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Understanding Fair Trade Certification

We touch the Third World every day. The clothes we wear. Much of our hot drinks and exotic fruits. So, how can we touch them more kindly, more justly, more respectful of their dignity?

The easiest answer is buying Fair Trade Certified products whenever we buy coffee, tea, sugar, cocoa, bananas and other fresh fruit, honey, cotton, wine, chocolate, flowers and gold.

Take a look at the impact it has on producers:

Santiago’s story
Fair Trade Cotton in Cameroon
Paul Rice: Impact of Fair Trade
Paul Rice: Uncommon Hero

Fair Trade is a development strategy to address poverty among producers by helping them build sustainable businesses and communities. The funding for development comes from producers receiving a fair price for their goods, rather than from government handouts or foreign charity. Where producers have struggled against poverty because they have been impoverished by the unfair advantages exporters and developed nations have in the trade relationships between North and South, Fair Trade uses the free market system for the benefit of those producers.

Fair Trade has become organized as a certifying (= labelling) system. As a certifying system, Fair Trade is made up of:

  • the international standards-setting body called FLO [Fairtrade Labeling Organizations] International,
  • the international auditing organization called FLO-CERT that works in developing countries to certify the export products, and
  • the national auditing bodies that oversee importing, licensing and selling certified goods. In Canada the national certifying organization is Fairtrade Canada.

While many of the principles of Fair Trade have been in operation since the 1940s, the certification or labelling organizations began to emerge in the late 1980s and became organized in the late 1990s. Fairtrade USA, for example, only emerged in 1998, ten years after the European organizations began. So Fair Trade is very well known in Europe, with Britain being the country most aware of and committed to it. It is still not well understood in much of Canada.

FLO International standards cover fair wages, safe working conditions, democratic empowerment of all (including women), and ecologically sound agricultural practices. FLO does research to determine commodity-specific price floors that ensure the costs of production and costs of living are covered by the Fair Trade price paid to the farmer. Along with determining a fair selling price, FLO also sets a “social premium,” a small amount of money that goes to the producer co-op to use in community development projects such as building schools, medical clinics or roads, creating scholarships, developing export enterprises, etc. Coffee, for example, currently has a Fair Trade price of $1.40/lb. and the social premium is $0.20/lb. So the importer will pay $1.60/lb. to the producer co-op. That extra $0.20 can have a huge impact. In East Timor a coffee co-op used its premiums to build a medical clinic and so has become the primary provider for health care in their region.

FLO-CERT audits producers to ensure the international Fair Trade standards are met — labourers are paid fair wages, there is democratic involvement, protection of the environment, etc. FLO-CERT also audits exporters to ensure they are paying the appropriate prices. If prices on the world markets rise above the price floor, the Fair Trade price also rises, but regardless of how low the market price falls, the Fair Trade price floor guarantees the livelihood of the producer. Most producers sell whatever they can into the Fair Trade system, but until market demand for Fair Trade products increases, they must sell most of their goods on the world markets, even if they get less than the cost of production. (That’s why we are encouraging people to buy Fair Trade: if we don’t buy it, they can’t benefit from it.)

Fairtrade Canada monitors the importing, licensing and sale of all Fair Trade goods to Canada to ensure that all goods sold as certified can be traced, and that none is being sold as certified that has not come through Fair Trade channels. In this way, buying Fair Trade is the best guarantee that what we buy is having a direct and positive impact on the well-being of producers, their families and communities in the global South. Fairtrade Canada also promotes public awareness to grow the market for Fair Trade goods, which in turn increases the number of producers able to benefit from Fair Trade. The Fair Trade Town campaign is one of the strategies for increasing community awareness and commitment to Fair Trade.

Is Fair Trade a perfect system? No. There are no perfect systems in this world. If you would like to see some of the criticism of the Fair Trade system, read Colleen Haight’s “The Problem with Fair Trade”, but I suggest you read the responses, which are very good and show the weaknesses of the article. To be fair, also read Paul Rice’s response. In my opinion, the power of the Fair Trade model has been its capacity to organize and develop co-ops that have empowered millions of small producers, and its capacity to promote trade justice as a focused social movement.

Three chains for change

The All’s Fair Wear-athon celebrates the way something as simple as shopping can change the world when we do it wisely.   The word  sweatshop needs to be seen for what it is: not simply low-paying work, but often a form of oppression that takes advantage of the poor and can even be a form of slavery.  The AFW seeks to grow a community that knows their buying power is a force for change, a community that respects and works for the dignity of the people in the global South who grow our food and make our clothes.

“How can my shopping make a difference?”

Be a ethical consumer. Buy things that actually help others as well as meeting our own needs. If economics is all about supply and demand, an ethical consumer creates a demand for goods that help the poor, the community and the environment. Ethical consumers  support the best supply chains.

A supply chain is how things get from where they are made or grown to where we buy them. So the farmer grows coffee, sells to an exporter, who sells to an importer, who sells to a roaster, who sells it to a grocery store, who sells it to you. You, the consumer, are the end of the supply chain. This is what gives you the power to make change. Some supply chains are indifferent to the suffering of the poor in developing nations, but others were built for the purpose of creating a more just relationship between the global North and South. Ethical consumers choose products and brands that support the better supply chains.

There are three supply chains worth knowing about, two of which focus on Fair Trade and the third focuses on fair labour practices.

  1. Fairtrade Certified products
  2. Fair Trade goods
  3. Fair Labor Association-affiliated companies

I will go into more detail on each of these supply chains in later postings.  Generally Fair Trade is a supply chain developed to help communities is the global South by partnering with them to make a living from what they grow or make.  It helps them build sustainable businesses and communities, where the funding for development comes from producers receiving a fair price for their goods, rather than government handouts or foreign charity.

Fairtrade Certified products
Fair Trade Certified products come from developing countries: coffee, tea, sugar, cocoa, bananas and other fresh fruit, honey, cotton, wine, chocolate, flowers and gold. Depending on where you live, you can find Fairtrade Certified products in grocery stores or specialty shops.

These goods are identified by the Fairtrade label, which certifies they have come through a rigorously audited supply chain that guarantees the farmers and labourers in the producing countries received a fair price for their goods. Fairtrade establishes a fair price based the cost of production, the cost of living and the cost of certification. So if the world market for coffee falls, Fair Trade farmers will still get a fair price.  Fairtrade farmers belong to co-operatives, which allows them to work better as a community.  For every pound of coffee the co-op sells into the Fairtrade supply chain, the co-op also receives a “premium,” a small amount of money to be used on community projects, such as building schools or medical clinics, creating their own export companies, establishing scholarships, etc.

So when you buy Fair Trade Certified products, even though they are a bit more expensive, you know you are investing in whole producer communities in the global South. Action item: Buy Fair Trade Certified goods instead of the cheaper products, and ask your favourite retailers to stock Fair Trade items that are not yet available locally. To find out what is available locally, check out Fairtrade Canada’s Fair Trade Finder page.

Fair Trade Goods
There is another Fair Trade network where the focus is not on certifying specific products but on the reputation of the whole company that sells the goods. You can find Fairtrade certified coffee in any grocery store, but the store itself is not Fair Trade. But Ten Thousand Villages is a store where everything is Fair Trade, even though there is no certification process. The company, which was developed solely for the purpose of giving Third World artisans more direct access to First World markets, has a reputation that guarantees the supply chain is working for the well-being of producers. Typically the producers are marginal communities in the Third World, and their involvement in Fair Trade reflects development projects by missions or agencies working to alleviate poverty.

The organization behind this network of producers and retailers is the World Fair Trade Organization, and one of the key WFTO bodies in North America is the Fair Trade Federation. Occasionally you can find goods imported by the Fair Trade Federation sold in local independent retailers. Action item: Patronize Ten Thousand Villages (a great place for buying exotic gifts) and stores you find carrying FTF goods, and invite your favourite local independent store to consider carrying FTF goods. They can find sources at the Fair Trade Federation site.

Fair Labor Association-affiliated companies
The Fair Labor Association provides regular clothing companies with a way of exercising greater control over factories in the global South where their goods are made. In the past, companies tried to avoid blame by saying they do not own the factories that make their goods, so they cannot control the labour conditions. But now, instead of avoiding responsibility, companies can make fair labour standards part of the production contract — if a factory wants to keep their contract with Nike, for example, they must meet the labour standards required by the contract. FLA-affiliated companies give the FLA the addresses of all the factories manufacturing for them. The FLA does random surprise audits of the factories, identifies any failure to meet the standards, and sets up a plan for the factory to improve its working conditions and keep the contract with the company.

You can support this effort to improve Third World working conditions by rewarding FLA-affiliated companies for doing the right thing. Get to know the labels and brands of these companies: Gildan, American Eagle, Nike, Adidas, etc. (If you think Nike is one of the bad guys, you have probably seen videos from 2004 — which hurt their sales so much that they straightened up their act.) You can learn more about the FLA at the Fair Labor Association website. To see the companies and brands affiliated with the FLA, see their Participating Companies. Action item: Get to know these labels and buy them whenever possible, and maybe even let them know that is why you buy their products.

Conclusion
When enough people buy through these three supply chains, companies will recognize there is a culture shift towards treating the global South right. When one British chain, the Co-op, went strictly to Fairtrade bananas, Dole lost $20 million in annual sales, prompting Dole to look for a source of Fair Trade bananas so that they could compete. In Europe, such pressure has forced companies with histories of labour abuse to seek some kind of ethical certification. When consumers care, companies care.

OXFORD STUDENTS FOR JUSTICE (OS4J)

Heart — Challenge — Clarity

Our Heart

We are dedicated to fighting poverty in the global South by changing how our community shops.

The Challenge

We will promote Fair Trade in our family, friendships, school and community until Fair Trade is so well known and supported that our community is formally recognized as a “Fair Trade Town.”

Clarity

  • We believe the human heart was created for justice and love. This is what we need, and what we need to offer others.
  • We believe fighting poverty is one of the most profound ways of living for justice and love.
  • We believe poverty is truly defeated when people’s work gives them dignity and enables them to care for the well-being of their family and community.
  • We believe promoting Fair Trade changes whole communities in the global South by paying a fair price for what they make, recognizing the worth of their labour and allowing them to build a future for themselves.