The Brawl Over Fair Trade Coffee
A man holds up coffee beans above a basket for roasting at Giang Lo Duc coffee shop in Hanoi August 7, 2012. Reuters/Kham
On May 20, the country’s oldest “fair trade” coffee company, Equal Exchange, purchased a full-page color advertisement in the Burlington Free Press. It was an open letter to the CEO of the Vermont-based Green Mountain Coffee company, the world’s largest buyer of fair trade–certified coffee. “We wish to congratulate you for your past deeds,” Equal Exchange wrote, “but now urgently request that you withdraw your support for the certification agency Fair Trade USA…in light of its unilateral decision to change the rules of fair trade.”
Equal Exchange’s advertisement drew public attention to an unfolding schism in the world of fair trade coffee. The current feud, which has been gathering steam for years, erupted in September, when Fair Trade USA—the US affiliate of Fairtrade International, which governs the global fair trade system and sets labeling and production standards from its home base in Bonn, Germany—announced its decision to end its affiliation with the parent body. In fair trade circles, this was a high-level divorce, and it reverberated widely. FTUSA, which is based in Oakland, also declared that it would certify coffee produced on plantations and by independent smallholder farmers—a significant departure from a system that restricts accreditation to coffee grown on democratically run, farmer-owned cooperatives, of which there are 360, mostly in Latin America.
FTUSA’s president and CEO, Paul Rice, is blunt about his reasons for exiting the international system. In a May interview with the blogger Julie Fahnestock, Rice depicted the movement as doctrinaire and hostile to innovation. “If fair trade continues to [exclude] the poorest of poor,” Rice said, “it’s really on moral thin ice.” He went on to say: “Don’t we want to democratize fair trade? Don’t we want fair trade to be more than a white, middle-class movement?” As for innovation, Rice declared, “Everyone is innovating. Look at Apple, everyone…. It baffles me that somehow innovation in our movement is unacceptable.”
Fair trade leaders are pushing back. In a message posted on the Coffeelands blog, which is hosted by Michael Sheridan of Catholic Relief Services, Jonathan Rosenthal, a co-founder of Equal Exchange, wrote: “If you choose to look at who is making this decision to radically change the imperfect tool called fair trade, you might admit that it is nearly totally driven by well intentioned white folks in the US with lots of money and big dreams.” He concluded, “This feels like a move right out of the colonial playbook.”
Fair trade coffee has been a valuable experiment, one that has brought concrete benefits to hundreds of thousands of farmers. But it rests upon a fragile foundation, and the corporate embrace of the concept could undo decades of work by activists, consumers and farmers: democratically run, farmer-owned cooperatives may be unable to compete with corporate-sponsored plantations. “The fair trade model provided some protection from the unequal conditions of the open market,” says Nicki Lisa Cole, a sociologist at Pomona College who has studied fair trade. Welcoming large-scale plantations into the model “re-creates the problematic conditions for small producers that spurred creation of the model in the first place.”
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There is no standard historical account that explains the rise and consolidation of fair trade. In an essay he wrote for a recent collection titled The Fair Trade Revolution, Rosenthal traces the concept back to a handful of idealists, inspired by English Quakerism, who launched “Free Produce Initiatives” in 1790 to sell slavery-free cotton and fruit. The Fair Trade Resource Network, a nonprofit educational organization, credits Edna Ruth Byler, who imported needlecrafts by low-income women in Puerto Rico in 1946, as the principal fair trade pioneer. The first fair trade label, Max Havelaar, was created in 1988 under the auspices of the Dutch development agency Solidaridad. Fair trade–certified coffee (from Mexico) soon appeared on the shelves of Dutch supermarkets. Today, Britain is the world’s largest market for fair trade products; the Netherlands isn’t far behind. Fair trade sales in South Korea and South Africa are growing rapidly. In 2011, global consumers spent $6.6 billion on fair trade–certified products. Coffee represents the largest segment of the market, but one can also purchase fair trade tea, sugar, bananas, cocoa and wine, among many other items.
But what exactly is fair trade? As Equal Exchange wrote in its advertisement: “The objective [is] to remove the exploitation from international trade and build a new system to ensure fairness and market access” for small-scale farmers and workers. A milestone was achieved in 1997 with the founding of Fairtrade International in Bonn, which served to unify global fair trade organizations under a single rubric and a single labeling system. Under this regime, producers in developing nations receive a minimum price—a safety net to cushion farmers and producers against market fluctuations—as well as a premium, a separate payment (for example, 20 cents per pound for coffee) that workers and farmers can invest in environmental, educational or infrastructure projects. The Fair Trade Resource Network estimates that more than 1.4 million people in more than seventy countries directly participate.
In the realm of fair trade, Paul Rice has been a controversial and dynamic presence. “Paul is not afraid to think and act on a big scale. That’s one of his great gifts,” says Jonathan Rosenthal, who has known Rice for decades. “And he’s willing to cut any corners to get there. That, to me, is one of his great faults.” Educated at Yale, Rice moved to Nicaragua in 1983, when the Sandinista revolution was in full bloom. He stayed for eleven years, living for most of that time near the Honduran border. In a recent phone interview, he told me that he worked in the fields, helped to create the country’s first fair trade cooperative (PRODECOOP), trained farmers and managed aid projects. Rice was guarded discussing his experiences in Nicaragua, but his old friends (including Rink Dickinson, co-president of Equal Exchange) insist that he was utterly committed to the revolution and even risked his life for it. Indeed, some of Rice’s friends—including the young American engineer and solidarity activist Ben Linder—were murdered by the US-backed contra rebels. Rice downplays his youthful leftism, saying only, “I’m not going to talk about the Sandinistas. I was committed to social justice, and still am.”
In 1994, Rice left Nicaragua and enrolled in the MBA program at the University of California at Berkeley. Four years later he helped to found Fair Trade USA, which was originally a project of the Institute for Agriculture and Trade Policy in Minnesota. (The IATP strongly opposes Rice’s new initiative to certify plantations and small farmers.) The Ford Foundation, which gave FTUSA $1 million in its early years, also provided it with a long-term, low-interest loan of $2 million. In subsequent years Rice worked indefatigably to build the fair trade brand—not only among consumers, but also among corporate and business leaders. As a result of its partnership with FTUSA, Dunkin’ Donuts uses 100 percent fair trade–certified beans in every espresso drink it sells. Today, Fair Trade USA, which is a 501(c)(3) organization, is robust: it works with 740 companies, including Starbucks, Costco, Sam’s Club, Whole Foods, Ben & Jerry’s and Green Mountain Coffee. In 2010 the organization earned $6.7 million in certification fees, an income that many nonprofits would envy.
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