You’ve surely seen the “Fair Trade” label on your coffee or your fancy chocolate bar. You know what it means: that whoever grew your product received a fair price under good working conditions. But how much do you know about the movement behind the labels or the 2011 split in the fair trade camp?
The Fairtrade Labelling Organization (FLO) is an international federation of labeling initiatives and producer networks that promote fair trade. The FLO demands that “certified traders must buy directly from a certified producer organization and pay a minimum price that is set by the FLO with the intent to cover sustainable production costs” and a “social premium that is to be used for social, economic, or environmental development of the community.” The FLO focuses on small producers grouped in producer organizations, which handle business transactions with buyers.
In 2011, though, the movement split when the U.S. labeling organization left the FLO and established its own labeling program, calling itself Fair Trade USA. The new U.S.-based group wants to expand the reach and scope of the fair trade movement by certifying large farms and plantations using hired labor that are considered “worker-friendly,” as well as including small farmers not organized in producer organizations. Paul Rice, the president and CEO of Fair Trade USA, calls this idea “Fair Trade for All” and promises that it will make fair trade “scalable and significant” instead of a niche market with a limited number of suppliers.
Needless to say, the rest of the fair trade movement does not necessarily share Mr. Rice’s vision (and is somewhat put off that Rice stole the fair trade name for his own organization). They believe that farmer cooperatives must be at the center of the fair trade movement, and that any efforts to bring in large farms will hurt small farmers and their coops and damage the fair trade brand by lowering its standards and making the smallholders compete with massive farms.
Others in the movement, though, are just worried about the effect of a split in an already small market, and the confusion it may cause among retailers and customers. They are concerned that the competing factions will further splinter the movement as they compete for buyer companies, and that customers, confused at the profusion of labels and brands, will just buy whatever non-fair trade product is easiest and most easily understood.coops and damage the fair trade brand by lowering its standards and making the smallholders compete with massive farms.
Fair Trade USA might very well expand the fair trade brand, bringing more fair trade products to market and helping large companies find enough supply to be able to sell fair trade products. However, the FTUSA products will not necessarily be from the small farmer coops customers have learned to associate with fair trade products. As an informed customer, you can make the choice about which side of the movement you stand with…and which products you’ll choose to buy.
Blogal Prosperity by the Center for Global Prosperity 
I knew that there was a split on this issue, but I had a hard time remembering which label was which. Thanks for this post.
Good post. Thanks for a really good summary. Informed consumers are empowered consumers! With that in mind, I wanted to share a couple of points to clarify though. 1st, Fair Trade USA changed its name from TransFair USA while still a member of FLO, and as part of a system-wide effort to streamline each country’s labeling organization. Transfair Canada became Fair Trade Canada as well, for example. It is a mis-categorization to say that “. . . Rice stole the fair trade name for his own organization.”
2nd, and this is important, is that FLO also has, does and continues to certify large farms and plantations using hired labor. In products like cotton, bananas, rice and others, those large famrs with hired labor have always been in the FLO system. The distinction is that it does not do so in coffee and a few other categories of products. Fair Trade USA’s Fair Trade for All initiative brings that model to coffee for the first time. The jury will be out on if that negatively impacts cooperatives in coffee or not. So far, to my knowledge, it has not and Fair Trade USA’s theory of change is that a rising tide lifts all ships, and by increasing access and demand, coffee cooperatives will actually see an increase in their business.