05/31/2012 03:53 EDT | Updated 07/30/2012 05:12 EDT

'Fair trade' movement faces a schism on question to allow bigger plantations to play

MONTPELIER, Vt. - After a quarter-century working to improve the lives of farmers in places like Latin America and Africa, the fair trade movement is at a crossroads.

Will it expand its mission to include bigger players and a larger share of the markets in coffee, cocoa, bananas and other products? Or will it stay with its original purpose, empowering small farmers, often working through co-operatives, with higher prices for their crops and more clout in setting international trade practices?

In Vermont, which has long prided itself on being home to companies that pursue both profits and a social mission, the question gained broad notice on May 20, when the fair trade policies of Waterbury-based Green Mountain Coffee Roasters were targeted in a full-page ad in The Burlington Free Press.

Bridgewater, Mass.-based Equal Exchange Inc., which markets fair trade coffee, chocolate and other products, called on Green Mountain to sever relations with Oakland, Calif.-based Fair Trade USA, the national leader in certifying products as eligible for the fair trade label.

So far in the history of the movement, fair trade "has exceeded all expectations for success," the Equal Exchange ad said. "More small farmers have market access, improved living standards, and have achieved greater economic control and political power."

Fair Trade USA "changed the rules to allow large-scale plantations and private estates into the (fair trade) coffee system," the Equal Exchange ad said, "potentially putting at risk the very survival of the farmer co-operatives."

FTUSA has defended the changes, which were announced last year and implemented in January.

"We believe the future of Fair Trade lies in a more inclusive approach that supports everyone in the global coffee supply chain that is willing to commit to a journey of sustainability, responsibility, empowerment and impact," the organization says on its website.

The fair trade movement dates to the 1940s, when a Pennsylvania Mennonite named Edna Ruth Byler travelled to Puerto Rico and was shocked by the poverty. She set up a business to sell the needlecrafts of female artisans she met on the trip; it later grew into the non-profit retailer Ten Thousand Villages.

The movement began to blossom in Europe in the 1980s and since then has gone global, with coffee its leading commodity.

Companies looking to affix a fair trade label to their products go to an independent third party, such as FTUSA or Fairtrade International, to get certification that their products are coming from sources that meet certain standards.

Fairtrade International, based in Bonn, Germany, with affiliates in about two dozen countries, has standards for the sort of "small producer organization" preferred by companies like Equal Exchange. Among them: "Democracy. Profits should be equally distributed among the producers. All members have a voice and vote in the decision-making process of the organization."

The results, say fair trade advocates, are improved conditions for farmers, as well as a way for consumers to see by the label on a chocolate bar or bag of coffee beans that their purchase is contributing to that improvement.

Under fair trade rules, farmers get a $1.40 per pound "floor price" for coffee — a minimum maintained even if commodity markets go lower; a 20-cents-per-pound "social premium," which pays for communal benefits like health clinics or schools; and an extra 30-cent premium if the coffee is organic.

If large plantations are allowed into the fair trade system, critics say, they could become eligible for premiums they don't need to be profitable. There's also widespread concern that the small farmer co-operatives could be squeezed out.

The concern is that "large companies will use the fair trade seal to do what they call 'fair-wash,' to get the halo effect and perhaps confuse consumers about their overall practices," said Daniel Jaffee, an assistant professor of sociology at Washington State University who has studied the movement.

In some ways, the fair trade debate is reminiscent of previous quarrels over what counts as organic. Consumers often are willing to pay more for products many see as healthier or grown in a more ethical fashion; more companies want to grab a share of that market and, when they start to do so, raise questions about whether standards are being diluted.

FTUSA has split from Fairtrade International.

Officials at both Green Mountain and Seattle-based Starbucks, the two largest marketers of fair trade coffee in the United States, said they're staying with FTUSA for now, waiting to see how its push to broaden the market works out and, they insisted, not slackening in the efforts to ensure their products are ethically sourced.

"We're engaging with everybody and we're really trying to figure this out," said Ed Canty, a coffee buyer with Green Mountain. He said the company wants very much to protect small farmers.

Ben Packard, Starbucks' vice-president for global responsibility, said his company, like Green Mountain, is pushing the fair trade agenda on several fronts. "We are waiting to see what the implications of these different schemes on the marketplace are going to mean," he said.

Separately, Starbucks is continuing to pursue a certification system it set up, along with the non-profit Conservation International, called Coffee and Farmer Equity, or C.A.F.E. Practices, Packard said.

Requirements would include transparency. Suppliers must tell Starbucks how much money is going to farmers and provide humane working conditions and sound environmental practices.

The rift in the fair trade movement has been resonating in coffee-producing countries.

Jeronimo Pruijn, a leader of the Latin American and Caribbean Network of Small Fair Trade Producers, said a key to the movement has been democratic control of co-operatives by farmers themselves.

He and other critics of FTUSA's decision to begin labeling products from large plantations as fair trade said the group did little or nothing to consult the farmers likely most affected by its decision.

"A private owned company can by no means be compared with a collectively owned coop or association," Pruijn said in an email from Mexico City. "Different values, different decision-making processes and different costs are involved which make these two models to be incompatible within (one) certification system and promotion strategy."

FTUSA President and CEO Paul Rice said in a recent interview that he will continue to push to make fair trade a bigger feature of Americans' shopping experience, by increasing the numbers of consumers who shop for fair trade products, as well as the farmers included in the supply chain.

Only about 10 per cent of the world's coffee growers are in farmer co-operatives, Rice said, adding, "We believe we can reach the other 90 per cent."