Fair Trade 101

by Sarah Buckman

In this COVID-19 era, it is clear how much our local economy relies on purposeful spending or conscious consumerism, recirculating money spent on local products to help the livelihoods of our neighbors. It is heartwarming to see community members of Champaign-Urbana rally behind their beloved local businesses, farms, and neighbors to keep them all afloat. While conscious consumerism is not a new concept, it does feel like the stresses of COVID-19 has increased the awareness about how an individual's spending shapes the outcomes of the local and global economy. What would it look like if this awakening of purposeful spending not only applied to the local food economy, but also the individual's decision to choose fair trade certified items to stock their household pantry. With more purposeful spending and small changes at grocery stores, you can support higher social welfare standards for international commodity crop workers and their communities by purchasing fair trade.

With the upcoming holiday of Valentine’s Day, let’s break down fair trade into simpler terms so you can make the most informed decisions when stocking up on chocolate, coffee, vanilla, sugar, roses, and other commodity foods that are often gifted to celebrate the day.

WHAT IS FAIR TRADE?

A simple explanation:

Fair Trade is a broader alternative international trade model and social movement built with the purpose of paying fair prices for goods and commodities exported from other countries in order to address unfair profit distribution by other world trade models. Fair Trade is designed to set up long-term trading relationships with international farmers, manufacturers, artisans, and other producers that benefits the workers and communities producing the goods by providing a higher minimum price for the goods and additional funds for community development. In order for an item to be licensed and labeled as fair trade certified, its company has to pass rigorous monitoring by a fair trade certifying body to ensure the company has:

  • a transparent and traceable supply chain

  • equitable working conditions and adherence to labor laws (fair wages, and economic well-being, no child labor or other human rights violations, anti-discriminatory, safe workplace environment, etc)

  • contracts for fair minimum price and premium for the products

  • plans for community development goals and worker support services

  • proper packaging and labeling of goods

The most recognized fairtrade organizations and their labels:

Fairtrade International 

 

Fair Trade USA (Fair Trade Certified)

Fair For Life

World Fair Trade International

Rainforest Alliance Certified

WHAT DOES FAIR TRADE STAND FOR?

Higher living wages

Fair trade certifying organizations pride themselves on paying living wages for workers of companies in order to retain its fair trade certification. Because living wages vary across the globe, determining fair living wages typically involves organizations like the Global Living Wage Coalition, a consultant of Fairtrade International to determining estimates for living wages that analyze nutritional food costs, decent housing expenses, essential needs, and emergency expenses. 

This estimate is “then divided by the average number of full-time-equivalent workers in a typical household in the area, to arrive at the net living wage. Any deductions or taxes are added in order to calculate the necessary gross wage. This process involves consultation with local stakeholders, including trade unions and employer organizations when present. The local stakeholders visit workers’ homes and markets to collect food and housing costs. Workers provide information on preferences and living conditions, while employers supply information on in-kind benefits, bonuses and other compensation. Stakeholders have the chance to provide feedback and suggestions to the preliminary estimates before the benchmark is finalized” [source].

Community development goals and social premiums

In addition to paying living wages for workers, fair trade also includes “social premiums,” additional funds allotted for community development programming or social welfare programs. Typically a committee of workers determine how to best use the premium funds. Since 1998, $465 million dollars have fueled Fair Trade USA’s Community Development Funds. For example, coconut farmers in the Phillippines voted for their premiums to provide daily feeding programs for community children at the local school; textile workers in India decided to purchase gas stoves for all their workers; Colombian farmers voted on the creation of a dental clinic, and in communities in Côte d’Ivoire, new clean water pumps and wells installed. [source 1, source 2].

COMPLICATIONS WITH FAIR TRADE

Raw Commodity Workers Doing the Hard Labor

In what many people call "developing countries" or the "global south," raw commodity workers are tasked with doing the hardest physical labor through farming, manufacturing, and other difficult jobs at low wages while marketing, branding, and logistics teams behind the shipment and selling of the product receive significantly higher wages. Ideally, the distribution of wealth would extend more for laborers than what they currently are, especially since the global economy depends on what is produced. They're doing the hard work, they should get paid more.

Fair Trade Organizations Receive Harsh Scrutiny Compared to Their Competitors 

Fair trade is doing some amazing work and should be celebrated. They're creating an alternative trade model that sets standards and are collectively actively working to eliminate child-labor, human trafficking, unsafe and dangerous working environments, environmental degradation, economic collapse, discriminatory and gender gaps, and inhumane working contracts. Those problems are far too common in the ‘non-fair trade certified’ world of international trade, especially for large multi-national corporations like Mars, Hershey’s, and Nestle that are constantly under investigation for their negligence when it comes to child-labor, slave labor, and human trafficking. The Washington Post interviewed executives from Mars, Hershey’s, and Nestle after 2015 U.S. Labor Department report stated that “more than 2 million children were engaged in dangerous labor in cocoa-growing regions… [and] representatives of some of the biggest and best-known brands — Hershey, Mars and Nestlé — could not guarantee that any of their chocolates were produced without child labor.”

But oftentimes, fair trade organizations are harshly compared to other fair trade organizations, scrutinizing one company's standards to another. Rather than pinning two similar organizations against each other, why not address the stark difference between fair trade practices and the practices of multinational companies, those turning a blind eye to child labor and exploitative working practices?

Lack of Transparency on Minimum Wages

For the average consumer looking to get quick facts on minimum wage pricing for fair trade, it isn’t as readily available as you would think. More often than not, you have to skim impacts reports, minimum price excel sheets, or familiarize yourself with commodity futures and other economic indicators. 

Higher Pricing on Fair Trade Products

Depending on where you source your fair trade products, they can be much more expensive than non-certified products. For instance, Hershey, Nestle, and Mars chocolate bars are usually cheaper than our fair trade certified chocolate bars. It is possible that the sticker shock can dissuade consumers from purchasing the more expensive bar and go with the cheaper option.  Yet, typically our Equal Exchange chocolate bars are just a dollar more than a Hershey bar, and that money goes towards transparent supply chains and fair trade wages for the farming cooperatives they partner with.

While these higher prices do support higher worker wages, we need to acknowledge that higher prices may also limit access to fair trade items for consumers with lower incomes.

FAIR TRADE BRANDS WE LOVE AT THE CO-OP

Equal Exchange

Alaffia

Endangered Species

Frontier Co-op

The world of fair trade is definitely extensive and complicated. There is so much amazing work being done to increase worker wages, develop communities, and provide safe working environments. However, no system is perfect. There are complications and shortcomings in fair trade, such as lack of transparency, lower accessibility, and some descrepency in wages between what we often consider "blue collar" work and "white collar" work. Nevertheless, fair trade organizations collectively work to improve the lives of laborers and communities as a whole.