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Behind the Fair Trade LabelBehind the Fair Trade Label

April 22, 2011

5 Min Read
Behind the Fair Trade Label

By Stacy Geagan Wagner, Contributing Editor

Youve seen the Fair Trade Certified" label, whats behind it? For a variety of reasons, ranging from lax government regulations to isolation from markets to predatory middlemen, farmers often cannot sell their crops for what theyre worth. Unfair prices can force farmers to clear-cut forests to sell timber or create pastures, or to abandon their farms and communities to migrate to cities in search of work. The result is a cycle of poverty that harms not only individual farmers and their families, but entire communities and ecosystems.

To date, the worldwide fair-trade system has helped almost 1.2 million farmers in 70 developing countries receive fair prices for their products in the global market. Fair-trade certification sets a minimum floor price to protect farmers when commodity prices plummet, but cooperatives are also free to negotiate with buyers to secure even higher prices. In addition, fair-trade certification includes a hired-labor standard that addresses working conditions and low wages for plantation workers.

Beyond setting minimum prices and ensuring fair wages, the fair-trade model also teaches business skills, organizes farmers into strong cooperatives, links farming communities directly to global markets, provides access to credit, protects natural ecosystems, ensures safe working conditions and reinvests in communities for vital social services. On top of the fair price, cooperatives also receive fair-trade premiums, funds specifically earmarked for community development. Cooperatives democratically decide how to use the premiums to improve their communities. For example, an organic coffee cooperative in Peru has used fair-trade premiums to begin a reforestation program in the surrounding mountains, while an organic vanilla cooperative in India has used fair-trade premiums to make needed improvements in transportation.

Rigorous certification

The black-and-white Fair Trade Certified" label is backed by a transparent social auditing system and is currently the only fair-trade label that has received the International Standards Organizations (ISO) 65 accreditation. Fair Trade USA, Oakland, CA, a nonprofit organization, is just one piece of the fair-trade puzzle worldwide; it is one of 24 member organizations that work under the umbrella of Fairtrade International (FLO), Bonn, Germany. FLO sets and monitors global fair-trade standards with farming organizations throughout Africa, Asia and Latin America.

Fair Trade USA tracks transactions along the supply chain between more than 700 U.S. companies and the farming organizations from whom they source. In 2009, the certification team audited more than 40,000 transactions between producers, importers and manufacturers to ensure that the fair-trade price and community-development premiums were paid.

How products qualify

Fair Trade USA and FLO certify products, not entire companies, and oversee transactions along the supply chain to ensure that fair-trade standards are met throughout the process. FLO determines these standards through academic and field research, and all standards are approved via global consultation that includes producer input and governance. The standards are based on the principles of fair prices, fair labor conditions, direct trade, democratic organizations, community development and environmental sustainability. For example, producer organizations must maintain good labor conditions, adhere to environmental standards, operate in an open and democratic manner, and invest a portion of the profits back into the producing community.

Fair-trade certification is a multi-step process. At the production level, FLOs certification agency (FLO-CERT GmbH) monitors cooperatives and farms and ensures that they meet fair-trade standards. At the next step in the supply chain, Fair Trade USA audits transactions between U.S. importers, manufacturers, distributors and the producers from which they source. In order to display the Fair Trade Certified" logo, Fair Trade USA partners must adhere to fair-trade standards in their transactions and maintain transparency in their purchases, which includes submitting regular reports to Fair Trade USA.

If a company sells coffee beans, for instance, this is considered a whole product, and every step of the growing and packaging process must be certified by Fair Trade USA. This type of product must be 100% fair trade to carry the label. However, if fair-trade ingredients are used in another product, that doesnt qualify the finished product as fair tradeunless that ingredient is the only one available for fair-trade approval. Therefore, an ice cream made of domestic eggs and milk, and imported sugar, vanilla, cinnamon, and chocolate, can only be labeled as fair trade if the latter four ingredients are individually fair-trade certified.

Fair trade certification doesnt mean a product is organic. However, 47% of U.S. fair trade imports were certified-organic, as well, in 2009.

Stacy Geagan Wagner is the director of media & PR at Fair Trade USA (fairtradeusa.org) and is responsible for spreading the word about fair trade to U.S. consumers, helping farmers and farm workers lift themselves out of poverty through the everyday shopping decisions of American consumers. Connect with her at [email protected].

Sustainable Growth

As the fair-trade network grows, it creates a ripple effect that helps build sustainable communities. In 2009, U.S. companies sourced fair-trade-certified products from 325 farming cooperatives around the world, 25% more cooperatives than in 2008. As a result, farmers generated $45 million in additional income, and fair-trade premiums increased 25% to nearly $14 million.

According to the 2009 Almanac" from Fair Trade USA, Oakland, CA, overall Fair Trade Certified" imports were up across the board, and 47% of all imports were also certified-organic. In 2009, the number of fair-trade-certified products in the United States also skyrocketed to more than 9,000. New certified product categories include spirits, grains, nuts, oils, spices and herbs, vegetables, fresh fruits, wine, and flowers, among others, and can be found in everything from baking mixes to ice cream and body-care products. These products are available at more than 50,000 retail locations in the United States.

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