About a year ago at the annual roasters Guild retreat, we posed the question in the roundtable discussions, “is fair Trade dead?” We selected the subject because it was a trending topic. in side conversations, blog comments and on the roasters Guild forum, people were discussing the purpose of an additional premium in a high-priced market, with growing adoption of direct relationship models. As the conversation rolled on and spread out, what we heard again and again was: “no, fair Trade’s not dead. But its role is changing.”
The potential evolution of fair Trade continues as a popular topic, with a discussion thread (May 2011) on the roasters Guild forum inspiring positive and constructive comments about benefits to producers, effectiveness of cooperatives, marketing value, availability, relevance for smaller roasters and so on.
The conversation was accelerated when the Stanford Social Innovation Review released an article entitled, “The problem with fair Trade Coffee,” (C. haight, 2011)(1). Although a good portion of reader comments related to the validity of the author’s research and conclusions, the article and subsequent posts highlighted persistent questions about the impact, value and burden of fair Trade—opening up a more fundamental question, “is there a problem with fair Trade?”
One of the first points raised by Haight was about the impact of Fair Trade on poverty. She argued that Fair Trade has not been successful in achieving one of its major goals of alleviating poverty.
In a counterpoint, Paul Rice, president and CEO of Fair Trade, responded with, “During our 12-year history, Fair Trade USA has helped improve the lives of more than 1.5 million farmers by cultivating a more equitable global trade model that alleviates poverty in coffee growing communities.” Rice went on to reference data available in the organization’s impact report (2). The following points were taken as excerpts from that document:
• 10 Years, 110 Million Pounds
• U.S. licensee partners paid $11 million in Fair Trade premiums to support community development projects in 2009
• Since 1998, sales of Fair-Trade certified coffee in the U.S. have generated an estimated $220 million dollars in additional revenue and premium funding
Those are laudable accomplishments, but statistics about volume and premiums don’t exactly address the question being asked of whether Fair Trade is helping to alleviate poverty. Yet in all fairness, it is an understandable response to an unfair question. Because, in truth, a solution for poverty does not yet exist. And a simple solution for poverty will likely never exist.
Rather than debate whether Fair Trade has been successful in alleviating poverty, perhaps we should consider the broader question of whether certifications are useful tools toward poverty relief. Daniele Giovannucci, co-founder and executive director of the Committee on Sustainability Assessment, responds, “Certifications can be a viable tool for poverty alleviation, but are a tool we do not yet know how to use very well. With the proliferation of different standards (or certifications) and the infancy of verification or validation methods, we don’t yet know to what extent they are delivering measurable environmental, social or economic benefit.”
If operating with the hope and possibility that certifications models will deliver environmental, social or economic benefit, but also with the knowledge that solutions and measurements lag, then it is understandable a tension would develop and that eventually the value of the models would come into question.
Some of that value disillusionment may stem from intention. Certifications models originally emerged to link consumer interest with producer value. In that sense, consumer interest in the sustainable coffee segment has grown, but is still estimated at less then 10 percent of the total worldwide market (3). Interest is relatively small at the present time, but shows potential. In its Conscious Consumer Report (2009), branding firm BBMG found that more than half of consumers express a willingness to pay more for products with social and environmental benefits even in a tough economy, although price and quality remain top considerations. There seems to be a gap between what consumers say and what they do, yet it’s possible that what we are grappling with is not lack of intention, but rather a far more nuanced set of values driving purchase decisions and consequently, a situation where the potential is there but a ways away from being fully realized.
If the value of certifications is not yet in the sanctity of the solution and not entirely developed in the marketplace, then the definition of value is open to interpretation. Comments to Haight’s article revealed a host of possibilities, including enhanced credibility for the buying company, premiums paid, market access, better organization and management through a cooperative structure, community reinvestment, and as a supply chain management tool.
Of course, this variance exposes another issue: beyond the question posed in the previous section of whether or not certifications are a useful tool toward poverty alleviation, should be a clarification of “What are we really trying to accomplish?”
Naturally, questions of impact and value will result in an assessment of return or who bears the burden of its investment. At the 2011 SCAA Symposium, Luis Fernando Samper, director of intellectual property at the Colombian Coffee Federation, presented data regarding sustainable programs under their management, and even without factoring in up-front investment costs, questioned the return on managing a total of 67 certifications. Essentially, he challenged certification programs for being too numerous and burdensome from a management standpoint given the actual premiums delivered. In essence, he was pushing back on the idea that these programs, designed the support the farmer, actually cost the farmer more in the end.
However, coffee isn’t the only industry grappling over issues with certifications. At a recent conference on Certification, Consumption, and Change held by JustMeans in Washington, D.C. (May 24, 2011), representatives from a variety of certification agencies across various sectors (carbon, forestry, marine, and agriculture) acknowledged certain challenges with the certification model. At the same time, they cautioned against abandoning them altogether because, despite the ongoing examination, consumers do look for certification labels or seals. According to the 2009 Conscious Consumer Report, 28 percent of Americans seek certification labels or seals to verify social or environmental claims of a company. Certifications are meant to ensure points of credibility in the system, and if certifying organizations don’t perform that role, who will? Private businesses? That is the route many have taken. Café Practices, direct trade or relationship coffee models all exist to some degree as an alternative. Are those models doing a better job?
In the end, a large part of what is being considered is the method and cost of a credible system. Or even more simply, who benefits and who pays?
A Conversation Worth Having
Throughout the value chain an assessment of value and, consequently, return brings focus to the issues of how much a producer earns, how much credibility a company gains, and whether or not the customer is in fact guided to the best choice. While some may want to discuss the problems with Fair Trade and/or other certification programs, it seems that a better topic is about how to strengthen the role of certifications, ensuring that all the infrastructure and activity equal a reward for those affected. I believe there is a more productive conversation waiting to happen, one that will get us out of critiques of specific models and into real solutions for alleviating poverty or otherwise improving the impact of certification, increasing value for coffee drinkers, and distributing the burden in a way that makes sense.
With more than 15 years of marketing experience, Tracy Ging has spent the bulk of her career in the coffee industry, where she has worked on both sides of the supply-chain, developing a deep understanding of the market and the trends driving it. Tracy currently serves as Deputy Executive Director of SCAA.
1 Haight, C. (Summer 2011). The Problem with Fair Trade Coffee. Stanford Social Innovation Review. Retrieved from: http://www.ssireview.org/articles/entry/the_
2 TransFair USA. (August 2010). Impact Report. Self-Published. Retrieved from: http://www.transfairusa.org/what-is-fair-trade/impact
3 Pierrot, J., Giovannucci, D., and Kasterine, A. (Pre-Publication Copy). Trends in the Trade of Certified Coffees. International Trade Center.