The origin of fair trade
For years, farmer cooperatives in Latin America, Africa and Asia struggled to overcome problems such as a lack of land-tenancy rights, slavery-like work conditions, domination by plantation owners, extortion by intermediaries, a lack of human and indigenous people’s rights, deficient education and healthcare infrastructure, and repression by central and local governments.
To alleviate these problems, beginning in the 1950s, many nongovernmental humanitarian organizations around the world set up alternative trading channels between Southern producers and Northern consumers. These Alternative Trade Organizations (ATOs) were based on the principle of solidarity and the idea of ‘trade not aid’ for development. The clergy and critical political movements also promoted these ATOs. A widespread circuit of so-called ‘Third-World Stores’ emerged; these were mainly set up and managed by volunteers and nonprofit organizations. At this time, the term Fair Trade was not yet commonly used.
The producers found that they needed to increase the volume of their ‘solidarity sales’. This became one of the main reasons for creating a fair trade label as a ‘guarantee’ that Northern consumers could trust. The ‘Fair Trade’ label is now the most widespread certification. Originally, the impact of selling just a tiny part of the cooperatives’ volumes at better-than-conventional market conditions was small at the producers’ level, and limited to products like coffee and cocoa. The Fair Trade label certification made it possible to include other products and brands; even supermarket chains spread the solidarity-trade model and Fair Trade brand to much a broader public.
What fair trade became
Along with the acceptance and growth of Fair Trade product sales in Northern markets, fair trade practices soon turned into an important tool and engine to drive capacity-building among small producers’ cooperatives. Producers were able to get better prices and earn more. Cooperatives were able to consolidate production and trade capacities through fair-trade mechanisms such as the pre-financing of harvests. They were also able to sustain or boost many other activities that addressed other social and economic challenges, creating a virtuous circle.
Nevertheless, alongside these on-going positive results, changes affected fair trade labelling. In the beginning, the concept exclusively focused on cooperatives and small producers of coffee and cocoa. Over time, other products, such as tea, bananas and flowers, and other producers, such as corporate plantations – sometimes multinationals – were included. Meanwhile, on the other end of the trade-chain, multinational companies started to step into fair trade as distributors, intermediaries, and brands.
At the same time, the influence of Southern small producers within the international fair trade labelling organizations’ decision-making processes proved limited. Producers from different countries and/or of different products started to organize to increase their influence. They have had some historic successes, but must share their influence as producers with corporate plantations and unorganized small producers.
The increased mainstreaming of fair trade has put pressure on production levels and price-setting. New producers need to be certified in a short time; often they are the current providers of multinational companies. As big brands compete in the mainstream market, they have little will to increase the minimum prices or premiums paid to producers. At the same time, producers become more dependent on these few purchasing companies. In addition, uneven competition arises when corporate plantations sell products that previously only small producers provided.
How to make fair trade fairer
In 2006, a new label was launched: SSP, the Small Producers’ Symbol (SPP stands for Símbolo de Pequeños Productores). It stands as a ‘home for organized small producers’ in an effort to maintain the visibility of these producers in the wider fair trade movement. For producers, it serves as the next step in appropriating the supply chain and generating more added value. The SPP aims to help small producers to promote their products in local and international markets as coming exclusively from small farmer cooperatives.
At the beginning of 2011, to meet market demand, the SPP became a full-fledged, third-party-certified standard. Currently, about sixty thousand families in 60 small producer cooperatives are certified in Indonesia and 13 Latin American countries. Purchase and sales volumes have increased steadily in local and Northern markets. In 2015, certification of the first African cooperatives is expected.
The SPP primarily differentiates itself as a 100% producer-owned initiative. The producers developed and still fully steer the SPP through an Assembly of Producers. It determines standards and carries full responsibility for their enforcement. The producers’ sense of responsibility sees that trade partners and even civil society are included in decision-making; this broad-based participation is taken into account in the organizational structure of the SPP, represented by the Foundation of Organized Small Producers, FUNDEPPO.
The setting of minimum compensation and purchase prices for organic production is key for SPP member-producers; it is the only way fair and sustainable trade can really generate promised impacts and changes. For example, the minimum price for SPP-labelled coffee is currently USD 20 higher per 100 pounds than the commonly-accepted Fair Trade price. The current SPP compensation for organic production is USD 10 per 100 pounds higher.
Last, but not least, SPP obligations imposed on store chains and other distributors ensure that they have a deep commitment to organized small producers and their values. Brands are asked to commit to minimum volumes over set time periods and must adhere to the SPP Declaration of Principles and Values and its Code of Conduct. The SPP also prevents unfair competition by prohibiting intermediaries from accumulating overly-large stocks of SPP-certified produce.
For cooperative small producers and the SPP, fair trade is an enormously powerful engine for development, but only if the following conditions are met:
- Fair trade alone is not enough. It is fully powerful only when it is part of a locally-based movement of people who take responsibility for their own future, doing all they can to achieve a better life.
- Fair trade as only a marketing asset for multinational brands will not create a more equal or fairer marketplace. It will again make small producers dependent on big companies and fail to achieve thorough changes in economic power relations.
- Fair trade means recognizing that producers’ democratic and environmental contributions are a blessing for the whole world, and that they need to be supported through higher prices, not more requirements, so that producers can control their own lives.
- Fair trade alone cannot resolve all the world’s problems, not even those of small producers; wise public policies that believe in and invest in small farmers are also needed.
Fair trade without a clear purpose might lose its legitimacy compared with other visions of development and trade. We believe that its purpose is to create a horizontal, inclusive and participatory economy.
So we ask consumers and professionals who support fair trade to go beyond the surface marketing of labels. Fair trade labels certify fulfilment of a set of criteria that reflects a vision and values related to economics, development, environment, and society. Consumers, intermediaries and distributors must look at what kind of producers and companies are involved in fair trade and what kind of changes these organizations may provoke. Rather than just purchasing fair trade products, consumers and wholesalers and distributors should become involved with the people behind the label, so that everyone takes responsibility for the kinds of processes that we want to enhance. At the SPP, we believe in the power of horizontal democratic organization at all levels of the production and trade chain.