In 1982, Paul Rice, age 20, was studying economics and political science at Yale. Rice decided to spend the summer working on farms in Nicaragua. After finishing his degree at Yale, Rice returned to Nicaragua for 11 years, while the Contra War raged, and after. He continued working with farmers and established a successful coffee co-op.
Paul Rice is now president and CEO of Transfair USA, which last December won business magazine Fast Company’s prestigious Social Capitalist Award the fourth time running. The award is given to nonprofits that do good by following best business practices. Transfair USA monitors fair-trade certification of such products as coffee, tea, chocolate, fruit, rice, sugar, vanilla and flowers. Fair trade ensures that farmers get a fair price, can compete in the global marketplace, can practice sustainable agriculture and are able to invest their profits in their communities.
It may seem like a long road from the fields of Nicaragua to the Oakland, Calif., headquarters where Rice runs his nonprofit, which over the past nine years has produced more than $91 million in additional income for some of the world’s most disadvantaged farmers. But for Rice, a conscientious citizen of the global village, it’s not.
“After 11 years in Nicaragua, I realized that markets didn’t have to be the enemy, that in fact markets could be an incredibly powerful force for liberating the poor and that Fair Trade was a really interesting, innovative, powerful model for approaching that,” Rice said. “If I stayed in Nicaragua, I could continue to impact the lives of 10,000 families. But if I came back to the States and tried … to put Fair Trade on the map in a much bigger way, that maybe I could impact the lives of 10 million farmers.”
So, Rice got a master’s degree from the Haas School of Business at UC Berkeley and launched TransFair USA. Now, Fair Trade Certified products are available in 40,000 retail outlets throughout the United States and Canada.
The Birth of Fair Trade and Its Remarkable Growth
In 1946, a Mennonite volunteer, Edna Ruth Byler, was working with a sewing class in Puerto Rico and found that many women were creating beautiful lace but living in grinding poverty. Byler began taking pieces to the mainland U.S., where she sold them and returned the profits to the women directly. Eventually, her efforts grew into Ten Thousand Villages, which has developed from a single store established in 1958 to the biggest fair trade retailer in North America.
Fair Trade didn’t really become an organized movement, however, until the 1980s in Europe. In 1988, Solidaridad, a Dutch non-governmental organization, or NGO, created the first Fair Trade certification and label. Similar systems sprouted up across Europe over the next few years. In 1997, these myriad organizations founded Fairtrade Labelling Organizations International (FLO), an umbrella organization that sets Fair Trade certification standards.
FLO estimates that consumers worldwide spent a record $2.21 billion on Fair Trade certified products in 2006, the last year for which statistics are available. This marks a 41% increase from 2005 and benefits more than 1.4 million producers and workers worldwide.
So how does Fair Trade work exactly? The Netherlands-based International Fair Trade Association (IFAT), and umbrella group for 300 groups in 70 countries, defines fair trade as “a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South.”
TransFair USA cites several principles that define a product as Fair Trade:
- Democratically organized cooperatives receive a guaranteed minimum above-market price. They also receive an additional premium for certified organic products. (Fair Trade products are often, but not always, organic.)
- Workers have freedom of association and safe working conditions, while child labor is strictly prohibited. (The cocoa industry is especially notorious for using child labor.)
- Importers purchase from Fair Trade producer groups as directly as possible, eliminating middlemen.
- Fair Trade farmers and farm workers decide themselves how to use their Fair Trade revenues.
- Fair Trade farmers and farm workers invest Fair Trade premiums in social and business development projects. (These can range from improving educational opportunities to developing organic farming techniques.)
- The certification system supports environmental sustainability. Genetically modified organisms are prohibited, harmful agrochemicals are limited, and the conservation of ecosystems is encouraged.
According to Rice, it’s a win-win situation: “There’s a direct correlation between the quality of a cup of coffee, or the quality of a banana … and the amount of money the farmer actually gets paid for that harvest…. If farmers get a decent price, then they can invest more in the quality of the final product.
“So there’s actually an alignment of interest there between your and my desires as consumer and the return to the grower…. When you buy a Fair Trade product you’re also helping other families around the world. Helping families keep their kids in school, helping them farm in a sustainable manner.”
Fair Trade products are more expensive, but usually not out of line with the cost of the premium end of a product line. Fair Trade products, while growing in popularity, still represent a tiny fraction of world trade: In 2006, only a little more than 3 percent of the coffee sold in the United States was Fair Trade Certified.
But as Fair Trade commodities become more mainstream, the prices will likely come down. “There is no reason why Fair Trade should cost astronomically more than traditional products,” said Transfair USA spokesperson Nicole Chettero. “We truly believe that the market will work itself out as Fair Trade Certified products move from being a niche market to a mainstream option. As the demand and volume of Fair Trade Certified products increase, retailers will naturally start to drop prices to remain competitive.”
Concerns About Fair Trade
There are some concerns about the Fair Trade model, even among people most likely to embrace the concept—consumers concerned about ethical buying. One objection results directly from the mainstreaming of the Fair Trade movement. Large corporations such as Wal-Mart, Dunkin’ Donuts, McDonald’s, Starbucks and Nestlé have begun selling fair-trade products. Not only are such corporations known to sell products that use or harm animals; many conscientious consumers worry that companies often cited as poor corporate citizens will take advantage of the aura of social and environmental awareness. Wal-Mart has been criticized for low wages and lack of health care benefits, and Nestlé has been boycotted for its marketing of formula as a substitute for breast milk in the developing world, putting babies’ health at risk when the formula is mixed with local water, or due to the lack of protective antibodies and nutrients in breast milk.
But the Fair Trade movement is focused on putting its certification logos on products, not endorsing corporations. Because it is the product that is certified (in the case of Transfair USA, look for the black and white logo), consumers can shop for Fair Trade Certified products at various stores, including some online.
“We’re proud of the fact that consumers have stepped up and bought Fair Trade,” Rice said, “and that in turn has pulled more and more companies into the fold, because, let’s get real, big companies don’t jump into Fair Trade out the goodness of their hearts. They jump into Fair Trade because there’s a market for it.
“So TransFair’s approach is … to really embrace the opportunity to work with big companies in order to have a larger impact on the world. We don’t want to ever be accused of being a greenwasher. … The way we manage that risk is by setting very clear expectations up front with the companies that we work with around setting a balance between the volume of Fair Trade that they move, and promotion that they put out around that. So there needs to be a balance.”
Another concern has to do with global warming and the locavore movement, which argues that as much as possible food should be locally grown or locally produced. Obviously, transporting food over long distances contributes to greenhouse gases. And since products such as coffee and cocoa are from the Global South, many locavores eschew them altogether.
True, if you live in the United States, drinking coffee or enjoying a chocolate bar is contributing to global warming. On the other hand, the movement for Fair Trade empowers disenfranchised workers, helping them to make a better living and encouraging sustainable agriculture in some of the most environmentally vulnerable parts of the planet.
For instance, three-quarters of the world’s coffee growers farm less than 25 acres. And often, small coffee farms are a mere acre or two. The small size of the farms encourages sustainable practices such as shade-grown coffee, which is grown in a forest-like setting that provides habitat for myriad species, especially migratory birds. This is certainly preferable to the habitat loss caused by large monoculture plantations. So there is both social and environmental value in buying Fair Trade products.
“TransFair’s whole model is based on consumers’ voting with their pocketbooks,” said Fast Company magazine. And that means each and every one of us can make a small difference when we shop.
To learn where to find Fair Trade Certified products, type in your zip code at the Web page www.transfairusa.org/content/WhereToBuy.