not known at this time. Update: Please see the Quick Guide to Coffee Certifications for graphs that  illustrate that FLO has more criteria or requirements related to the environment and biodiversity than FT USA.

FT environmental standards developed by FLO, as I outlined in a previous post, are fairly generic. They cover ( with a very broad brush) pest management;  general soil, water, and waste management; GMO policy; energy use; and very broadly and non-specifically, biodiversity protection.

New FLO standards were rolled out in early 2011, but not much has changed.  The revised generic environmental standards for all small producers (which apply to coffee), while re-worded, expanded, and providing more detailed guidance, did not substantially strengthen biodiversity protection from previous versions. FLO said this upon the revision:

“Revised environmental requirements: Putting people first

The revised environmental requirements in the New Standards Framework keep people at the heart of the Fairtrade system. Strong core criteria protect producers’ health and safety, conserve nature and ban the use of GMOs and dangerous chemicals. Then, through the benefits received through Fairtrade, producers are encouraged to work on development priorities of their choice which lead to even greater sustainability.”

The Fair Trade USA seal.

As before, the standards specific to coffee do not have any additional environmental criteria (e.g., any sort of shade tree, density, species, or pruning requirements).

Here are the links to official statement by FLO and FTUSA. As the coffee industry responds, I’ll add links to especially relevant content.

Updated news links:

Additional links:

Fair and Direct Trade

Sips: Fair Trade debate

There are so many great voices in the fair/Fair trade movement, I keep out of it aside from environmental aspects of certification and occasional links. Here are a few of those links to some posts I have found most thought-provoking lately. Fair Trade is having growing pains, and recent high market prices for coffee have added to the turmoil.

The Stanford Social Innovation Review is a publication of the Center on Philanthropy and Civil Society at Stanford University. They recently ran two pieces on Fair Trade. The first, is The Problem with Fair Trade Coffee, by Colleen Haight, an assistant professor at San Jose State University. About a third of the way down is a good illustration of the author’s interpretation of why Fair Trade coffee has a “quality problem.” Lots of history and stats in the piece, and excellent comments, as well.

They followed up with a rebuttal from Fair Trade USA head Paul Rice, Fair Trade: A Model for Sustainable Development.

Meanwhile, Small Farmers. Big Change the blog of Equal Exchange, an alternative trade organization, also put out two pieces. Fair Trade is NOT the End Goal: Part I and Part II. Part I explained the pressures on co-ops during periods of uncertain high market prices, and the choices they face when it is time to deliver on pre-negotiated contracts which will pay less than the market price. One passage struck me,

When the coffee starts coming in, the competition (in the form of multi-national businesses) is knocking at the farm gates offering farmers more money for their beans than the price the co-op has promised them.

I added the emphasis. I suppose anybody could come along and offer higher prices at the farm gate, but look who is specifically singled out* as the entity who is trying to get  farmers to break their contracts with their co-ops: corporate coffee. As the post explains, this far-reaching problems. And those multinationals won’t be at the farm gate when prices drop again.

Part II is a view of the future of Fair Trade by Santiago Paz, co-manager, CEPICAFE, a co-op in Peru.

Food for thought.

*Update: A Wall Street Journal article, “Battle brewing over coffee” published on 17 July confirmed it is the “cash flush” multinationals tempting the farmers. The first sentence reads, “Rising prices have upended the coffee trade, as multinational brokers increasingly woo farmers away from local cooperatives in the world-wide scramble for beans.” It specifically mentioned these are representatives from  Nestlé SA,  ED&F Man Holdings Ltd.,  and Ecom Agroindustrial Corp. Ltd. The latter two are very large organizations that include coffee divisions (ED&F Man’s is Volcafe) that buy coffee for multinational roasters. These companies say that it’s up to the farmers who to sell to.

That’s true, and I can’t really blame the farmers, who need the cash. But these multinationals won’t be providing loans and support when coffee prices drop, and if the cooperatives go under, nobody will.

Maybe these high prices wouldn’t be as tempting if we’d been paying the real cost of coffee all along, providing a price that reflects all the work that goes into growing coffee, and enough for farmers to cover their costs of production and feed their families, send their kids to school, and invest in their farms and communities.

There is no such thing as cheap coffee.

Update #2: Fairtrade International (FLO) has been holding workshops on risk management and contract negotiation for cooperative managers to help them with the problems surrounding defaults on their contracts. FLO reports that Bolivia, Peru and Indonesia were the countries hit hardest by co-op member defaults. Read more here.

Photo by Ian Murchison under a Creative Commons license.

Certifications / Fair and Direct Trade

What’s happening with Fair Trade?

Big kerfluffle, well explained in the following posts; make sure to read the comments. My thoughts on how this relates to other certifications follow.

These posts bring up a two-pronged issue that is not only at the crux of the discontent with TransFair USA/Fair Trade USA, but could apply to other certifications. It’s akin to “mission creep,” though arguably with worse consequences. It’s a veering away or dilution of the mission. First is the incorrect notion that the Fair Trade movement is about alleviating poverty, rather than creating a viable alternative market that addresses global trade systems that are unfair to small producers (and providing the resources needed to empower these producers). The Small Farmers, Big Change post has a great example regarding tea and plantation certification.

Which brings us to the second prong, and the heart of the matter, which is that the contention that TransFair USA/Fair Trade USA is more concerned with growing the “brand” than advancing the mission. Small Farmers, Big Change quotes a coffee cooperative rep from Peru:

“They are so concerned with growing the system, advancing at all costs, that they will only end with the extinction of small farmers.”

By shifting away from the small producers and trying to get as many products and players into the Fair Trade system as possible, the argument goes, the standards are being weakened. Creating a second set of modified standards to bring large (often corporate) producers into the fold allows them to “green” a small portion of their sourcing, and offer these goods at a price that can undercut that of cooperatives and smaller producers. If nothing else, this “corporatization” of Fair Trade is creating real anger and alienation, which is beginning to lead to public confusion and distrust of Fair Trade certifications in general.

This has an unsettling parallel in the eco-certification world: the rapid growth and expansion of Rainforest Alliance certified farms, forests, and products. It’s old news that many people are unhappy with Rainforest Alliance working with corporations that seem largely at odds with the spirit of the certification (you can read my post “Discontent with certifications” from more on this topic)., although it certainly hasn’t reached the revolt stage we seem to be approaching with Fair Trade. Many people are watching how the Fair Trade issue plays out, and it may shape the progress and strategies of other certification schemes in the future.