FLO, Fair Trade USA, and Starbucks: A Critique - Part 3

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FLO, Fair Trade USA, and Starbucks: A Critique - Part 3

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Tuesday, May 1, 2012 - 5:10am

Part 3 of a multi-series post

(Please note: This posting critiques the fair trade industry at the close of 2011.  As of January 2012, Fair Trade USA revised their standards and the current standards will be discussed in a future posting. Click on the link at the bottom of the post to read about Fair Trade USA's revisions). 

As the European fair trade market was gaining momentum, small steps were also being taken in the United States. Led by the Mennonite Central Committee and Ten Thousand Villages, fair trade was originally pushed by missionaries and development workers on behalf of displaced refugees. The young U.S. fair trade movement shared with its European counterparts a twin set of roots: one in religious development charities and another in solidarity activism on the political Left, (Jaffee, 272). In fact, Fair Trade USA, formerly known as Transfair USA, was one of the founding members of FLO. In 1998, the formerly Transfair USA was founded. Boston-based Equal Exchange, who had been building the fair trade coffee market for twelve years in the USA, helped to generate the publicity that the new fair trade label needed. Equal Exchange pioneered the fair trade model for agricultural products in the United States, filling this niche virtually alone for a decade, (Jaffee, 267). In the fall of 2011, Fair Trade USA announced that by December 2011 it would withdraw its membership from FLO and create its own standards; standards which became quite controversial. 

Critics of Fair Trade USA claim that their new model is focused on maximizing the volume of fair trade sales as opposed to maximizing the impact of each purchase. Fair Trade USA has been characterized by a business-centered model, and civil society links have played a minimal role in its institutional culture and governance structure, (Jaffee, 267). As is the model with Starbucks' Coffee Sourcing Guidelines/Preferred Supplier Program and the UK supermarket, Tesco's, 'Nature's Choice', these private companies have standards that are set and monitored by an individual firm, (Tallontire, CSR and Regulation, 77). Coincidentally, Fair Trade USA will have their standards monitored by the Scientific Certification Systems (SCS); the same monitoring organization who audits Starbucks' 'ethical sourcing practices" called the Coffee and Farmer Equity Practices (CAFÉ Practices). In 2011, The SCS helped Fair Trade USA develop the attached standards (Figure 1: 2011 standards. Standards have since been revised.)

Fair Trade USA Labeling Opportunities (fairtradesusa.org)

  1. Fair Trade Certified label: Products with 25 percent Fair Trade Certified content and more will earn the "Fair Trade Certified" label on the front of the package.
  2. Fair Trade Certified Ingredients label: Products with between 10 and 24 percent Fair Trade Certified content will earn the "Fair Trade Certified Ingredients" label on the front of the package.
  3. Ingredients Panel: For products with less than 10 percent, Fair Trade Certified content will be featured as a back-panel ingredients note—such as "Fair Trade Certified Sugar."

The controversy about Fair Trade USA's standards arose from the fact that they were much lower than the globally recognized standards of FLO. Fair Trade USA had publicized that it would certify a product as fair trade with only 10% of the product including fair trade ingredients. These standards came from their recent push called "Fair Trade for All." Fair Trade for All is the initiative of Fair Trade USA which has pushed them in a different direction than FLO, with a goal to double their impact by 2015; impact meaning more access of the fair trade market for producers and for corporations.  This approach is a more inclusive approach that will benefit more farmers and farm workers, first in coffee and then across the system and will extend the benefits of Fair Trade to include millions of additional people and offer give U.S. buyers more opportunities to do more good with more Fair Trade supply options, (fairtradeforall.com). Fair Trade USA will be assessing its business practices in an effort to make fair trade certification easier, less expensive and more scalable for their industry partners. According to Stacy Geagan Wagner, the former Director of Public Relations at Fair Trade USA, "We [Fair Trade USA] don't understand why fair trade exists for some and not all. Not just for farmer workers in bananas and tea. We have different philosophies to achieve [than FLO]. We want to be innovative and under FLO we couldn't do that."
Jennifer Larson, a former Communications Coordinator at Fair Trade USA, added, "In light of all of the feedback we have been receiving we are currently reviewing our policy and will announce changes in early December." Wagner admitted that Fair Trade USA made a mistake by publishing these low standards on their website. "We are reviewing our policies again, being very specific about what it [Fair Trade USA standards] does allow and does not allow." 

When asked why the standards were published on the website as official standards if they were still under a review process she commented, "If people had read the fine print on the website, they would understand that these policies weren't final.  It was a good learning experience. And we can't undo the past."

Unique to Fair Trade USA is the certification of cosmetics such as lip balm, lotions and shampoos. Another part of the controversy about their standards was in regards to the labeling of composite products with as little as 2 -5% fair trade ingredients (fairtradesusa.org):

Category 1: Minimum 5% for 'leave on' oil/wax based products 
Category 2: Minimum 2% for 'wash off' surfactant based products 

Not every ingredient in the product needs to be eligible for certification (meaning there is not a certification available for ingredients such as water or certain fragrances) and these products will have the third tier label, "certified ingredient."  The reasoning for this, states Fair Trade USA, is because of the water content in many cosmetics; without water those percentages would look like 20 and 50 percent, (fairtradeusa.org). However, in the summer of 2011, the National Advertising Division of the Council of Better Business Bureaus, due to a letter of formal complaint filed by Dr. Bronners Magic Soaps, filed a complaint against Fair Trade USA for false advertising. They recommended that Fair Trade USA, which licenses use of "fair trade" seals, modify the authorized language that accompanies seals provided for personal-care products to make clear that such products may contain only 2-5% fair-trade certified ingredients and the organization has agreed to do so, (nadreview.org). Fair Trade USA agreed to revise their standards and in the fall of 2011, they welcomed stakeholder input into their revisions. In January 2012, Fair Trade USA released this statement about their new standards; standards which look quite similar to that of FLO's. 

Stay posted for more juicy details in the movement! Next week's post will discuss the role of big corporations in the fair trade industry. Is fair trade just another marketing scheme?

Keywords: Ethical Production & Consumption | Business & Trade | Ethical Consumption | FLO | Fair Trade International | Fair Trade USA | Starbucks | Truth | Volunteerism & Community Engagement | fair trade