Thursday, March 11, 2010

Fair Trade: Helping farmers get a fair share of trade

Have you ever been to a coffee shop and read somewhere that the coffee they sell is Certified Fair Trade? If so, have you ever taken a minute to think about what that really means? Well, if not, then I am here to tell you what it means to be Fair Trade Certified.

To start, agriculture is big business all over the world. Without farmers we wouldn’t have most of the food we have today. For large-scale farmers, their benefits of farming and selling is huge, but for small-scale farmers it is usually small. This forces those farmers into a cycle of poverty and debt. There are many middlemen in the process from growing the food to getting it to your table, so little money you actually spend on food reaches the people who grew it. It’s a very sad process for those hard-working farmers, so that is why there is such a thing as Fair Trade. Fair Trade enables those small-scale farmers to sell their food and have enough money to feed their family and survive.

The Fair Trade Movement arose during the rebuilding period post-World War II. This was a period of time when organizations were formed to help develop policies and standardize financing practices. At this time, there was a term known as “development trade,” which began with European and American organizations and churches linked to impoverished communities. These organizations and churches would purchase goods from the developing countries and sell them to customers in developed countries.

The organizations were known as Alternative Trade Organizations (ATO’s), and the number of these types of organizations increased during the 1960’s and 1970’s. In the 1980’s these development organizations coined the slogan, “trade, not aid” in reaction to the corruption created by foreign aid to large organizations and directly to governments. This was the point in time when the term “fair trade” was used with this movement as opposed to the “free trade” policies of that time.

Although I will be mainly focusing on fair trade coffee, other items that are fairly traded include; handicrafts, cocoa, sugar, tea, rice, bananas, honey, cotton, wine, fresh fruit, chocolate and flowers.

In 1988, a coffee cooperative from Oaxaca, Mexico drafted a proposal with Dutch ATO, Solidaridad, to buy and sell large amounts of coffee. Solidaridad came up with the Max Havelaar label instead of forming a bridge between the Mexican group and the European group. This label was put on any coffee where the producer was paid a “fair return.”  The name came from a fictional Dutch character who was opposed to the exploitation of Dutch coffee pickers.

In 1989, the International Federation for Alternative Trade (IFAT) was formed between multiple ATO’s to create support globally. The Fairtrade Labeling Organizations (FLO) group was formed in 1997 to set standards and made sure those standards were met. This group brought together Max Havelaar and its counterparts in other countries.

In 1999, Fair Trade coffee was introduced to the United States, the world’s largest coffee consumer. Today, the United States consumes about one-fifth of the world’s coffee.

At the time one advocacy group, Equal Exchange, was set up and demanded coffee companies begin buying and selling fair trade.

As I mentioned in the beginning of this post, there are many middlemen in the process from growing coffee to actually getting it into the consumers' homes, so the grower gets a small percentage of the money most of the time. This is why there is such a thing as Fair Trade and Equal Exchange created a different path that would allow the growers to earn more money in the end and help out their communities. The graphic below shows the path Equal Exchange has created by eliminating the middlemen, giving more money to the producers and giving the consumers a better value.

Image courtesy of Equal Exchange

According to the Equal Exchange Web site the current minimum price for fair trade coffee is $1.21 per pound, plus $.10 per pound social premium and an additional $.20 per pound for organic. *When the market rate for coffee exceeds the minimum Fair Trade price, a premium is paid above the market rate. According to an article published by Global Exchange in November 2009, the current market prices of coffee are around $.60-$.70 per pound. Since these prices are so low, many farmers don’t make enough to maintain their families, so that is why Fair Trade is needed.

Now that I told you the history of Fair Trade and how much companies have to pay the farmers for their coffee, but what are the actual criteria for being Fair Trade and how does one company receive certification?

A non-profit organization based in the United States, TransFair USA, is the only third-party certifier of Fair Trade products in the U.S.. TransFair’s audit system makes sure the products “verifies industry compliance with Fair Trade criteria.” This organization licenses over 600 U.S. companies that proudly display the Fair Trade Certified label. This organization is also one of 23 members of FLO.

According to the Transfair USA Web site, these are the Fair Trade principles:

•Fair prices: Organized farmer groups receive a guaranteed minimum floor price with a additional premium price for certified organic products.
•Fair labor conditions: Workers on fair trade farms enjoy freedom of association, safe working conditions, and living wages. Child labor that is forced is strictly prohibited.
•Direct trade: Importers purchase from Fair Trade producer groups as direct as possible, avoiding any middlemen, which in turn empowers farmers and strengthens their organizations.
•Democratic and transparent organizations: Fair Trade farmers and workers decide democratically how to use their Fair Trade premiums.
•Community development: Fair Trade farmers invest their premiums into the social and business development of their community. This includes; health care, new schools, quality improvement trainings, and organic certification.
•Environmental sustainability: The Fair Trade certification prohibits the use of genetically modified organisms (GMOs), promotes farm systems that improve soil fertility, and limits the use of harmful agrochemicals.

Numbers to make note of:

•There are over 35,000 retail establishments in the U.S. that offer Fair Trade products.

•Fair Trade benefits over 800,000 farmers organized into cooperatives and unions in over 48 countries.

•TransFair USA has certified more than 74 million pounds of Fair trade coffee, which has generated more than $60 million of additional income for farmers.

•In 2009, Starbucks doubled its consumption of Fair Trade coffee making it the world’s largest consumer of Fair Trade coffee.

I had the opportunity to talk to Megan Lobsinger, an employee at Donkey Coffee & Espresso in Athens, Ohio. Below is a clip of what she had to say. The first one was a response to my question about why coffee shops should buy Fair Trade coffee to sell and the second is a response to a question asking her if she thought the fair trade label helped their business and if she thinks that makes people more inclined to purchase it.

I wanted to know just how many people at Ohio University really paid attention to the Fair Trade label when they bought coffee, so I can’t really survey 20,000 students, so I sent a survey link to over 100 people on my Facebook Friends list. Fifty people took the one-question survey and here are the results.

Graphic Illustration made by the editor.

When I looked at the final results of this survey, I was surprised to see that close to half of the people didn't even purchase or drink coffee. Also, the lowest percentage at 14% is the number of people who actually pay attention to Fair Trade, that was only around 7 or 8 people, very low I think.

As I end this post I think about how important Fair Trade is to those hardworking farmers and I will now pay more attention to it. Without Fair Trade, those farmers can't live. So I encourage those of you who drink coffee to pay more attention next time you go to Starbucks or any other coffee shop and if you have the opportunity to pay a little more for Fair Trade coffee, just think about who you are helping and the ways it will help those people and their families in the long run.



allie.laforce said...

Once again, your research is amazing. You continue to impress me every time you post. Thank you for all of this helpful information I really enjoyed the graphics and the sound. It has been such a learning experience reading your blog! I look forward to taking some of your advice and sharing with others!

Tricia Flickinger said...

Thanks Allie! I'm glad you enjoyed reading and learning about coffee.

Sandi M. Combs said...

I kind of knew what Fair Trade was, but thanks for sharing all of this insight. Plus, I can rest easy: As a Starbucks drinker, I'm happy to hear it is the world's largest consumer of Fair Trade coffee.

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