Fair Trade Certification Doesn't Do for Plantations What it Does for Co-ops

A few weeks ago, I wrote here at GOOD on Fair Trade and co-operatives.

Why the original—and continuing—focus on co-operatives?

Why do Equal Exchange and our allies oppose extending Fair Trade certification to plantations? Don’t plantation workers need reforms like Fair Trade, too?

For one thing, this is not entirely the “innovation” that FTUSA suggests. Rather, it's an experiment that has run for well over a decade, in that plantations in certain other industries (tea, bananas, cut flowers, etc) have already been obtaining Fair Trade certification. That history, plus our own Fair Trade experience at Equal Exchange in some of those industries, has shown us that:

Certifying plantations does not deliver the ambitious, transformative economic and social changes that characterize authentic Fair Trade. Unlike a successful farmer co-operative, the certification of a plantation, no matter how benign its operation, does nothing to change who owns the farm land, who has true economic control, who decides what will be grown or how, or who has political and social power in these rural communities.

The term “banana republic” tightly encapsulates the reality of societies run by the few, for the few, and at the expense of the many. That kind of reality is found not only where bananas are grown, but in most communities growing export crops like coffee, tea, cocoa, or sugar. While certainly not every plantation is exploitative, their presence, and their economic and political dominance, remains an obstacle for the aspirations for the “99 percent” who are not plantation owners. Consequently, the small farmers need to be able to unite, and together create enterprises like co-operatives, that they own and control, and that enable them to become serious players in their industries and carve out real economic opportunities independent of the 1 percent.

Since conventional businesses—sometimes even governments—often resist their efforts, the co-ops need reliable partners, just as back in the day the banana plantations needed allies such as United Fruit, Dole, and occasional interventions by the U.S. government. For 25 years Fair Trade has created those allies for the coffee, cocoa, and sugar co-operatives.

Supply is not a constraint. The small coffee farmer co-operatives which today supply the Fair Trade market produce 750,000,000 pounds per year, but can only sell about a third, or 250,000,000 pounds to the Fair Trade market. Any Fair Trade sales by plantations will eat into those 250,000,000 pounds. The co-ops that have finally been gaining ground, often thanks in part to their Fair Trade exports, have been explicit on this point. The real constraint is that too few businesses, and consumers, are buying Fair Trade products.

The Fair Trade system has consistently proven to be poorly suited to the task of significantly changing the welfare of plantation workers. It was not designed to solve those problems and so this is not a surprising outcome.

In sectors like tea and bananas, the certification of plantations has offered importers an easy way to source certified crops, often using their existing plantation-based supply chains. Consequently there is little incentive to create new relations with small-farmer co-ops. However, back in the '80s and '90s it was precisely the Fair Trade requirement for coffee importers to work with farmer co-ops that helped to jump-start the growth and professionalization of dozens for small farmer co-ops. That catalytic opportunity is being missed in sectors that permit the Fair Trade certification of plantations.

In contrast some Fair Traders, like ourselves, AgroFair, and La Siembra have opted to create small-farmer co-op supply chains in the chocolate, tea and banana industries, where they were lacking. It has been difficult, but we’ve found it to be viable and capable of delivering high social impact—just as we have always found with the coffee grower co-ops.

Plantations still enjoy numerous commercial, financial, and logistical advantages over small farmer co-ops that will enable them to undercut the co-operatives on price and grab Fair Trade market share from the small farmers.

Certifying plantations in the coffee, cocoa, and sugar sectors will increasingly steer new Fair Trade importers towards plantations, instead of directing them to farmer co-ops. This will represent significant lost potential lost sales for the co-ops.

Thanks to the central role played by small farmer coffee and cocoa co-ops in Fair Trade’s success most consumers assume that all Fair Trade products come from small farmers. With the proposed changes countless consumers will think they are supporting small farmers when in fact they are not.

Certifying plantations has been shown to be a “soft option” for plantation management that actually deflects pressure for farther-reaching changes, such as the presence of legitimate labor unions. Consequently the minor reform of Fair Trade certification can blunt more powerful changes. For a comprehensive union perspective see this commentary at International Labor Rights Forum.

Photo via Equal Exchange.