Bananas Over Fair Trade

Written by Ralph E. Stone. Posted in Business, Economy, Opinion


Published on June 06, 2012 with 1 Comment

Free Trade bananas

One group of farmers who benefit from fair trade is banana growers. Bananas are the most consumed fresh fruit in the U.S., and represents 50 percent of all U.S. fresh fruit imports. Photo courtesy

By Ralph E. Stone

June 6, 2012

The main goal of Fair Trade is to ensure that producers — usually located in underdeveloped countries — treat their workers well and pay them a fair price for their labor, which in turn helps the workers to improve their lives. For consumers, it’s a simple way to choose products, knowing that those who grew or made the products were treated fairly and paid a fair price for their labor. When a product carries a Fair Trade label it means the producers and traders have met standards of the certifying organization. Farmers are audited annually. Thus, sellers agreeing to sell Fair Trade products and consumers buying these products are relying on the integrity and diligence of the certifying organization. And how much extra will a consumer be willing to pay for a Fair Trade certified product — 5 percent, 10 percent?

When a product carries a Fair Trade label it means the producers and traders have met standards of the certifying organization. The standards are designed to address the imbalance of power in trading relationships. Most products have a Fair Trade price, which is the minimum that must be paid to the producers. The minimum price ensures that producers can cover their average costs of production and acts as a safety net for farmers at times when world markets fall below a sustainable level. Without this, farmers are completely at the mercy of the market. When the market price is higher than the Fair Trade minimum, the buyer must pay the higher price. Producers and traders can also negotiate higher prices on the basis of quality and other attributes.

In addition to the Fair Trade price, there is an additional sum of money paid, called the Fair Trade Premium. This money goes into a communal fund for workers and farmers to use to improve their social, economic and environmental conditions. The Premium is invested in education and healthcare, farm improvements. Since many projects funded by the Premium are communal, the broader community, outside the producer organization often benefits from Fair Trade.

FINE was created in 1998; it is an informal association of the four main fair trade networks: the four members — Fairtrade Labeling Organizations International (FLO), World Fair Trade Organization (WFTO), Network of European Worldshops (now part of WFTO), and European Fair Trade Association (EFTA). In 2001, FINE agreed to the following definition: “fair trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers — especially in the Southern Hemisphere. Fair trade organizations, backed by consumers, are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.”

In 1998, Fair Trade USA began in Oakland, California, and is the leading third-party certifier of Fair Trade products in the United States. Fair Trade USA audits and certifies transactions between U.S. companies and their international suppliers to guarantee that the farmers and workers producing Fair Trade Certified goods are paid fair prices and wages, work in safe conditions, protect the environment and receive community development funds to empower and uplift their communities. Fair Trade USA recently broke from FLO. Apparently, a major element of the split may be that Fair Trade USA is now certifying large-scale plantations, while FLO remains committed to only certifying small-scale farms.

Coffee was the first product to be certified by Fair Trade USA and that’s probably why Americans tend to associate the Fair Trade label with coffee. According to Fair Trade USA, coffee imports have increased from 78,000 pounds certified in 1998 to 108 million pounds certified in 2010. Fair Trade standards also exist for other products such as tea, fresh fruits, nuts, flowers and plants, cotton, and even balls used in sports, which are often hand-stitched.

Bananas are the most consumed fresh fruit in the U.S., and represents 50 percent of all U.S. fresh fruit imports, a large portion of which are produced in Latin America. The 27 Fair Trade producers supplying bananas to the U.S. market are located in Ecuador, Costa Rica, Perú and in the northwestern Urabá region of Colombia. According to Fair Trade USA’s Product Impact Report, imports of Fair Trade bananas almost doubled from 2008 to 2009, reaching 49 million pounds.

In “One Cup At A Time: Poverty Alleviation and Fair Trade in Latin America,” a Fair Trade research group at Colorado State University posed the following questions: What are the real benefits of the Fair Trade movement? Can the benefits of Fair Trade be sustained over time? Can Fair Trade grow to include more farmers and communities throughout the developing world? Can Fair Trade be expanded to encompass not only poor farmers, but also other sectors connecting Southern producers and Northern consumers?

There are praiseworthy and less-than-praiseworthy assessments of Fair Trade. Clearly, Fair Trade cannot solve the problems of poverty, but Fair Trade has had a positive impact on the well-being of producers who joined the Fair Trade movement. But the jury is still out on the future of the Fair Trade movement.

Ralph E. Stone

I was born in Massachusetts; graduated from Middlebury College and Suffolk Law School; served as an officer in the Vietnam war; retired from the Federal Trade Commission (consumer and antitrust law); travel extensively with my wife Judi; and since retirement involved in domestic violence prevention and consumer issues.

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