An Analysis of Fair Trade: Reflections from a Founder (Part III)

This is the third and final part of Rink Dickinson’s speech on the state of fair trade, delivered at the IRTF conference in Cleveland, Ohio on October 23rd....

This is the third and final part of Rink Dickinson’s speech on the state of fair trade, delivered at the IRTF conference in Cleveland, Ohio on October 23rd.

The Trojan horse for plantations was tea.

After the initial success of the Max Havelaar fair trade certification scheme in Holland the fair trade certification idea spread. Soon there was a Max Havelaar Belgium and Switzerland. An allied but competitive seal started in Germany called Transfair Germany. Soon there was a Transfair Austria and Luxembourg. These two organizations did not like each other and fought for marketing turf and liscensing revenues/sales dollars. Transfair Germany and therefore all the Transfairs brought in plantations in tea with the idea that if you couldn’t find small farmers, just substitute in a plantation, make a few changes and voila fair trade tea would exist. The reality is the Germans did not understand how fair trade functioned. Remember the key economic and social engine of fair trade is access. The Dutch vociferously objected to plantation tea even being considered fair trade. After several years of fighting over this and a host of other issues the two organizations were forced to merge creating Fair Trade Labeling Organization. In that merger tea plantations and hence plantations were accepted as part of fair trade.

So how has fair trade tea developed? Not at all like coffee. Tea is very dear to my heart and I have, and Equal Exchange has, continued to put significant time into trying to build an authentic small farmer model in fair trade. It has been a very hard road to travel down for a host of reasons but primarily because of the plantation question.

The area we work most closely with in tea is Darjeeling in India. A tremendous number of estates there are fair trade. Those estates do not need access to markets. They already sell to tea companies and brokers throughout Europe and the U.S. For them fair trade is simply another aspect of their product that they offer to consumers that want it. To an extremely large extent nothing really changed for those plantations in becoming fair trade. They simply allowed their workers (who were already in unions) to create a committee shared with management to disburse some modest premium dollars to a development fund. In return, they had this extra “product attribute” to offer to Twinings or Bigelow, or Celestial or Stash. Perhaps more importantly the northern certifiers such as Transfair got to offer more products, take more market share in their competition with other social responsibility programs, and make more income. Making this situation more ironic the plantation tea workers who are weak players in this system are legally bonded to the land. They are tied to the plantations in a feudal type of manner. How can the people who pick the tea be bonded and the product be considered fair trade?

Missing from this are small tea farmers. Not because there are none in Darjeeling. Because they lost the minute the beautiful fair trade idea built for them was mistakenly attached to a plantation that had no market access problem at all and completely dwarfed small farmers in resources.

We at Equal Exchange are working with small tea farmers in coops in the same manner we do in coffee. We are still trying to build that supply chain. But if in coffee it took us and the Europeans fifteen years to build it with no competition from plantations, how long will it take in tea? Remember all the risk to build the coffee supply chain? The risk in processing, exporting, financing and quality. Remember how no reasonable commercial coffee trader would want to get involved in that? Building our supply chain is just as difficult. We have been at this with small farmer groups like Mineral Springs and Potong in association with other alternative trade organizations and a with the support of an extremely supportive partner Tea Promoters of India. But the supply chain in this case is small and weak.

Where do we stand in terms of the criteria of leverage, education, and economics?

Leverage (my grade D) – Equal Exchange has built our small farmer tea supply chain at great effort and risk. But we have almost no leverage either in country or in the U.S. market. In Darjeeling, people know of the projects that we are supporting and there are now some small farmers in tea groups. But they are still few and far between and if you compare them to their coffee counterparts after the same period of incubation, they are perhaps 10% as far. In the U.S. (and European) markets no commercial companies are backing small tea farmers. So those tea farmers particularly at Potong have huge supply and very weak markets. The equivalent of Dunkin Donuts or Starbucks in tea feels no need to buy from Potong. Why? Because they already have fair trade tea. Their existing supply chain was just fine thank you, no need to be pressured to work with some new group that might be risky. Allowing plantations in took away market opportunities for small tea farmers and then the positive cycle of development that would occur from those opportunities. Fair trade plantation tea has completely stunted the path forward for small farmers in tea.

Education ( D) – Coffee, chocolate, and bananas are politically hot. They have energy and we as Americans understand there is real exploitation in those commodities and want to be on the right side. Tea is much softer and less understood. Regardless, we at Equal Exchange need to do a much better job telling this story.

Economics (D)- Equal Exchange is having a much harder time making tea work. Remember how coffee had high prices, high profit margins and high turns? Tea has high prices and high profit margins but much lower turns. Between that and the uphill fight of trying to differentiate plantation fake fair trade from the authentic small farmer fair trade it is hard to get the resources to reinvest to better support our farmer partners.

WHAT IS FAIR TRADE?

We can all go and read different definitions of fair trade. Fair trade is for small farmers and small producers who are democratically organized. If you take the democracy out you have traditional aid or world bank development or what the Transfair and the European certifiers are now trying to call fair trade. And fair trade is about access for those small producers. By slowly developing over time at significant risk small farmers and producers can build solidarity networks and enter commercial supply chains. When they succeed at this there are benefits or positive development for their communities. That’s what fair trade is all about. If you want the fastest supply chain that produces the most tea or coffee or bananas at commercial terms you have entered into some socially responsible product world of which there are many examples. It just ain’t fair trade, and it won’t have the same positive benefits.

WHAT NEXT ?
We don’t know what this next stage of fair trade development will look like in Salvador, in Darjeeling, in Scotland or in Cleveland. We are here today to celebrate, to build our community and in part to have this discussion. I would like to highlight a few threats and opportunities in the current situation.

THREATS

1) The gravest threat is the ongoing lowering of fair trade standards to the point where real fair trade groups cannot compete in the market because fair trade in name is cheap and well connected with the market and access is actually worse than it was before this movement started in earnest in the eighties. This is more or less the current case in tea. It is the coffee producer’s greatest fear and that fear is absolutely justified. This threat plays out with few farmers coops beyond coffee and fair trade coffee coops getting weaker and being replaced by plantations, unaffiliated small farmers, and fake coops.

2) Another threat is consumer and marketplace fatigue around all of this. Already no consumer can understand the differences between Rainforest Alliance, Whole Trade, Fair Trade International, Transfair’s version of fair trade, Utz Kapeh, IMO, and Direct Trade.

3) A third threat would be a bifurcated system in which small farmers in what the market defines as fair trade coffee remain relatively strong and important. But small farmers are weak beyond that and fair trade in bananas, tea, and most other commodities becomes a plantation product. This contradiction makes fair trade weaker to U.S. consumers because consumers want to support small farmers not plantations. This is roughly the path that FLO international is on.

OPPORTUNITIES

1) There is an opportunity to connect all of us who are engaged in authentic small farmer fair trade. This is the trade model that actually has impact on lives and creates positive development. It is the model that Americans think they are supporting and want to support. These products can be identified by the companies that support authentic small farmer trade and by a small farmer seal that is about to be launched by our friends from CLAC.

2) There is an opportunity to keep developing based on the real accomplishments that have been achieved from Peru to South Africa to here in Ohio. Hundreds of organizations have taken risk, created supply chains, gone through powerful development processes, failed, and succeeded and failed and succeeded another time. These organizations and their members and supporters are the real fair trade movement. Their history, their development, our history, our development cannot be erased.

CONCLUSION

For us to be in the right path between those threats and opportunities we need each other. Groups like Las Colinas need Equal Exchange and IRTF. We are linked and we build each other probably more than we often understand. Now is not the time to be silent or polite. It is the time to shine the light brightly. Let us ask the stores we shop in what type of fair trade if any they participate in. Let’s ask Dunkin Donuts, and Starbucks, and Green Mountain to develop their position on small farmers and plantations. Let’s describe what happens in slowly over time when a real small farmer to consumer supply chain is built and how different that is on every level from simply deeming an existing supply chain to be fair.

Thank you for your time, your energy, your commitment. You have accomplished great things at IRTF and we look forward to working together in this vital time for fair trade. Keep the faith.

In this article


Join the Conversation