Tea Suppliers Divided Over Fair Trade Split

Tea suppliers, unclear as to precisely how the Fair Trade USA split from Fairtrade International will unfold after Dec. 31, indicate they are likely to participate in both programs.

Anupa Mueller, a long-time Fair Trade supporter and organic tea advocate, voiced the frustration of many.

“This has caused more administrative chaos than we can deal with,” says Mueller. “My customers will be a combination of both so I will, unfortunately, have to align myself with both which will inevitably cause higher fees and increased paperwork,” says Mueller, founder of Eco-Prima Tea in Elmsford, NY.

“What we think and how we feel and whose policies we agree with becomes secondary to the administrative realities — how do we report transactions, which label do we carry and which path will result in the fewest changes,” says Mueller.

Seattle-based Choice Organic Teas, founded in 1989, helped Trans Fair USA (the predecessor to Fair Trade USA) develop its tea standards and was the first company to offer Fair Trade Certified™  tea in the U.S. The company continues to offer the largest selection of Fair Trade Certified teas in the country.

The firm "has no immediate plans to change the status of our Fair Trade Certified registration through Fair Trade USA," says Anne-Marie Phillips, Head of Sales & Marketing at Choice Organic Teas. 

FTUSA's decision is still a relatively new development and the full implications on the fair trade system, tea growers, manufactuers and consumers are still unfolding, she says. "We are in contact with our sources throughtou tthe industry and continue to gather information on a daily basis," says Phillips. "Unless we are presented with a compelling case otherwise, Choice Organic Teas will remain with Fair Trade USA for our fair trade certfication," she says.

QTrade Tea & Herbs is enthusiastic about Fair Trade USA’s “Fair Trade for All” initiative, says Joshua Rigsby, Marketing and Communications Coordinator at the Los Angeles-based firm: "We believe the initiative is a step forward for socially-conscious business practice in the tea industry.”

Fair Trade for All aims to double U.S. sales of Fair Trade certified goods by 2015. U.S. retail sales were $1.29 billion in 2010, the Canadian market was $344 million. Fairtrade sales worldwide exceed $6 billion.

Rigsby says QTrade “fully supports Fair Trade USA in their desire to increase the overall impact of the Fair Trade movement for producers around the world." He says "many elements of the FLO system have become overly-bureaucratic; requiring reams of paperwork and unnecessary fees.”

“We believe the new Fair Trade USA label will streamline the certification process for everyone, removing hurtles for businesses and increasing benefits for producers,” says Rigsby.

“We recognize that it may take time for some of our clients to fully appreciate the benefits of this new system. If any of our clients prefer to maintain their FLO certification we will certainly honor their request and continue to supply them Fair Trade products as certified through FLO's system," he added.

Eva Y. Wong, Minister of Enlightenment says The Republic of Tea has not made a decision.

“We support Fair Trade's work and we are always looking for opportunities to expand our positive impact in tea producing communities through our own ethical sourcing projects and through our partners in the field, including Fair Trade, Rainforest Alliance and Ethical Tea Partnership," she says.

Ultimately the Novato, Calif.-based supplier “will choose the logo/certification that allows us to continually increase the sustainability of our industry, the quality of our tea and the livelihoods of the growers upon whom we depend,” she says.

Adagio RootsAdagio Teas founder Michael Cramer says “our preference is to let our connections to farmers speak for themselves via our Roots Campaign and the new “direct trade” logo. The program features an online Q&A that introducescustomers to the farmers who produce these teas and gain insight on the process of growing and making the tea they love, says Cramer.

Runa Co-Founder and President Tyler Gage says: “We are sticking with FTUSA because we admire their commitment to making Fair Trade better known and respected in the U.S. FTUSA does more than anyone to educate and inspire people about Fair Trade, and we're excited to work with them to grow FT in America.”

None of the 715 retail and manufacturing partners in the Fair Trade USA have resigned due to the separation from FLO, says Jenna Larson, Fair Trade USA Communications Coordinator and spokesperson.

Business Decision

Fair Trade USA founder Paul Rice, appearing on a webinar hosted by Co-operative News* last week says “the decision to leave FI was not so much a political decision, but a business decision. The level of service from FI didn’t justify the cost, financially as well as through the constraints of membership.”

“The main change to FTUSA standards, for now, is in coffee, to allow hired labor and unorganized farmers to participate in the system,” Rice continues.

“There are no changes at present in environmental standards from FI. Some producers have complained that the costs of compliance with environmental standards exceed the financial benefits, so FTUSA will consider how to make compliance more cost-effective for producers,” adds Rice.

“It is important to note that Fair Trade for All is the result of years of input from our partners to expand the supply of high-quality Fair Trade Certified products so they can do more Fair Trade,” says Larson. “Fair Trade for All will allow companies, large and small, to take a “whole of business” approach to Fair Trade, not just the flavor of the week, she says.

“In the months and years to come, Fair Trade USA will introduce innovations that will extend the benefits of Fair Trade to millions more farmers and workers, and U.S. businesses will have more supply options, offering them more opportunities to do more good for more people,” she continues.

FTUSA will have more resources to invest in building the Fair Trade movement, as well as the market for Fair Trade Certified products, here in the United States to generate significantly more impact for Fair Trade producers, says Larson.

“The new coffee standards, which will available for public review on Nov. 1, will actually build on the success of FLO’s hired labor standards that currently exist in categories like rice, produce, tea, cotton and flowers. They will first be applied to coffee, with care, and will remain rigorous in order to ensure the integrity of the Fair Trade model,” she says.

“While the larger producer networks in coffee have opposed our decision, many individual farmers across categories, including tea, are incredibly supportive as they see that the changes we are making have the power to create greater access to markets and strengthen their individual communities,” she says.

Details including a helpful Q&A can be reviewed at FairTradeForAll.com

Central Divide

Poll: Do I Stay or Do I Go?

A divide is evident among suppliers by category. The decision drew heated criticism from producer networks representing African, Caribbean, Central and South American growers of all types of Fairtrade certified products. Online forums display lively commentary among coffee professionals   debating the merits of Fairtrade. Comments from tea, cocoa and sugar producers were more subdued.

Rice says about 20-30 producer co-ops sell the majority of volume into the U.S. “We’ve reached out to almost 100 coop leaders in the past few weeks,” says Rice.

“When Fair Trade bananas opened to estates, Fair Trade sales increased for co-ops too. Many coffee businesses already source from both co-ops and estates. We’re not going to flood the market by opening supply from 100 estates,” he says. “We’re going to do 5-10 estates in 1-2 countries in the first year. Then we’ll build on what we learn from the data, publically available, of sales from co-ops v. sales from estates. If co-op sales don’t increase, we’ll have to adjust course,” says Rice.

Producer Power

Fairtrade International, formerly the Fairtrade Labelling Organization (FLO) last week elevated producers to equal voting power in the General Assembly, the highest decision-making body. Producers are now half-owners of the global Fairtrade system.

Previously producer networks held three of 24 votes. In announcing the decision, FI says that “Although producer networks gained minority ownership of FI in 2006, they never had equal power to rich-country labeling initiatives in a system claiming to exist principally to benefit marginalized producers.”

It can be expected these Assembly members will be outspoken in their concern over Fair Trade USA's direction. Readers can judge their animosity in public statemenst at the following links: CAN (which represents three producer networks); Fairtrade Africa; the Network of Asian Producers;  the Latin American and Caribbean small producers network CLAC and Red Café .

Certifier Impact

Relations among the certifying bodies remain civil, if not cordial.

Fairtrade International is undecided but may establish a rival certifying body in the United State. FI announced there will be no application fee charged to U.S. businesses that switch if they are currently registered with FTUSA. In the meantime, U.S. based companies that wish to remain affiliated with Fairtrade International are encouraged to contact Fairtrade Canada, which remains affiliated with the European-based FI. Director of Communications Michael Zelmer says that Fairtrade Canada is the Fairtrade gateway for North American firms.

“This includes both companies who sell exclusively in the United States and companies with clients already in the Fairtrade system, such as any business registered with Fairtrade Canada,” says Zelmer. “Registering with a member of Fairtrade International, Fairtrade Canada or otherwise, is the only point-of-entry required to access the entire Fairtrade system worldwide,” he explains.

As of June 1, 2012 FI will no longer accept FTUSA’s certification for sales into other Fairtrade markets. This will have some implications for cross-border sales.

"Until now, U.S.-based companies had to go through Fair Trade USA to take part in the global Fairtrade system, and FTUSA’s policy has been to use their black and white mark (except for small volumes of products coming in to the US from overseas)," Zelmer explains.

"So both certification marks will be available in the U.S. now, but companies get the international Fairtrade mark by signing up with one of the existing Fairtrade International members (most likely Fairtrade Canada). We’re taking on this role to cover for Fair Trade USA no longer performing this function," he says.

To learn more, email questions to questions@fairtrade.net

“We are aware that some companies may be adversely affected by Fair Trade USA’s decision to resign from Fairtrade International, and our immediate focus is to provide the information they need to make the decisions that are right for them, and to make any transition as smooth as possible. We have held webinars with many affected businesses already, and will be hosting another within the next month. However, any company can and should contact us directly with their questions,” says Zelmer. Contact details are at www.fairtrade.ca.

Marketing Mission

Fair Trade has relatively low name recognition (34 percent) in the United States compared to European countries where it reaches 90 percent. FTUSA promises to step up marketing efforts. In most industries the task of promotion is undertaken by trade associations supported by business.

Rice intends to invest in marketing with the help of business partners, citing as an example the case of Ben & Jerry’s, a shining example of a large and well known manufacturer enthusiastically on board. Retail partners include Kroger, Wal-Mart, Safeway, Costco, Whole Foods Market, Target and Trader Joe’s.

Marketing and promotion in consuming markets, such as the U.S. and most European countries, is the sole responsibility of the Fairtrade International members located there, Zelmer explains.

Marketing and promotino in consuming markets has always been the sole responsibility of Fairtrade International's members, such as Fair Trade USA, rather than Fairtrade International itself. "Consumer-facing marketing is simply not what Fairtrade International was set up to do," he says.

Zelmer says the relatively high awareness of Fair Trade within European countries “is a testament to the skill and success of the members located in those countries, as well as the businesses and consumers supportive of Fair Trade, and has little to do with Fairtrade International.”

In 2010 Fairtrade International dedicated 21 percent of expenditures to market services. These include development and protection of the Fairtrade Certification Mark; helping to develop new national markets (South Africa, Korea, Czech Republic, Brazil and India); communications support for producer networks and national member organizations; international market research; global product management to support members; and management of major international accounts.

Zelmer provided a breakdown of expenditures. (SEE SIDEBAR: Where Fairtrade International's Money is Spent)

“Note that approximately  half of FLO’s revenues comes from fees charged to its members,” says Zelmer.

New Certification Mark

On Sept. 15 FTUSA applied to the U.S. Patent and Trademark Office for a new certification mark “intended to certify third parties who meet the applicant's (FTUSA) certification standards… for goods listed in the application.” These include 32 categories from coffee and tea, wine grapes and herbs to cotton, apparel and linens, sports balls, seafood, timber, rubber, gold and diamonds.

FTUSA spokesperson Larson says “the goal of the new certification mark is to develop a new logo that can be registered in any country for businesses that want to work with Fair Trade USA for cross-border sales.”

She described the mark as “a simple, global market solution for Fair Trade.”

Proposed FTUSA Certification Mark Fair Trade USA Fairtrade International Transfair USA
Proposed Fair Trade USA Certifier Mark Fair Trade USA
Certifier Mark
Fairtrade International Mark Original Trans Fair USA
Certifier Mark

The design is significantly different from the current black and white Fair Trade Certified logo, she explained. It will “pop better on the shelf through use of color.” Symbols in the mark include one basket to indicate sharing, care for the environment and regards for the people who grow our food, (rather than the current label which speaks to scales of justice).”

“It is also designed to make the words “Fair Trade Certified” much stronger and easier to read, because that is the phrase consumers look for,” she says.

Rice told Co-op News that labels can only pack so much information before they break down.

“Transparency will be available on the website with information about what percent of ingredients that are Fair Trade.  “We’ve heard many proposals about using color coding, number of stars, etc., to distinguish organic from not, 100% Fair Trade companies from not, co-ops or hired labor, and such information is better communicated by companies on their packaging. Most companies don’t think their customers care for that level of detail,” he says.

Right now Fair Trade USA is busy communicating with its members and circulating the new certification mark for comment.

“While the larger producer networks in coffee have opposed our decision, many individual farmers across categories, including tea, are incredibly supportive as they see that the changes we are making have the power to create greater access to markets and strengthen their individual communities,” says Larson.

“Our stakeholders, across categories and regions, have been extremely supportive of our new initiative,” says Larson. “The fact that we're moving forward is clear evidence that demand exists both from farm workers as well as business partners,” she adds.

Sources: Co-operative News (Webinar: Insights into What FTUSA Leaving FLO Means for Producers and the Movement.)