Fair Trade is an initiative that aims to improve the livelihood of small producers by ensuring a minimum price for their coffee. Farms participating in Fair Trade work with Alternative Trading Organizations (ATOs), which typically purchase directly from producers based on principals that support poverty alleviation, transparency and accountability, capacity building, better working conditions, etc.
See also: Coffee Sustainability
Importers receive Fair Trade labeling for their products from a labeling organization and the process is controlled by national organizations. There are also umbrella organizations, which are a conglomerate of different entities such as producers, labeling organizations, and marketing organizations. One such conglomerate is Fairtrade International (FLO). FLO works to coordinate standards and guidelines for various labeling initiatives. FLO monitors producers and traders and can decertify in cases where standards are not being met. Unlike ATOs, labeling organizations are not involved in trading products.
Only cooperatives consisting of small farms can be certified. The process usually takes six to twelve months to complete and includes establishing formal organizational structures, mechanisms of accountability and transparency, as well as accounting processes.
However, not all is sunshine and roses with Fair Trade. It can be difficult to trace the premium paid for fair trade coffee back to developing countries or even to producers. It has also been argued that the fairtrade system can be gamed.(Griffiths, 2012)
Some buyers pay the licence fee, but do not pay the exporters the money that they are obliged to if they are to call the product Fairtrade.
(Griffiths, 2012)
See also: Why Fairtrade Has Failed Coffee Producers
Also, why focus strictly on co-ops of small holders as opposed to farmers with larger farms but in the same predicament or small holders who aren’t in a co-op? What makes the small holder, co-op member more deserving than an independent small holder or a farmer with a larger farm facing the same problems, just on a larger scale?
Given what we know about the consumer attitude-behavior gap and what we don’t know about how much of the premium reaches producers, it’s fair to say improvement is needed on both the supply and the demand side of the equation.
- Griffiths, P. (2012). Ethical Objections to Fairtrade. Journal of Business Ethics, 105(3), 357–373. https://doi.org/10.1007/s10551-011-0972-0
This article is part of a series on voluntary sustainability standards (VSS). Below are all articles in the series:
Ethical Consumption
Fair Trade Coffee
Why Fair Trade Has Failed Coffee Producers
Ethical Trade
Organic Coffee