Fair trade big money

Have the words that hold so much sway over the consumer dollar been usurped? Nick Churchouse reports.

Child-trafficking, cocoa, the volatile coffee market and cotton-picking poverty. These things do not typically pop to mind when shopping, but are exactly what consumers' fair trade dollars are helping prevent.

But what makes trade fair, and who says?

Trade has been unfair for centuries, at its worst underpinning slavery, child prostitution, the corporate rape of Third World resources and a never-ending poverty cycle in developing countries.

A burgeoning social conscience is fuelling efforts to stamp out the remnants of such practices, and consumer knowledge of fair trade is the pointy end of that conscience.

Born in the mid-1900s as a backlash against the poor treatment of developing nations by dominant multinational companies, the concept of fair trade has become a term synonymous with the growing trend towards sustainable and ethical purchasing.

Designed to give producers in developing nations a fair crack in the market, fair trade principles are entrenched in sustainable production communities for commodities such as coffee, cotton, fruit and sugar.

Yet these two words that hold so much sway over the consumer dollar have all but been usurped by a German-run multinational, says a Melbourne coffee trader, Moshe Tawil.

Mr Tawil is irate about the political semantics of fair trade, a movement he says is being hijacked by a bunch calling themselves Fairtrade the single word brand, not the two-word phrase.

The difference is almost imperceptible to the average shopper, but is big money to businesses, who give up 2 per cent of their sales to use the distinctive logo of the Fairtrade Labelling Organisation (FLO).

The not-for-profit group was set up in 2002, rolling 12 fair trade certification agencies under one logo, the blue and green Fairtrade stamp.

The standards required by FLO include a minimum price for producers, as well as development initiatives, funded by the fair trade premium, a roughly 10 per cent extra charge on all FLO-certified retail goods.

In 2007, sales under the Fairtrade logo accounted for about 2.3 billion (NZ$4.7b) worldwide, up 47 per cent on 2006, and supported 7.5 million people in the developing world.

That is the problem, Mr Tawil says.

"Fairtrade [FLO] holds itself up as the right way and by association everyone else is evil or bad. If everyone has to be Fairtrade, then there's a problem."

The Fairtrade Labelling Organisation's headquarters are in Bonn, and the company has become the default fair trade stamp by hardline certification standards and sheer marketing nous, paid for by the 2 per cent licensing fee charged.

When a single brand becomes too big and too ubiquitous, questions are always going to be asked.

FLO New Zealand executive director Steve Knapp does not make any apologies for the aspiration to be the sole purveyor of the fair trade stamp of approval.

Because the word is so generic, FLO cannot trademark it. He says only Fairtrade is true fair trade.

"People associate it [the phrase] with a certification. People calling their products fair trade are riding on the back of what we are doing. If it's not certified, that's really misleading consumers."

He says as its distinctive logo becomes more prevalent, there is more pressure for others to adopt it. That brings criticism and freeloaders.

"There are plenty of people who jump on the bandwagon. How do we know what they are doing? They claim they are doing this, that and the other."

FLO has a robust and accountable backroom, based in its Bonn headquarters, and undoubtedly helps create a better life for millions of communities in developing countries.

But the gripes come nonetheless. Some say the 2 per cent licensing fee is a ripoff, while others say FLO's dominance shuts out small producers who cannot afford to meet the minimum measure for the Fairtrade badge.

Matt Lamason knows the issue well, having set up his company, People's Coffee, in the name of sustainability and fair trade.

"The generic Fairtrade (FLO) label is constantly under criticism because it has become such a mainstream mark."

People's Coffee is criticised for paying the licence fee, money some would say should go directly to the producers, or even help make fair trade coffee less expensive for consumers.

But Mr Lamason is happy to pay for the logo and follows it up personally, visiting the FLO-affiliated coffee growers and bringing the stories home.

"The average consumer does not ask that when they are standing there buying their latte, so we say we are making a difference and invite them to come and pull it apart with us. It requires constant dialogue and questioning."

A small percentage of consumers care enough or know enough to research their purchasing decisions. Most well-meaning shoppers just go for the dolphins on the tin, the green tree-shaped logo or the fair trade sticker. Milk, check; bread, check; conscience, check.

BUT TradeAid general manager Geoff White says British supermarkets are developing their own fair trade marks, based on minimum standards and one-dimensional buying policies that end up working for big growers.

"Fair trade was set up to help the little guys. So the question becomes whether these multinationals coming in disrupts what we have so it is no longer doing what it was set up to do?

"That's a massive challenge. The farmers are saying this is not what we imagined, these guys can box us around," Mr White says.

TradeAid's 36-year-old reputation is built on a relationship model, in line with the World Fair Trade Organisation's ambitions to build a certification system for whole organisations.

Mr White says this focus is all-inclusive, overcoming a failing of the FLO model where the smallest producers were unable to fit the one-size-fits-all standards.

"The mark is irrelevant. The producers are important to us; if we are selling product that is not having a positive effect on our suppliers then we don't want to do it."

Mojo Coffee owner Steve Gianoutsos feels similarly, preferring to let his coffee do the talking.

He would rather not send a 2 per cent cheque to "a fat cat in Germany", countering that he pays his suppliers more than double the premium they would get under the FLO price guarantee.

Mojo sources FLO-labelled coffee for several customers, but he sees more value in doing ethical trade his own way.

"We do lots of charity work with our growers, we just don't make a song and dance about it, but we are finding you do need to tell your story and educate your customers in what you are doing.

"We sell fair trade coffee; we just can't use that label. We call it relationship coffee."

Victoria University PhD student Will Watterson's thesis surmises the criticisms of FLO are fair but only theoretical. While criticised sometimes for being too structured, sometimes for not being structured enough, FLO is well accounted for, he says, with other fair trade organisations scant on providing supporting information. "A lot of them are airy fairy about what they are saying or guaranteeing."

But essentially FLO was taking fair trade down the wrong path, he says. Instead, the World Fair Trade Organisation's focus promoting fair trade certification of a whole business should become more prevalent.

WHAT IS FAIR TRADE?

Fair trade researcher Will Watterson says debate over the definition of fair trade is encouraging, despite the common misunderstanding between free trade, fair trade and ethical trade and such concepts.

The awareness is causing people to question what trade means and what the major trade issues are. Equally, the sustainability argument is integral and the more illumination about the topic the better.

Mr Watterson says: "It's part of the growing concept of global citizenship. It's the idea that we cannot keep going on with our lives benefiting from globalisation and not realise there are responsibilities and consequences from that as well."

Free trade: Trade policy that promotes the idea that trade should be able to be carried out without interference from government.

Ethical trade: A term that describes socially and/or environmentally responsible trade. Generally based on adherence to international and local labour and environmental laws. A do-no-harm approach.

Fair trade: 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 and securing market access rights for disadvantaged producers by using trade as a tool to improve the lives of those living in poverty.

Alternative trade: The early form of what is now known as fair trade.

Fairtrade: The one-word brand used mainly in food products to denote certification by the Fairtrade Labelling Organisation, a private, not-for-profit organisation.

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