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Corporate Responsibility: National Fair Trade Month
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Corporate Responsibility: National Fair Trade Month - Executive Leadership Articles

Corporate Responsibility: National Fair Trade Month

Executive Leadership Articles

Corporate Responsibility: National Fair Trade Month

October is National Fair Trade Month, as proclaimed by Fair Trade USA, a certifying body of products grown in developing nations for purchase in the United States. Dedicated to improving conditions and quality in these developing nations, Fair Trade USA puts its stamp only on products meeting its strict standards, which fall into categories of empowerment, economic development, social responsibility, and environmental stewardship. Cooperatives meeting these standards are promised a floor price above market minimums for their goods. American sellers, in addition to paying the higher price, pay the organization an additional premium of twenty cents per pound (thirty cents for certified organic produce), which goes back to the cooperatives, who decide democratically how best to use the premium in improving the lives of their communities and the quality of their product.

Just as B Lab certifies corporations for socially responsible practice, Fair Trade USA (there are multiple certifying bodies internationally, each with a similar model, but this article will focus specifically on fair trade as it is practiced in the United States) certifies produce as being grown and harvested under conditions that minimize erosion, pay livable wages, eschew forced labor, and provide safe working conditions, among other qualifiers.

Coffee is perhaps the highest-profile of fair trade products in the United States, as well it should be. It is the second-most valuable export in developing nations (after petroleum), and America leads the world in its consumption, accounting for twenty-two percent of exports from these countries. However, according to Fair Trade USA's 2013 Almanac, 12,000 products were certified in 2013, an increase of 12% over the previous year, which means the socially conscious consumer can contribute to improving the quality of life of people on other continents with an ever-widening selection of consumer goods. Likewise, corporations, with their heftier powers of consumption, can make efforts to deal with a greater selection of Fair Trade certified products, as when Whole Foods Markets switched its in-house store-branded coffee to Fair Trade coffee in response to popular demand by its customers. An increasing number of organizations, such as churches, universities, and even towns, are making legislated commitments to consume Fair Trade products wherever possible.

It's important to point out that, just as corporate responsibility is not charity but good business, Fair Trade certification is not a handout in any way. It is capitalism and consumerism, and producers face the same risks with the fickleness of demand whether they are certified or not; without sales there are no premiums, and the boost in price that comes with certification is still just an asking price.

There are other flaws in the system, of course, such as the problem of what producers are supposed to do with a surplus of product that out-supplies demand. When demand is lower, some farmers must sell the same product two ways: with and without the Fair Trade stamp. There is speculation (but apparently little research) that for some farms, the higher cost of meeting standards doesn't pay for itself in demand for the certified product, even with the Fair Trade premium. In 2011, an article in the Stanford Social Innovation Review concluded that, specifically in the case of coffee, the very standards upheld by Fair Trade USA were resulting in a lower quality product, keeping afloat with higher prices (especially true of coffee) farms that perhaps should be growing something else.

Yet it is tough to argue against an organization whose stated mission is primarily to reduce poverty in the world. In a rebuttal to the SSIR article, Fair Trade USA President and CEO Paul Rice defends his model, explaining that by putting premiums in the hands of the producing cooperatives, the farmers decide how their compliance will improve their businesses and the lives of their employees, adding that some cooperatives pool premiums with other cooperatives nearby for more wide-ranging effect in their communities. Rice also emphasizes that Fair Trade USA holds farms accountable to practices, not quality, leaving it up to the market to select for quality, again leaving it up to demand to shape markets.

In a nation where concern for the living conditions of those who produce our goods is increasing all the time, the lengthening reach of Fair Trade USA and similar organizations is an encouragement, not only in America’s willingness to pay for quality, but in the ideological demonstration that responsible business is good business.

 

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Corporate Responsibility: National Fair Trade Month - Executive Leadership Articles

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