Article published on META Vol.19 May 12

The Pain of Fair Trade Movement - Anthony Chiu ( Director of Hong Kong Fair Trade Power)

In recent months, the hottest topic in fair trade movement must be Fair Trade USA (the former of TransFair) separated from FLO (Fair trade Labeling Organization), and established a new system and standards. This is an inevitable pain on the road to another peak in fair trade movement after developed for a few decades.

In 1988, the Dutch established a system of fair trade certified label - Max Havelaar. Through labeling products with fair trade sticker, consumers can identify ‘fair trade’ products out of the others in the mainstreams market. This certification system popularized fair trade in the market. Based on the system, certified organizations of a number of countries set up an international organization certificate – FLO together in 1997. After many years of effort, FLO has members in over 20 countries in the world.

In recent years, many multinational companies (or brands), have started to release fair trade certified products. These enterprises promote fair trade because of handling the requirements of public pursuit on social responsibility, such as avoid usage of ‘sweatshops’ and child labor during production. In addition, those companies spotted the potential market on ‘ethical consumption’ and would like to get benefits in it.

Take chocolate as an example, in 2009, Cadbury released fair trade certified milk chocolate. Meanwhile, Many NGOs started to criticize Nestle for not selling any fair trade chocolates.

Later, Nestle produced ‘Four Finger KitKat Chocolate’ with fair trade certified cocoa beans. This year, in 2012, Mars followed the trend, starting to sell fair trade chocolate in United Kingdom. Nowadays, the world’s highest selling chocolate brands, has approximately one or two chocolate products made by fair-trade cocoa bean.

These multinational companies and brands started to change their products by using fair trade raw materials and ingredients. It leads to a huge demand on it. The supply and quality stability is also very demanding. This is a big challenge for fair trade movement. How could the co-operations produce large amount of products within short period time to fulfill the overwhelming demand of those multinational companies ? Let takes Coffee as an example. In the past, all fair trade certified producers must be formed by smallholder co-operations. Coffee farms operated by big farm enterprises which hire farm workers, do not fulfill current fair trade certification requirements.

This brought extreme tension and dilemma. For instance, if the standards of fair trade organization certificate lowered, more producers, in particular farm enterprise s which own massive farms for production can also fulfill the new “Fair Trade Standards”. Thus , the increasing demands of Multinational Enterprises could be satisfied and boosts sales and of fair trade products and widens the market. However, this may lowered the credibility of fair trade certificate, as well as bringing devastating effects on the marginalized farmers, particularly smallholders, which fair trade movement is aiming to help initially.

The separation of Fair Trade USA from FLO highlights the difference of fundamental ideas : On one hand, FLO insists to keep the current standards; on the other hand, Fair Trade USA wishes to adjust current standards and systems in order to welcome more large companies/ brands to join the movement. What influence s will the decision of Fair Trade USA brings to fair trade movement? It's still too early to draw a conclusion. However, it arouses rapid debates from different parties in recent months which would certainly lead to a healthier development for fair trade movement.