Fair Trade III: What is Fair Trade

The term, “Fairtrade”, is the outcome of the strategic organization of ethical trade to have a more effective role on in rebalancing global trading practices. The ETI set the initial groundwork on which subsequent Fair Trade initiatives could build. Their core values are:

Employment is freely chosen

Freedom of association and the right to collective bargaining are respected

Working conditions are safe and hygienic

Child labor shall not be used

Living wages are paid

Working hours are not excessive

No discrimination is practiced

Regular employment is provided

No harsh or inhumane treatment is allowed

(Hale and Shaw, 2001).

Fair Trade when spelled in two words, refers to fair trading practices, similar to the term, “ethical trade” (www.fairtrade.net). “Fairtrade” when spelled as one word refers to the certification system which monitors the worldwide trade of crops grown in the Third World such as tea, cocoa and coffee, when that exchange follows certain guidelines (www.fairtrade.net). Fairtrade certification is regulated by FLO which is based in Bonn, Germany (www.fairtrade.net).

FLO sets rigorous ethical trading standards which must be adhered to by everyone in the supply chain in order to receive the Fairtrade certification (Carjaval, 2005). In an effort to maintain an effective certification system, FLO sets standards per crop that deal with the unique qualities of that crop. For example, cocoa and coffee are largely grown by self-organizing small-holder cooperatives whereas tea is grown by plantation workers who are employed by the owner of the plantation (www.fairtrade.net). So, different standards are needed for each scenario. In this way, FLO maintains a great deal of credibility and transparency and a great deal of consumer assurance that the commodity was in fact traded ethically. This shows the holistic nature of the certification program and its willingness to address issues of sustainability contextually in order to best achieve the intended results.

FLO is also an evolving certification, meaning that there is always room for improvement and that the certification is capable of benefiting more and more growers. For example, one requirement of the Fairtrade coffee certification is that growers must be working towards environmental sustainability. However, there is not an empirical or static guideline for what that means. This might sound like a failure in the system; however, it actually is beneficial. Because of advanced data recording and communications technology, monitoring certified farmers is easy. If a coffee farmer is achieving greater and greater levels of sustainability annually, he is able to stay FLO certified. In the same way, a grower who has reached a “certified organic” level of environmental sustainability, must also continually progress towards a higher level of environmental sustainability (www.fairtrade.net).

A look at the statistics exemplifies the previous point. In 1998, 100% of Fairtrade certified coffee was also organic certified. In 2004, only 76% of Fairtrade certified coffee was certified organic (www.transfairusa.org). This does not mean that Fairtrade is decreasing organic production. Rather, it includes farmers who are not yet certified, but who are working towards organic certification. This fluid characteristic of the FLO certification supports constant improvement in all levels of sustainability: social, environmental and economic; thus allowing the movement to achieve great results.

If the fast growth and First World market penetration of Fairtrade certified products continues, FLO has the potential, with its certification mark, to create the paradigm shifts necessary to create long-lasting global economic balance. The Netherlands, where the Fair Trade movement originated, is still one of the largest consumers of Fairtrade goods. In 2008, almost EURO 61 million worth of Fair Trade goods were sold. This is a 28% growth over 2007. That one of the oldest Fair Trade markets is still growing shows a great potential for change. Globally, over EURO 2.8 billion worth of Fair Trade goods were sold in 2008.

Below is a statistical representation of Fairtrade coffee in the marketplace to illustrate its present acceptance and impact. The following list shows the markets which have sold the greatest amount of Fairtrade certified coffee according to Trans Fair USA (www.transfairusa.org), FLO’s United States based national initiative which certified importers, manufacturers and retailers of Fairtrade goods in the U.S.:

Country Pounds certified # in top 7 markets

Australia 33,056 -

Belgium 3,728,154 5

Canada 662,028 7

Denmark 1,980,280 6

Finland 39,683 -

France 582,490 -

Germany 8,985,140 3

Italy 343,560 -

Netherlands 18,488,847 2

Norway 293,462 -

Sweden 537,434 -

Switzerland 620,930 -

UK 6,354,875 4

USA 18,663,806 1

(www.transfairusa.com)

The following list shows the world markets which have had the largest Fairtrade coffee integration and, therefore, acceptance in order from most acceptance (www.transfairusa.org). This list is important because it shows the potential worldwide effect on global economic balance in that it shows Fairtrade’s ability to capture market percentages of the total coffee market.

Country % FT (of total market share)

Switzerland <3.5

Netherlands <3.5

UK <3

Denmark 1.5

Ireland <1.5

Austria <1.5

France <1

Belgium <1

Norway <1

U.S. <1

It is interesting, too, that these numbers are from 2004. In that year, the growth in the sales of Fairtrade certified coffee in the U.S. was still 76%, on a steady stream downward from over 100% in 2000. The stabilization of growth over the long-term will show the acceptance of Fairtrade.

Photo: Darjeeling, Northern India, where kids are proud to have schools, and to wear uniforms. Fair Trade affords these children schools, sports, milk and an opportunity, Sarah Scarborough.