Perspective Fair Trade, Eefje De Gelder

PERSPECTIVE FAIR TRADE DE GELDER FAIR TRADE de Gelder is a student on the Consequences of Mainstreaming Fair trade ( University ) She has also worked as a postdoctoral researcher on inclusiveness for the Inclusive Innovations project ( Delft University of Technology ) and as a project coordinator on a research project on Morality and Markets at Amsterdam . Her main research interests are how to include in cultural value chains and market systems in which and sustainability are often in conflict . Learning Outcomes 516 FAIR TRADE

After reading and discussing this text , students should be able to Explain fair trade practices and how these relate to lying ideological debates . Explain what fair trade mainstreaming is and the main topics of debate around it . Articulate potential future directions for the fair trade movement . Formulate an informed position on fair trade practices and ideologies . Review and compare the fair trade practices of different organisations and businesses . FAIR TRADE While doing your daily grocery shopping , you may have about the fair trade labels you see on certain products . Fair trade is a form of ethical commerce , embodied by a movement that mobilizes the idea of food justice The goal of the ment is to provide justice to , farmers in supply chains that typically do not have equal access to markets or have low bargaining power in exchange relationships . Ideally , direct and relationships between producers and buyers are established , eliminating the middlemen who often take a large part of the profits . The ment aims to pay higher prices than those already established on the world market , and establish better exchange conditions for producers , for example by including options and fixed interest rates when contracts are set up . Better wages , fewer working hours , prohibition of forced and child labour , and better protection against toxic material are among the ways that . De 2002 , 253 . DE GELDER 517

ing conditions of labourers are improved . In this way , fair trade aims to make producers less dependent on the mercies of world markets and middlemen . In other words , it is believed that compliance with fair trade principles improves and the socioeconomic situation of producers and labourers and the communities in which they live . These additional requirements do not come without costs for consumers . Over time , different fair trade organisations and businesses have supplied fair trade products to Western , who in turn pay a higher price for these products . The higher consumer price is intended to ensure the of producers . At the same time , with , labels and campaigns around their products , fair trade organisations aim to create greater awareness , explaining why fair trade cost more . At a higher level , fair trade organisations want to change the rules of the game , where conventional international trade practices are perceived as For example , the Fair Trade Advocacy Office in Brussels is dedicated to bringing fair trade and justice to the fore in EU policies . When fair trade principles are applied in practice , there are a couple of basic premises for the partners involved in the exchange . producers of handicraft or commodities such as coffee and the production organised democratically in producer a guaranteed higher price than the world market price . If the world market price is higher than the fair trade price , the world market price holds . On top of the fair trade price , a social premium should be provided , which producer communities should spend on munity development , for instance on education . Organically grown commodities receive an additional premium . For ple , since 2019 , the guaranteed fair trade price for cocoa has been . International Fair Trade Charter 2018 , 518 FAIR TRADE

US metric tonne ( with a social premium of US and an organic premium of US . At the beginning of 2021 , the cocoa price was US , meaning that fair trade cocoa producers would receive the world market price plus the social premium , which amounted to US . Organic cocoa producers would receive a US . Besides the ment of fair trade prices , arrangements should also be made with producers who often lack the financial means to invest or face high interest rates . On their side of the gain , producers must apply sustainable production methods and forbid child labour in the production process . The efficacy of fair trade certification programs has been found to be mixed and . certification by trade International may function as a safety net in cases where world market prices are low , but in those cases where world market prices are high , the relative benefits of fair trade cation may disappear . Results depend on the context , and may reflect the way in which the fair trade certification program is applied and the type of producer group involved . It is also hard to control how the auditing of producers functions , as well as how transparent these processes are . Furthermore , the poorest suffering mostly from power imbalances in not be reached by its gram , since a yearly certification fee is charged to , which the poorest are unable to pay . While generally it can be said that fair trade certification programs such as are beneficial to producer and worker communities , fair trade not be regarded as a panacea for the structural challenges that continue to exist at the international level . For example , it would be more effective to lower or eliminate subsidies for cotton farmers that serve to keep world market prices artificially low , and allow therefore cotton producers to rise worldwide . DE GELDER 519

This raises the question of how the fair trade movement as a whole approaches the market , with fair trade organisations and companies having different ideas about how fair trade works in practice . A major issue is the extent to which the movements ideology fits the markets it operates in . Should fair trade focus on enlarging its market , or focus on greater international justice ?

Do fair trade practices exist completely separately from market operations , or can they be integrated ?

The history of the fair trade movement reveals the tensions between ent approaches and different actors in the movement , and these differences have caused debate that continues today . Table shows different fair trade principles that virtually all actors in the movement adhere to , more or less . Table Overview of fair trade principles and the specifications of each ( Source World Fair Trade Organisation 2016 ) 520 FAIR TRADE

Fair trade principle Creating Economically Disadvantaged Producers Transparency and Accountability Fair Trading Practices Payment ofa Fair Price Ensuring no Child Labour or Forced Labour Commitment to Non Discrimination , Gender Equity and Women Economic Empowerment , and Freedom Ensuring Good Working Conditions Providing Capacity Building Promoting Fair Trade the Environment Poverty reduction by making producers economically independent . Involving producers in important decision making . Trading fairly with concern for the social , economic , and environmental of producers . Paying producers a fixed price by mutual agreement , ensuring socially acceptable wages depending on the location . Adhering to the United Nations ( UN ) Convention on children rights . Respecting the trade union rights and rejecting discrimination based on gender , religion , or ethnicity . Providing a safe and healthy Working environment for producers and workers in line with the International Labour Organization ( conventions . Seeking to develop the skills of producers and workers so they can continue to grow and prosper . Raising awareness for the need of greater justice in world trade by trading fairly with poor communities . Caring for the environment by maximising use of sustainable energy and raw materials , while minimising Waste and pollution . THE HISTORY OF FAIR TRADE Fair trade has a longer historical track record than is obvious . The fair trade movement began already in the 19405 , when consumer groups in the and Europe started to import products from handicraft producers . The American Edna , for instance , formed the basis of what is now the retail chain Ten Thousand Villages , by importing handicrafts from Puerto Rico , starting in 1946 . In the 19605 and , these DE GELDER 521

consumer groups were joined by people aiming to change the international trade system entirely . Shops selling products ing from countries started to appear in commercial districts , encouraged by alternative trade organisations ( An example of these are the World shops in the lands . These outlets were regarded as alternative , and often as centres of political action , where fair trade market approaches and actions were discussed . They paid special tion to producers from countries that were in the process of and their participation in equal exchanges at the international Differences over how to the movements ideals became very obvious with a new exchange practice in 1988 . The birth of the first fair trade certification program , by the Dutch foundation Max , implied the start of a strategy . Conventional companies could now join the movement more easily , without being involved in the politically sensitive issues with which the were associated . Products could be fair if producers and companies complied with fair trade standards , audited by an independent organisation ( such as the European ) Over time , fair trade cation became common ground in different European countries , as well as in the and Canada . The rise of fair trade tion programs enlarged the impact of fair trade among producers because more companies could join . Sales of fair trade products increased as consumers more easily and frequently encountered fair trade products during grocery shopping . At the same time , fair trade producers faced extra costs in terms of certification fees and associated administrative costs . As fair sales increased , the fair trade movement became more institutionalised , with the overarching body of the . See also Van Dam 2020 . 522 FAIR TRADE

fair trade movement , International in ( German ) leading the different national European and American fair trade initiatives from 2007 . This organisation is responsible for setting the Certified standards and management of the rounding process . Currently , various fair trade suppliers , certification programs , and organisations have emerged , including and programs such as and the Nestle Cocoa Plan . Certified was introduced in 2001 , as the certification program ( better fee ) by the multinational Ahold , and fitting the desires of the industry better than the International certification program . The main difference was the guaranteed minimum price , which Certified does not offer . The emergence of different types of certification programs and industry ment has meant that the concept of fair trade has increasingly been contested , with internal in the movement leading to a split in the American fair trade movement in 201 . At stake , among other things , were the percentage of fair trade certified ingredients in fair trade certified products and plantation Essentially , the discussion was about who fair trade policies were about the , producers , or companies engaging in fair trade . MAINSTREAMING FAIR TRADE AND THE CLASH OF TWO STRANDS IN ONE MOVEMENT Disagreements over the goal of the movement have led to intense discussions between people and organisations . Some fair trade movement actors have said that entering mainstream tion channels would hollow out the movements ideals . Indeed , up until today , the debate about being a movement and a market at the same time has been an important thread in ing fair trade , that is , the process in which consumers and . For a discussion on plantations , see 2017 . DE GELDER 523

are increasingly buying and selling fair products . Two main ideological positions in the fair trade of organisations and companies can be distinguished . On the one hand , fair trade is regarded as a practice over and against conventional market practices . Activists advocate an entirely new , alternative international trade system . Based on Marxist ideas on exchanges , personal relationships between and producers , and direct , transactions are regarded as the embodiment of just trade . According to Karl Marx , commodities in an exploitative system focused on hide the situation of producers and labourers . thus prevents consumers from ing the true circumstances under which a product is produced . Following this logic , consumers should be enlightened about the precarious position of producers and labourers , and aim at the eradication of inequalities at the international level . By working in the market and with conventional market players , the ment would lose these values and no longer be an alternative for the impersonal market systems . Again , this argument suggests that such systems aim at only , and may start to undermine fair trade principles . The fear is that cooperation with the same firms whose practices the movement has been ing to fight would cause the same problems to , given that their motivations would not have changed fundamentally . Consumers , aiming to establish personal and ships in supply chains , or to acknowledge the producers tion , would have no incentive to buy . Instead , consumers would be extrinsically motivated and focus on other features of the products . This would undermine the movements objective of having a dedicated consumer base with a focus on international justice . On the other hand , adherents of fair trade certification proclaim that the idea of just trade should be in the market . 524 FAIR TRADE

By means of certification programs , both market share and impact for producers and workers would increase . Moreover , working with bigger multinationals such as Starbucks and would accelerate this process . The success of fair trade cation could stimulate these firms to apply fair trade principles in their other supply chains too . From a business perspective , a certification mark on their product packages implies added value to their products . A label may persuade consumers to buy not just a commodity , but a product that reflects fairness for . Having a certification mark could thus be a market to differentiate , and give businesses a competitive advantage compared to other ( not yet certified ) products typically traded as commodities . In addition , larger businesses can often achieve economies of scale , making it easier to offer fair trade products at a lower price . Staying alternative would mean that the ( often more expensive ) fair trade products remain a niche in markets , restricting the overall improvement of producer livelihoods . Fair products in conventional outlets would thus allow consumers to find fair trade products easily by their certification marks and labels , increase awareness of fair trade producers and workers , and allow products to be bought at affordable prices . MAINSTREAMING FAIR TRADE AND THE PRACTICAL CONSEQUENCES The mainstreaming of fair trade has raised three main issues about just trade . Essentially , these reflect the roles of three actors in the fair trade movement and their effect on beneficiaries the larger companies entering the movement , consumers , and the fair trade movement itself . First , it has been feared that the entrance of larger businesses may violate or not fully comply with the standards set by DE GELDER 525

trade Internationals For instance , in the , Starbucks violated the requirement that of total coffee consumption should be bought as fair Larger companies may start their own certification programs , requiring compliance with lower standards and thus diluting fair trade overall sage . For consumers , distinguishing between the significance of different certification marks on products may become difficult . Connected with this , larger companies and nationals often source from larger plantations , rather than producers , so the original fair trade beneficiaries would face competition . Due to overall low demand , they already face difficulties in selling their harvest . Moreover , power may continue to exist , to the detriment of , due to lack of transparency about how and to what degree standards are complied with . The voice of the producer may not be voiced sufficiently and , as can be imagined , a day , audit of farm operations does not necessarily vide an accurate portrait of what happens in the . Such developments raise the question about the intended beneficiaries of fair trade certification programs and about the transparency of the certification process . Second , increased competition within fair trade in Western countries may result in the disappearance of Alternative Trade Organisations in commercial districts , an outcome already seen during the last decade . This is important , as these organisations typically embody the more alternative current of the movement , conveying fair trade core message and identity , as well as as a benchmark for fairness . also stand for personal relationships , which are hard to quantify but of importance to the producer groups they work with . The existence of certification programs would only further . et al . See 2009 . 526 FAIR TRADE

increase the anonymity of standardised market transactions , making producers again dependent on the mercies of the market . Third , consumers stances on the different fair trade certification marks remains an open question . Consumers do support fair trade goals but do not always buy fair products . Consumers can also differ greatly on which aspects of just trade are important and how they should be in markets . The different fair trade labels that have emerged , such as , may furthermore lead to sion for consumers about what fair trade really means . A parallel example is the appearance of other labels ( organic , etc . which may lead to label fatigue among consumers . For the fair trade ment , this is a risk , as consumers may no longer notice the fair or consider its added ( social ) value . media treatment of both the original fair trade certification program and conventional firms involvement in fair trade may undermine the trust in certification marks . At the same time , such attention can give consumers a better understanding of the difficulties in just trade . Finally , the relationship between the Western fair trade organisations and the producers has also been questioned . Fair trade producers do not always have an equal say or impact on the strategy to be followed within the development of fair trade ( certification ) programs . This may hinder critical reflection and exclude the views of fair trade producers on fair trade , mainly developed in Western countries . Over time , Fair trade International has increased the voting power of producer organisations to 50 , but not all certification programs have such systems in place . The consequences of mainstreaming are crucial to the legitimacy of fair trade in the conventional market . For both companies and DE GELDER 527

consumers , successful and effective fair trade standards would legitimise paying a higher price for fair trade products and result in more engagement . If fair trade certification marks do not live up to expectation , consumers may lose belief in fair trade . The latter may also happen if fair trade practices are misused by , that is , were to occur , or were fair trade programs set up that in practice make little or no difference to the producers . For producers , importantly , their depends on fair trade standards being effective . If fair trade does not sufficiently increase socioeconomic , producers will stop Working through it . However , there are other ways of fighting the structural inequalities that producers and workers face . More equality could be established in national trade if , for example , import tariffs and quotas were changed structurally , to the advantage of countries . THE FUTURE OF FAIR TRADE The future of the fair trade movement is closely related to the mainstreaming of fair trade . Practice and understanding are shaped by the way fair trade is . This has become increasingly varied , now that more companies and organisations have entered the market . It remains questionable to what degree such as Ten Thousand Villages and World shops will be able to attract consumers and convince them of the added value of the fair trade products . Enterprises that do not necessarily identify as or fair will also become tant transmitters of the fair trade message and even compete with . This could create confusion for consumers . At the same time , this and increased media attention could increase attention to the cause . For example , in the Netherlands , the Tony has focused on improving the situation of cocoa producers , making this the reason for its existence and the core of its marketing campaign . It was nonetheless heavily criticised for being unable to guarantee that its cocoa beans are 528 FAIR TRADE

. More recently , there were media reports that this firm is no longer on a list of ethical companies , due to its with a conventional cocoa processing . Clearly , with mainstreaming , fair trade organisations and companies are increasingly under public scrutiny . Such may pave the way for new and more effective avenues for key actors to mainstream fair trade . One option may come from companies that opt for having no certification label at all , in order to be more effective in reaching social responsibility and environmental goals . The main aspects of just trade these companies adhere to are establishing direct and relationships with farmers , providing community support , and supporting production . Moreover , these companies give the producer organisations a price that may be beyond the minimum price as set by International . Being transparent to the public about their if it includes difficulties in fairness often another goal . As such , these companies can be regarded as a new type of , in niche markets . If these companies are able to succeed in establishing socioeconomic for producers without needing certification programs , they showcase a new way of fairness to actors in the mainstream . To succeed , however , these companies will need a dedicated consumer base that understands and engages with the issues they aim to address , including a willingness to pay a higher price for products ( compared to conventional and fair products ) Fair trade certification organisations , in turn , are increasingly aware of the consequences of mainstreaming , as well as the limits of their own certification programs . They tend work together more , lobbying for ( inter ) national legislation , as they believe that strategies do not work quickly enough , and DE GELDER 529

commitment is too weak to achieve real change . In this way , a level playing field for all companies might be established , forcing those that are lagging behind to start implementing human rights and environmental due diligence . This entails that companies address all the social and environmental risks and impacts within their supply chains . They would have to make the risks of carbon emissions and pollution visible , but also make the pay and working conditions of workers ent and , in doing so , respect human rights . The United Nations Human Rights Council initiated guidelines for company and government responsibilities and duties in 201 . Currently , these are mostly voluntary for , although some countries are in the process of making mandatory the prohibition of forced and child labour . Because of mainstreaming , companies and consumers are increasingly aware of these issues , and at the present moment , there is greater openness to this type of enforced regulation by governments that have , until now , not actively put into place such regulation . Table The and challenges of the mainstreaming of fair trade ( based adapted from et al . 2013 , 179 . 530 FAIR TRADE

of mainstreaming Sales of fair trade products increase more opportunities for consumers to participate in fair trade more commitment to fair trade principles by companies increase in awareness of the relation between producers and consumers Number of fair trade beneficiaries increases . Fair trade organizations and companies cooperate more increased of ideas and practices . More media coverage . Fair trade organizations can professionalize and build extent markets . Proof that markets can be vehicles of socially just production and exchanges . Challenges of mainstreaming Fair trade products start resemble conventional commodities consumer awareness decreases , resulting in disengagement fair trade becomes instrumental to firms principles no direct relationship between consumers and producers Competition between fair trade producers and plantation workers increases . Alternative Trade Organizations face increased competition and may disappear . Fair trade principles may be hollowed out limited commitment of companies in the lower compliance with fair trade standards no direct trade relationships Certification charges and increased administrative burden for producer groups . Producers become subject to the mercies of Western markets and companies . Producers do have a limited say in development of certification programs . Consumer confusion increases due to number of certification programs . DE GELDER 531

75 ?

VILLAGES . Figure Fair trade organizations supporting alternative trade . Fair Trade Federation and World Fair Trade Organization are membership organizations , international and Ten Thousand Villages are examples of American outlets , and ( World shop ) is an example of a Dutch alternative trade organization . Port of the , RAINFOREST . ALLIANCE for Figure Fair trade organizations in mainstream markets . FAIR TRADE CERTIFIED , SYNTHESIS Fair trade products that consumers encounter during their shopping a world of organisations and firms that struggle over bringing just trade into practice . The balance between movement and market has been a continuous struggle in the historical trajectory of fair trade . The mainstreaming of fair trade products in conventional distribution channels makes clear that the of just trade has become difficult , especially since 1988 , when certification was introduced as a new way to approach the market . Certification was a radically different way of establishing fairness , meaning that more different interests and than the original , alternative entered the fair trade market . For fair trade , mainstreaming entails that the movement think through who it wants to benefit from its cation systems producers , who may not always be so efficient and are the most vulnerable ?

Or the plantations of the 532 FAIR TRADE newly joined , larger companies ?

And is fair trade only a safety net when world market prices fall , or does it represent a panacea for producers ?

Other questions revolve around the credibility of the fair trade certification programs that have emerged . and consumers may have different motivations for joining in the movement , bringing along different understandings of fair trade . This could create confusion for consumers about what should be understood as fair trade . At the same time , these also force the fair trade movement to and react to the increasingly competitive environment of which they are a part . That implies that between actors has emerged , as well as new initiatives to fair trade without needing certification . To most fair trade actors , ever , the time seems ripe for a legal enforcement of fair trade standards on the ( inter ) national levels at which they operate . The fair trade movement may be about to enter into a new arena in which just trade becomes the standard for all products . Discussion Questions Which stores in your neighbourhood would you classify as an Alternative Trade Organisation ( and why ?

Thinking about the products you buy regularly in the supermarket , to what degree are you aware of the companies policies regarding fair trade ?

Discuss how political convictions relate to the fair trade movement two main ideological positions . Do you see your consumption choices as a cal act ?

Why or why not ?

DE GELDER 533 Pick a product of your choice ( for example , coffee , tea , chocolate , spices ) and then go to a supermarket where it is sold . Find the product on its shelf and list all the fair trade certification marks you can find on the different brands . Then search for more regarding each certification program on your list and pare them with the help of the principles as outlined in Table . In your opinion , which fair trade certification program looks like the fairest of them all ?

Additional Resources Fair Trade Advocacy Office , 2014 . fair trade coffee , sustainability , and survival . ed . University of California Press . and Bennett , 2016 . Handbook of Research on Fair Trade . UK Edward Publishing . Wheeler , 2012 . Fair trade and the justice ?

New York MacMillan . References Bacon , Who decides what is fair in fair trade ?

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De ( DE GELDER 535 , 2019 . Fair Trade Rebels Coffee Production and for Autonomy in . University Of Minnesota Press . 2017 . labour certification the contested incorporation of plantations and workers . Third World Quarterly 38 ( 1492 . 2009 . Mainstreaming fair trade coffee from to traceability . World ( Reed , 2009 . What do corporations have to do with fair trade ?

Positive and normative analysis from a value chain perspective ?

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