Facilitating Fair Trade

In recent, years, a handful of formerly fringe concerns have progressively carved a larger niche in America’s public consciousness. Natural foods are no longer purely the realm of crunchy granola, wheat germ and spirulina. Organics have grown from local, earthy farmers’ cooperative groups to the realities of big business. And sustainability—whether applied to the environment or business—is no longer a foreign word greeted with shrugged shoulders.

All of these factors have made a notable impact on our American foodscape—and for good reason. These concepts combine ideology with human necessity—i.e., food. If consumers maintain a heartfelt belief in the foods they purchase, that sustenance has transformed into a philosophical ideal—perhaps the pinnacle of brand identity.

Now fair trade is poised to add a new dynamic to the emerging concern of ethical consumerism, promising to add value to products targeted toward consumers interested in natural and organic products while carving its own distinct market niche.

BEYOND COFFEE, TEA AND CHOCOLATE

Dutch firm Max Havelaar launched the concept with its certification of the first fair trade product, coffee, in 1988. A decade later in the United States—now the leading market for fair trade products based on total revenue—TransFair USA opened its doors in Oakland, CA, and continues as the sole U.S. fair trade certification agent.

“We’re one of 20 labeling initiatives worldwide,” says Nicole Chettero, public relations manager, TransFair USA. Fairtrade Labelling Organizations (FLO) International, Bonn, Germany, certifies the farms and workers’ associations, while labeling initiatives like TransFair USA certify the products themselves.

The common goal of fair trade is to provide a means for sustainable economic support of small farms—typically organized into cooperatives—while sourcing necessary commodities. TransFair USA certifies coffee, tea (including herbals like hibiscus, mint and chamomile), cocoa, bananas, grapes, mangos, pineapples, sugar, rice and vanilla. Chettero sees this list of available fair-trade ingredients growing exponentially over the coming years.

Currently, fair trade is perhaps most commonly associated with coffee, cocoa and tea—but there’s more to tea than just little bags steeped in hot water. “We do a lot of tea extracts and concentrates,” says Rick Brownell, vice president of vanilla products, Virginia Dare, Brooklyn, NY. He notes his company will probably follow up with fair trade cocoa and coffee ingredients.

The flavor company has also expanded into fair trade vanilla, along with a handful of other suppliers. “We have seen a lot of interest in fair trade products in the marketplace,” says Brownell. “Yet the supply situation really hasn’t caught up to the level of interest.”

Securing specific types of vanilla is also an issue at this early stage in the game. “The highest quality of vanilla, traditionally, has been Madagascar,” says Brownell. “Until we get Madagascan vanilla fair trade certified and available, we’re going to be at a little bit of a disadvantage. Right now, the only significant producer of fair trade vanilla is India. It’s very good quality, but again—it’s a limited supply.” He notes TransFair USA has indicated some Madagascan suppliers will be certified by the second half of 2007.

“We utilized our extensive network of global trade partners to work with vanilla farmers to ensure that they became fair trade certified,” says Skip Rosskam, president and COO, David Michael & Co., Philadelphia. “We have liquid and powder vanillas certified. So far, only Vanilla planifolia Andrews—commonly referred to as ‘bourbon’—is fair trade certified from India, Sri Lanka, the Comoros and Uganda.” He notes in addition to Madagascar, certification projects are underway in Indonesia.

One area of interest is chocolate. Fair trade chocolate must use fair trade vanilla—now that it’s available. Rosskam notes an interest in fair trade coffee and chocolate—and some other undisclosed ingredients.

The market for fair trade continues to grow. Chettero notes fair trade coffee has more than doubled in the last two years, with an annual average increase of over 75%. It’s the fastest-growing segment of the $11 billion specialty coffee market. Its retail value was estimated at about $50 million in 2000 to over $500 million in 2005. Starbucks accounted for about 12 million lbs. of fair trade coffee purchases in 2006, or about $140 million at retail prices. Fair trade tea grew almost 200% in 2005 alone, and cocoa about 85%.

“I would say that we’re reaching a tipping point,” says Chettero. “With every fair trade certified product that is introduced, it increases the consumer awareness and the availability for other products. The quality has increased, product availability has increased. Consumers are prepared for, and are seeking out, fair trade products. It’s only going to increase over time.”

According to Mintel, food and drink product launches with an ethical positioning—defined as products with ingredients linked to fair trade or sustainability—nearly doubled in 2006.

“In many ways, we’re the next organic label,” says Chettero. “Not in a way that would ever supplant or replace organic, but I believe that we are building on the momentum of organic. It’s a natural progression. People start by asking, ‘Is this good for me?’ and then they start asking, ‘Is this good for others?’ And we’re finding that organic really opened up the market to making people more aware of the origin of their food... Fair trade expands upon that. Not only do we have incredibly stringent environmental standards, but we also account for the social and economic impact of that commodity.”

DEBUNKING THE ECON 101 MYTH

One common criticism of fair trade is that in a market-based economy the increase of fair trade commodities will inevitably drive down prices, thereby lowering payments to farmers and negating the initial impetus of fair trade.

“We believe that is a fallacy,” says Chettero. “While in theory higher fair trade prices might incent farmers to increase production, in fact we often have seen the opposite.” She notes that fair trade producers typically invest revenue into farming methods and equipment that improve crop quality rather than increasing production, as well as diversifying their crops to avoid dependence on any one commodity. “It’s kind of a race to the top that encourages competition among growers to meet higher standards and differentiate their products accordingly. It’s raising the bar across the board.”

Another criticism is that some of the largest growers are not eligible for certification. In a recent article in The Economist, Ian Bretman, FLO International, defends this stance by noting that fair trade certification is designed to benefit those who need the most assistance.

That connection to helping small, upstart farmers can prove profitable. According to a survey conducted by the Center for Agroecology & Sustainable Food Systems, University of California, Santa Cruz, 84% of surveyed consumers showed a willingness to pay more for fair trade products—with 42% willing to pay a 100% increase (see "Central Coast Consumers Want More Food-Related Information, From Safety to Ethics").

In the case of coffee or tea, the entire product is certified fair trade. With composite products—such as ice cream—where not all ingredients are certified fair trade, Chettero notes the product label will state “made with fair trade certified” ingredients.

If this momentum continues, we’ll soon start seeing a lot more of those little labels in the supermarket—and maybe even on menus.