Faculty of Bioscience Engineering
Academic year 2013 – 2014
The ‘Fair Trade For All’-initiative: a stakeholder analysis applied to the case of Fair Trade certified coffee production in Minas Gerais, Brazil
Maayke Ruyffelaere
Promoter: Prof. dr. ir. Marijke D’Haese
Tutor: Lotte Staelens
Master’s dissertation submitted in partial fulfillment of the requirements for the degree of Master in Bioscience Engineering: Agricultural Sciences
The author and promoter give the permission to use this master’s dissertation for consultation and to copy parts of it for personal use. Every other use is subject to the copyright laws, more specifically the source must be extensively specified when using from this master’s dissertation.
De auteur en de promotor geven de toelating deze scriptie voor consultatie beschikbaar te stellen en delen ervan te kopiëren voor persoonlijk gebruik. Elk ander gebruik valt onder de beperkingen van het auteursrecht, in het bijzonder met betrekking tot de verplichting te bron te vermelden bij het aanhalen van resultaten uit deze scriptie.
The promoter The author
Prof. Dr. Ir. Marijke D’Haese Maayke Ruyffelaere
Acknowledgements
Fourteen months have passed since I began to explore the topic on which to write my master’s dissertation. Today, I am very happy to have reached this final result. Of course, this could have never been possible without the help of a lot of people.
First of all, I would like to thank everyone involved during the research in Brazil. Flávia, for putting me in touch with her incredibly generous family who provided me with a car, a house and a great amount of support during my stay in Minas Gerais. I would also like to thank Olivia, Antonino, Bel, Felipe and Tata. I was able to stay at their farms for several weeks, where I could pick, roast and grind coffee myself and practice my Portuguese. Being in touch with these families helped me to get an initial idea of the rural life in the area and the importance of coffee throughout the region. A special thank you goes to Fabio for assisting me through it all, and being my sounding board every time I had doubts or needed to discuss my impressions of the day. It would not have been the same without him. I would like to thank as well all my interviewees for taking the time to receive me, I could have never reached this result if it was not for their open attitude and patience.
Back in Belgium, I especially want to thank my parents, my sister and Josete for their motivation, support and time. My friends, Heleen and Wester, for the hours we spent side by side, pushing each other towards the finishing line. Special thanks go to my friend Jenna, who read every letter of this document, and gave me very useful suggestions on content, style and spelling.
And at last, I want to thank my tutor Lotte Staelens. I am very thankful for the trust she put in me and the guidance she gave me throughout this whole process. Thanks to her, I had exactly the experience I was hoping for with this master’s dissertation. She gave me the freedom to choose my own subject and organize my research, while being there at every step to stimulate and guide me as I was moving forward. Her experience and intuition were indispensable elements for me to enjoy the process of writing this paper. I would like to thank also prof. Marijke D’Haese for giving me the chance to finish my master’s degree with her as my promoter.
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Abstract
The aim of this paper is to examine conflicting views on the implementation of the ‘Fair Trade For All’-initiative in Minas Gerais, a state in southeast Brazil. This initiative, recently launched by Fair Trade USA, opens up the Fair Trade certification scheme of coffee to large estates and independent smallholders. In the past, this has always been limited to smallholders organized in democratically-run cooperatives. The international umbrella network of the Fairtrade Labelling Organization (FLO), of which Fair Trade USA was a member at the time, strongly rejected this new approach. Persistent disagreements ultimately led to the split of FLO. An intensive debate followed, where proponents and opponents of the initiative bombarded each other with all kinds of different arguments. This paper integrates a stakeholder analysis with an ontological approach in order to gain more insight in the conflict. Semi-structured, in-depth interviews were conducted with various stakeholders, and this data was complemented with participative observations and literature review. Drawing on an ontological politics perspective in order to structure the debate, I have found four, ontologically different, versions of the initiative. These versions embody distinct understandings of the initiative. The first represents the ‘Fair Trade For All’- initiative as a development tool in the primary production of coffee; a second discusses it as a marketing strategy; a third ontology represents it as an instrument to fill a legal void and a final, fourth ontology covers ‘Fair Trade For All’ as a governance model for the value chain. The distinction of these four ontologies draws attention to the multiplicity of the initiative. Three important findings emerge from the analysis. First, the initiative affects stakeholders located across the value chain of certified coffee, as well as ‘movement’ actors active outside of the chain who attempt to influence the course of events. Second, it shows that the issues at stake are not merely limited to which beneficiaries Fair Trade should include in its certification scheme, as the first ontology demonstrates, but that three other ontologies are equally matters of contention within this conflict. Third, it shows that the initiative is clearly ‘retail-driven’ and its consequences thus largely depend on the reaction of those stakeholders located downstream of the value chain. In conclusion, this paper argues that Fair Trade USA has neglected to engage in a broader, multi-stakeholder debate where each ontology is equally considered. This shortcoming has led to a standstill within the debate and the hampering of any form of reconciliation. Fair Trade faces a structural problem that is causing for recurring friction within the community. This problem lies in the potential incompatibilities that arise when one tries to reconcile the obtainment of social goals and the maximisation of profit within the same value chain.
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Samenvatting (NL)
In deze masterthesis onderzoek ik de tegenstrijdige visies op het uitvoeren van het ‘Fair Trade For All’ project in Minas Gerais, een zuidoostelijke staat in Brazilië. Dit project werd recentelijk gelanceerd door Fair Trade USA en maakt Fair Trade certificering mogelijk voor koffieplantages en onafhankelijke kleinschalige koffieboeren. Voordien was het label enkel toegankelijk voor coöperatieven van kleinschalige koffieboeren. Het internationale, overkoepelende netwerk Fairtrade Labelling Organization (FLO) heeft zich sterk gekant tegen dit project, waardoor Fair Trade USA zijn lidmaatschap moest opgeven. Na het uiteenvallen van de organisatie barstte een heftig debat los, waarbij voor- en tegenstanders van het project elkaar bekampten met sterk uiteenlopende argumenten. Om meer inzicht te krijgen in dit conflict werd gebruik gemaakt van een stakeholderanalyse in combinatie met een ontologisch interpretatiekader. Semigestructureerde diepte-interviews werden afgelegd met verschillende stakeholders in Brazilië. Deze data werden vervolgens aangevuld met participatieve observaties en een literatuuronderzoek. De analyse van deze gegevens leverde vier ontologisch verschillende versies van het debat op. Elke ontologie geeft een verschillende opvatting van het project weer. De eerste stelt ‘Fair Trade For All’ voor als een middel om koffieproducenten te ondersteunen in duurzame ontwikkeling; een tweede ontologie interpreteert het project als een marketingstrategie; een derde versie stelt het project voor als een instrument om een legaal vacuüm op te vullen, en een laatste, vierde ontologie behandelt ‘Fair Trade For All’ als een bestuursmodel voor de waardeketen van koffie. Het onderscheiden van deze vier versies benadrukt de verschillende insteken van het project. Er zijn drie belangrijke bevindingen. Eerst en vooral blijkt het project verschillende spelers uit de waardeketen van gecertificeerde koffie te beïnvloeden, maar ook leden uit de Fair Trade beweging die op actieve wijze het verloop van het project trachten te sturen. Ten tweede blijkt uit de analyse dat het geen eenduidig conflict is. Het debat beperkt zich niet tot wie al dan niet in aanmerking kan komen voor Fair Trade certificering in de producerende landen, zoals de eerste ontologische versie omvat. Het conflict speelt zich evenzeer af binnenin de andere drie ontologisch verschillende versies. Ten derde blijkt het project duidelijk gestuurd vanuit de retailsector in de Verenigde Staten. Hoe het project verder zal evolueren hangt dus voornamelijk af van de reacties aan dit uiteinde van de waardeketen. Ter conclusie argumenteert deze paper dat Fair Trade USA grotendeels bijdraagt tot het conflict en een mogelijk compromis verhindert door, enerzijds, een breed debat met verschillende stakeholders te vermijden, en anderzijds, slechts eenduidige aandacht te geven aan één aspect van het project, namelijk het betrekken van landloze plantagewerkers in de certificering. Hierdoor lijken de andere versies minder belangrijk, en blijven ze onopgelost. Een structureel probleem dat het conflict steeds doet oplaaien blijkt de ingewikkelde taak om het maximaliseren van sociale doelen te verzoenen met een winstgevend project dat strookt met de huidige markteconomie. Fair Trade werkt terzelfdertijd in en tegen diezelfde markt die ze tracht te veranderen, en dat veroorzaakt heel wat wrijving.
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Table of Contents
1. Introduction 1
2. Background 3
2.1. Evolution of the Fair Trade Label 3
2.2. The 'Fair Trade For All'-initiative 7
2.3. Background on the case study in Brazil 10
3. Methodology 13
3.1. Data collection methods 13
3.2. Data analysis methods 20
3.3. Limitations 23
4. Results 25
4.1. Mapping the debate based on four ontologies 25
4.1.1. First ontology: ‘Fair Trade For All’ as a development tool 25
4.1.2. Second ontology: ‘Fair Trade For All’ as a marketing strategy 30
4.1.3. Third ontology: ‘Fair Trade For All’ as an instrument to fill a legal void 37
4.1.4. Fourth ontology: ‘Fair Trade For All’ as a governance model for the value chain 42
4.2. Stakeholder positioning 49
5. Conclusion 52
6. Possible scenarios for the future 54
7. Bibliography 56
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List of Tables
Table 1: Data on Fair Trade certified plantations in Minas Gerais, Brazil 11
Table 2: List of identified stakeholders 14
Table 3: Overview of interviews 16
Table 4: Characteristics of certified cooperatives 17
Table 5: Overview participative observations 19
Table 6: Summarizing the four ontologies 49
Table 7: Motivation of stakeholder positioning 51
List of Figures
Figure 1: Timeline of Fair Trade 3
Figure 2: General principles of Fair Trade 5
Figure 3: International Fairtrade Label and TransFair USA’s Label 6
Figure 4: International Fairtrade Label and Fair Trade USA’s Label 9
Figure 5: Supply chain of certified coffee 9
Figure 6: Location of Fair Trade certified plantations in Minas Gerais, Brazil 11
Figure 7: Location of Fair Trade certified coffee cooperatives in Minas Gerais, 12 Brazil
Figure 8: Situating the identified stakeholder groups 15
Figure 9: Location of performed interviews 15
Figure 10: Prototype of a rainbow diagram 22
Figure 11: Rainbow diagram used for the ‘Fair Trade For All’ debate 22
Figure 12: ‘Fairtrade Sourcing Partnerships’ labels for cacao, cotton and sugar 34
Figure 13: International Fairtrade Certification mark; Fair Trade USA Label; 36 former TransFair USA Label and the Small Producer Symbol
Figure 14: Final rainbow diagram 50
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List of abbreviations
ANT Active-Network Theory
BR Fair Association of Brazilian Fair Trade certified coffee cooperatives
CLAC Coordinadora Latinoamerica y del Caribe de Comercio Justo
COHA Council of Hemispheric Affairs
ETI Ethical Trading Initiatives
FAO Food and Agriculture Organization of the United Nations
FLO Fairtrade Labelling Organization
FNSF Fazenda Nossa Senhora da Fatima
GM Genetically Modified
IBGE Instituto Brasileiro de Geografia e Estatística
ICA International Coffee Agreement
ILO International Labour Organization
PT Partido dos Trabalhadores
RSP Responsible Sourcing Partnership
SCAA Specialty Coffee Association of America
SCS Scientific Certification Systems
SPO Small Producer Organization
SPP Small Producer Symbol
UCIRI Unión de Comunidades Indígenas de la Región del Istmo
WFTO World Fair Trade Organization
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1. Introduction
On September 12th 2011, Fair Trade USA launched the 'Fair Trade For All’-initiative. This initiative opens the certification scheme of Fair Trade coffee to plantations and independent smallholders, while before this was only accessible to small-scale farmers organized in democratically-run cooperatives. The international umbrella network Fairtrade Labelling Organization (FLO), of which Fair Trade USA was a member at the time, strongly rejected this new approach. This ultimately caused the FLO to split. Two new, official Fair Trade networks were born: the independent certifier Fair Trade USA, and the remaining members of the FLO who adopted the name Fairtrade International (Fair Trade USA, 2014a; FLO International, 2011b).
The recent events uncover the conflicting views that exist on the ‘Fair Trade For All’- initiative, and in a broader perspective, on the Fair Trade label as such. Fair Trade USA’s initiative roughly divided the Fair Trade community into two camps: those in favour of certifying large estates and independent smallholders for all commodities, and those who kept on supporting the traditional cooperative model. However, each “side” in this debate involves multiple actors, each with their own perspective. All stakeholders use numerous, divergent, arguments to make their case. The issues at stake cannot simply be narrowed down to a singular discussion of ‘Fair Trade For All’. Disagreements between the stakeholders involved are causing a lot of commotion, debate and even appeals to boycott Fair Trade USA’s products (Equal Exchange, 2012a; Fair Trade USA, 2012a; Hardie, 2013; FWP, 2011).
The overall goal of this master dissertation is to gain insight in the development of this conflict. It aims to uncover how and why these stakeholders have developed such contrasting positions and how these became so incompatible over time. In order to reach this objective, I have adopted an ontological approach, nominated as ontological politics. This means that focus is given to which ontologically different, co-existing versions of the initiative should be considered in order to gain insight in the debate (De Krom et al., 2014).
This approach is applied to a case study in Minas Gerais, Brazil, where the project was firstly implemented in January 2012. Based on in-depth, semi-structured interviews with Brazilian stakeholder groups, participative observation and literature review, the debate is mapped through the 1) identification of relevant stakeholders; 2) discussion of each ontologically distinct version of the initiative; 3) differentiation and categorization of stakeholders according to their positions. These three complementary steps contribute to a coherent and thorough understanding of the dispute that came forth of ‘Fair Trade For All’.
As has been mentioned previously, the ‘Fair Trade For All’-initiative consists of two major changes with regard to the former certification scheme of coffee: the inclusion of large coffee estates and the incorporation of independent smallholders. As the conflict between the former partners of FLO is mainly caused by Fair Trade USA’s decision to initiate Fair Trade certification on large coffee estates and hired labour operations, and this is, up until now, the only relevant issue in the case study, this master dissertation only focuses on this aspect of the ‘Fair Trade For All’-initiative. The decision to start certifying independent coffee farmers is not discussed here.
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This master dissertation makes a number of contributions. First, it contributes to an increased transparency and understanding of the workings of the Fair Trade label. Typically, the label is presented as a tool to reduce inequality between Northern consumers and primary producers in the developing world. However, as multiple interpretations emerge on how to reach this goal, it is important to investigate their specific content, respective motivation and practical repercussions. Second, the dissertation aims at removing some of the significant confusion among members of Fair Trade coffee’s value chain with regard to the 'Fair Trade For All'-initiative. The existence of "multiple types" of Fair Trade and the vague ties between the former members of FLO are unclear and cause for miscommunication and misunderstandings between stakeholders across the value chain. Furthermore, the controversy generated by 'Fair Trade For All' is alarming the Fair Trade community, as the debate could potentially damage Fair Trade's leading position in the market of ‘ethically-sourced’ products (Coocafé, pers. comm., 2013b; Dos Costas, pers. comm., 2013; Coopasv, pers. comm., 2013; BR Fair, 2012b).
The next part of my dissertation will provide the needed background information to understand the evolution of Fair Trade, the label and the FLO, from its early emergence in the 1950s up to recent developments. A detailed description of the 'Fair Trade For All' project will be included. To conclude this part, I will describe the context of the research area in southern Minas Gerais, Brazil. In a second part, the methodology used for data collection and analysis, and its limitations, will be explained. To conclude, I will discuss the results of my analysis, provide a visual representation of the stakeholder analysis and, to end, I will briefly touch upon some potential future scenarios that may evolve from this conflict.
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2. Background
2.1. Evolution of the Fair Trade label
Fair Trade aims to improve the social, environmental and economic conditions of disadvantaged producers by giving them direct access to a market, guaranteeing better trading and working conditions and enabling investment in environmentally-friendly production methods (Hellin and Higman, 2002). Although there is one rationale constructing the concept of Fair Trade, throughout the years a variety of labels have emerged and with them, different perspectives evolved on how the label should be implemented in order to be an effective development tool. The end of the collaboration between Fair Trade USA and the Fairtrade Labelling Organization (FLO) is definitely one of the most notable evolutions. The following timeline represents an overview of the start of the Fair Trade network until its recent developments (Figure 1), and the subsequent paragraphs reconstruct Fair Trade’s evolution.
Figure 1: Timeline of Fair Trade
The roots of the Fair Trade market lie in direct, alternative trade relationships between church-based organizations in Europe and artisans and farmers in several developing countries. These initiatives developed into an international certification system, known today as the Fair Trade label (Murray et al., 2006). In the 1950s, long before certification existed, churches, disaster relief organizations and solidarity groups had already formed direct trade relationships with refugees and marginalized groups. These organizations were paying producers more competitive prices, offering market access and providing technical assistance. Fair Trade crafts and food products were distributed through religious and solidarity networks but the volumes of these “fairly-traded” goods remained small and had limited impact on sustainable development (Bacon, 2004). It was not until the 1980s that the first Fair Trade certified product found its way to the supermarket shelves. The origins of certified Fair Trade can be directly traced back to a group of Mexican coffee farmers. In 1983, members of 17 indigenous peasant communities in Oaxaca, Mexico
3 came together to form the Unión de Comunidades Indígenas de la Región del Istmo (UCIRI, Union of the Indigenous Communities of the Region of the Isthmus). The creation of this organization came about as a response to a variety of situations. The role of the numerous local middlemen in the export of coffee certainly motivated them to shorten the supply chain, but a drastic fall in coffee prices was at the core of their initiative (Mukherjee and Reed, 2009). This fall in coffee prices was the result of a deregulation of the international coffee market, part of a larger trend of neoliberal economic reforms around the globe which promoted the need to align local prices to world prices. The unfavourable conditions that coffee farmers were facing drove UCIRI to make a proposal for the development of a certification scheme for fairly traded coffee.
In 1988, ‘Max Havelaar’ was launched, as a result of a collaboration between UCIRI and a Dutch church organization called Solidaridad (Eshuis and Harmsen, 2003). The development of a Fair Trade label helped these Mexican farmers get access to regular distribution outlets. Before, they could only sell to small, alternative distribution outlets such as world shops where the average shopper hardly ever went. After the development of a Fair Trade label, however, the coffee became available in supermarkets, within daily reach of consumers (Eshuis and Harmsen, 2003; Mukherjee and Reed, 2009). The trend of market liberalization continued and led to the disintegration of the International Coffee Agreement (ICA) in 1989. The ICA was a set of international agreements that set production and consumption quotas and governed quality standards for most of the coffee industry from 1962 to 1989. As a result of its disintegration, many national agricultural ministries strongly decreased their role in coordinating coffee production. The introduction of higher- yielding trees, advanced technology and the emergence of new producers such as Vietnam caused a large overproduction of coffee, which also contributed to the dramatic fall in the world market price of coffee1 (Hellin and Higman, 2002). Coffee producers’ livelihoods had become increasingly dependent on the behaviour of international markets, and low coffee prices forced many farmers either to abandon production or to seek temporary off-farm employment. Other effects of the changes in the global coffee commodity chain were the high rates of transnational corporate concentration2 and the declining prices paid to producers. Since the disintegration of the ICA, producers’ share of the final retail price has fallen from 20% to 13%. It was under these circumstances that, during the early 1990s, increasing numbers of farming families began to work together to pool their resources and improve their negotiating position in the market. Meanwhile, the Max Havelaar initiative was being replicated in several other countries across Europe and North America. During the 1990s, the Fair Trade movement expanded quickly, growing to include also other crops such as cacao, bananas and tea, and consequently linking producer groups in developing countries to national Fair Trade labelling organizations in the industrialized world. In 1997, seventeen of these national certifying bodies joined together to form the Fairtrade Labelling Organization International (FLO). The aim of this decision was to unify the promotion of Fair Trade, establish equal standards and coordinate an international Fair Trade product monitoring and certification system (Bacon, 2004; Fairtrade Foundation, 2011; Mukherjee and Reed, 2009).
1 Between 1989 and 1993 there was a 50% reduction in the world price of coffee and in December 2000 international coffee prices hit a 30-year low (Hellin and Higman, 2002). 2 By 1998, Philip Morris, Nestlé, Sara Lee, Proctor and Gamble and Tchibo controlled 69% of the roasted and instant coffee market, while eight transnational export-import companies controlled 56% of coffee trade around the globe (Bacon, 2004). 4
In 2004, FLO split into two independent organizations: FLO International, which sets the standards and provides business support, and FLO-CERT, which inspects and certifies producer organizations and audits traders. In order for a product to be sold with the Fair Trade label on its packaging, it must be grown by a producer group or farm that has been certified by FLO and traded by exporters and importers who are registered with FLO (Fairtrade Foundation, 2011). The price paid for Fair Trade products must be at or above the Fair Trade minimum price – which is dependent on the current market price – set for each product according to the region of origin. This minimum price is meant to cover the costs of sustainable production as well as allow producers to maintain sustainable livelihoods. Producer groups receive a ‘social premium’ on top of the minimum price that can then be invested in ways that will benefit their communities (e.g. educational programmes, health care, improved infrastructure). Traders should also sign contracts that encourage long-term planning and stability, and help producers navigate the complex system of obtaining credit (FLO International, 2011a; Getz and Shreck, 2006). For both coffee and cacao, only small- scale producer organizations (SPOs) are eligible for certification, while for bananas, tea, flowers and select other commodities, large farms are also considered. The certification standards vary slightly according to the crop and whether it is produced by a SPO or a large farm, but all share minimum standards for social, economic and environmental development (Bacon, 2004). Figure 2 provides an overview of the Fair Trade principles according to the three pillars of sustainable development.
Figure 2: General principles of Fair Trade (FLO International, 2011a)
Since the establishment of the FLO network, the different members have not always been in line with one another. In particular, the North American TransFair USA has had its differences with the rest of the organization (Equal Exchange, 2012a). Since the creation of the umbrella organization FLO, the different members had kept their own national certification mark and lacked a shared symbol. In 2002 FLO decided to launch an international Fairtrade Certification Mark. The goal was to improve the visibility of the label
5 on supermarket shelves, facilitate cross border trade and simplify the export procedures for both producers and exporters. By 2006, all but three Labelling Initiatives adopted the new mark. TransFair USA, TransFair Canada and Max Havelaar Switzerland still used their own label (Fairtrade Foundation, 2011). Ultimately, the only member which never adopted the international, standardized Fairtrade Certification Mark was TransFair USA. Figure 3 shows the international Fairtrade Certification Mark and the label that was spread in the United States by Transfair USA.
Figure 3: International Fairtrade Label TransFair USA’s Label
Furthermore, TransFair USA unilaterally changed its name to Fair Trade USA in 2010, which caused a stir among members of the Fair Trade community. Even though the FLO network is by far the largest certifying group in the market when it comes to Fair Trade certification, TransFair USA is by no means the only player who developed a label and a certification scheme in line with the Fair Trade philosophy in the United States. Numerous labels were developed during the last 30 years, some only sourcing from SPOs and others diversifying their product line according to different production types. Examples are Fair For Life, Fairtrade Original and Fair Trade Proof. All these labels have their own profile and although they own a marginal share of the Fair Trade market, they could not agree with TransFair USA’s decision to adopt the name of Fair Trade USA. It would seem that TransFair USA serves as the representative for all the other groups and dictates the rules in a monopolistic way. Consequently, ten thousand people signed an Organic Consumers Association petition asking them not to appropriate the name of an entire movement (Equal Exchange, 2012a).
At last, problems arose concerning the certification standards the network was setting. In 2003, the annual Specialty Coffee Association of America (SCAA)3 conference was held in Boston. This event brings together various stakeholder groups every year, including representatives of small farmer cooperatives, Fair Trade roasters, traders and other Fair Trade activists. At this event Paul Rice, CEO of Fair Trade USA (Transfair USA at the time), announced his wish to change the standards. He claimed that large companies and corporations wanted access to Fair Trade certified products but that there were not enough available on the market. Therefore, he suggested certifying large coffee farms as well, in order to obtain a higher volume of certified coffee and include farm workers in the benefits of the Fair Trade certification scheme. He encountered a storm of protest and outrage, and agreed to drop this controversial strategy (Equal Exchange, 2013). In November 2003, FLO decided to place a moratorium on estate certification until the end of 2004, in response to
3 The origins of the SCAA date back to 1982 when a few small-scale coffee roasting companies joined together, bound by the common mission of promoting high quality gourmet coffee and sustainability (SCAA, 2002). Its members are primarily small-scale coffee roasting companies and traders, but also larger companies such as Starbucks, farmer organisations and producing country representatives joined the association (Bacon, 2004). 6
the strong opposition coming from small-scale coffee producers to Rice’s statements. FLO agreed to maintain this moratorium on certifying coffee estates, but to go forward on certifying plantations producing bananas, avocados and other goods that have not been traditionally produced for the Fair Trade market by small-scale farmers (Coffeelands, 2014; Murray et al., 2006). Nevertheless, eight years later in 2011, Rice persisted and implemented ‘Fair Trade For All’.
2.2. The 'Fair Trade For All'-initiative
The ‘Fair Trade For All’-initiative, introduced by Fair Trade USA, was launched on September 12, 2011. Fair Trade USA describes the initiative as their vision for the future: a ‘bigger and better model of Fair Trade’ (Neuman, 2011). The principles behind this new vision are three-fold: 1) strengthening farming communities, 2) including more farmers, farm workers and communities, and 3) engaging consumers to increase market demand (Fair Trade USA, 2012a). This project was the main reason that Fair Trade USA and FLO jointly announced the resignation of Fair Trade USA, effective December 31, 2011 (FLO International, 2011b).
The second principle is beyond dispute the most significant change with respect to the policy of FLO: Fair Trade USA opens up certification for coffee from large estates, which were previously barred in favour of small farmers (Neuman, 2011; FWP, 2011). Furthermore, smallholders are no longer expected to be organized in cooperatives in order to get the Fair Trade certificate. From 2012 onwards, Fair Trade USA accepts coffee coming from cooperatives of smallholders, independent smallholders and plantations, and requires them to comply with standards similar to those implemented in the rice and cotton sector for independent smallholders, and the banana and tea sector for plantations (Fair Trade USA, 2012a). The project starts with coffee, but aims at ultimately including cacao as well. Coffee is a very important commodity for Fair Trade USA, as it accounts for over 70% of the Fair Trade market in the US (Neuman, 2011). In the words of Bacon (2004): coffee was the first certified Fair Trade product and remains “the backbone” of the system, accounting for the majority of the Fair Trade retail sales. The objectives of ‘Fair Trade For All’ are, on the one hand, to deliver Fair Trade’s benefits and premiums to more farmers and farm workers in the coffee supply chain. On the other hand, however, it aims to make it easier for large corporations and coffee roasting companies to source Fair Trade coffee. These objectives come together in the form of the following target: doubling the sales of Fair Trade certified coffee in the US by 2015 (hence, doubling the impact of Fair Trade by 2015) (Fair Trade USA, 2012a).
The project started with the ‘Coffee Innovation Program’, a set of twelve pilot projects throughout Africa and Latin America with groups of independent coffee farmers and coffee plantations. Ten of these have been certified and are currently providing the North American market with Fair Trade coffee. To certify these newcomers, Fair Trade USA is working with Scientific Certification Systems (SCS), an independent third-party certification body. The first pilot, the official starter for the ‘Fair Trade For All’-initiative, was an estate in the southeast of Brazil: Fazenda Nossa Senhora da Fatima (FNSF). It received its certificate on the 1st of January, 2012 (Fair Trade USA, 2014c). Fair Trade USA previously announced to end this pilot period early 2014, with a conclusive impact assessment including results at
7 both the individual farm level as well as the macro level to ensure that cooperatives are expanding their sales and benefits as the Fair Trade movement expands. This report has not yet been published, although a provisional review of coffee sales during 2012 in the United States has been released on their website (Fair Trade USA, 2013). However, the report only covers coffee sales, which makes it impossible to assess the impact on working conditions and livelihoods of participants. During 2012, only the first pilot received its certificate and due to the fact that this estate produces Fair Trade certified organic coffee, the only change that could be perceived was a 50% increase in import of Fair Trade certified organic coffee coming from Brazil and no change in the amount of coffee coming from the Brazilian cooperatives. This status quo has also been reported by the Association of Brazilian Fair Trade certified coffee cooperatives (BR Fair), claiming that the group had yet again a large quantity of coffee left in stock, as was the case in 2011. This information could be consulted when visiting Coopasv (a member of BR Fair), as BR Fair sent an official letter to Fair Trade USA asking for an explanation for the large stocks they were facing during consecutive years, forcing them to market the coffee on the regular market. This means they had to sell their coffee for a lower price and miss out on premium money. They also questioned why Fair Trade USA claimed that certified coffee was missing on the North American market, while Brazilian warehouses were packed (BR Fair, 2012a). Fair Trade USA did not answer this letter. In the report that lists the results of the Coffee Innovation Program during 2012, Fair Trade USA also stated that the extra sales coming from this certified plantation directly benefited cooperatives in other countries, as the extra volume from the Brazilian estate pilot made it possible for certain blends to finally become 100% Fair Trade4, releasing premium money for participating cooperatives in other countries (Fair Trade USA, 2013).
At the retail-level, I focused on the situation in the United States, as this is where the consumer market is facing the conflicting labels of Fair Trade USA and Fairtrade International. As a reaction to the resignation of Fair Trade USA from FLO, the umbrella organization changed its name to Fairtrade International (still commonly referred to under the abbreviation FLO) and was forced to develop a new national Labelling Initiative in the United States, called Fairtrade America (FLO International, 2011b). Those roasters and retailers that chose to continue working with Fair Trade USA, even though it is no longer part of FLO, such as Starbucks, Green Mountain Coffee Roasters and Wal-Mart, sell coffee with the independent Fair Trade USA label (Fair Trade USA, 2014b). Other coffee roasters and distribution channels, such as Ben & Jerry’s, chose to collaborate with the international network (Fairtrade America, 2014). Traders, registered with FLO and audited by FLO-CERT, can still sell to roasters and retail-level clients of Fair Trade USA, as Fair Trade USA still “accepts” the FLO-CERT audit, next to their own set of standards (Fair Trade USA, 2012a). These retailers can only sell that coffee with the Fair Trade USA label, unless they are a member of both networks (such as Starbucks, as they have coffee shops all over the world). This means that coffee coming from cooperatives of smallholders (and thus audited by FLO-CERT) can still end up in shops with the Fair Trade USA label. FLO-CERT formulates it as follows on their website: only if your company, previously registered only with Fair Trade USA, has subsequently been certified by FLO-CERT or registered with a Labelling Initiative, you may continue to trade Fair Trade products as was previously the case. Those companies in the US that have decided to apply the Fair Trade USA label and to
4 Fair Trade USA has strict guidelines for label use, requiring that a bag of coffee contains 100% Fair Trade certified beans in order to bear the logo. These Fair Trade cooperatives that are being discussed were selling into the blend for years, but had not received premiums because the coffee could not be labelled as Fair Trade (Fair Trade USA, 2013).
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keep their registration with Fair Trade USA only, will not have a valid FLO-ID and cannot sell products as FLO-Fairtrade, even if bought from a FLO-certified customer (FLO-CERT, 2012). For completeness, Figure 4 shows the current labels spread by Fairtrade America and Fair Trade USA in the United States. Fair Trade USA chose to change its former label (shown in Figure 3). As a consequence of the split, the FLO label is new to the North American market, and some retailers are still spreading the old Fair Trade USA label. This is causing a lot of confusion on the market, as consumers are not fully aware of the origin of the coffee they are buying and which ‘Fair Trade model’ they are supporting. That is why certain roasters, such as Equator Coffee Roasters, who decided to stay with the international network, make an effort to distinguish themselves from Fair Trade USA’s model in their marketing strategy. They criticize the ideas of Fair Trade USA and emphasize that they support the “only authentic Fair Trade label” (Equator Coffee Roasters, 2011). Figure 5 gives an overview of the coffee supply chain from the producers’ level up to the North American retail market. In this moment, Fair Trade USA has not independently certified cooperatives of smallholders but it is possible that they will do so in the future. Please note that the depicted relationships from roasters to retailers are merely illustrative, and not to be taken literally. The chart is meant to clarify the flows of certified coffee. The consequences for the market are further elaborated in this master dissertation.
Figure 4: International Fairtrade Label Fair Trade USA’s Label
Figure 5: Supply chain of certified coffee from producers through traders to roasters and retailers
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2.3. Background on the case study in Brazil
This master dissertation focuses on the case of Fair Trade certified coffee production in Brazil, more specifically in the south of the state Minas Gerais. Brazil is the largest coffee producing and exporting country in the world, and over half of this amount comes from Minas Gerais, a landlocked, mountainous state in the south eastern part of the country (MAPA, 2010). The name of the state, “General Mines”, originates from the abundance of mineral wealth characterizing the state and extracted particularly in the 18th century (Meuninck, 2009). 74% of the total income produced by agricultural activities in Minas Gerais comes from coffee, followed by milk (10%), cereals (7%), meat (6%) and in lower shares sugar cane, fruits and others (Achinelli, 2003). Coffee from the southern region of Minas Gerais typically has a moderate body and sweetness, with medium to high concentrations of citric acid. These characteristics are influenced by the region’s high altitudes ranging from 700 to 1200 metres and the predominantly humid climate (Barbosa Neves, 2012). Occasional frosts can cause extensive damage to crops, causing prices on the world market to fluctuate significantly (Meuninck, 2009). According to Huddell (2010), the neoliberal reforms adopted by Brazil following the 1980s debt crisis caused severe economic damage to small-scale coffee farmers throughout the country.
Many large coffee estates are situated in this region, but amidst these large properties numerous farming families survive on the harvest and sales of their coffee. Also on a national scale, the majority of farmers (84%) in Brazil are smallholders. Together they control 80 million hectares of farmland (24%) (IFAD, 2011). This reflects the inequality in Brazilian land distribution, represented by a Gini coefficient of 0.872 (World Bank, 2004; IBGE, 2009). With regard to the coffee sector, we find 71% of farms less than 10 hectares large, 25% of farms between 10 and 50 hectares and only 4% of farms larger than 50 hectares (INAES, 2010).
The majority of the Brazilian Fair Trade certified coffee cooperatives are located in the south of Minas Gerais (BR Fair, 2014). The first coffee cooperative in the region to be Fair Trade certified was Coopfam in 1998 (Cooperative Coffees, 2010). After Coopfam, select others followed, but it was not until the 2007-2010 Responsible Sourcing Partnership (RSP) project launched by USAID, Wal-Mart Stores and Fair Trade USA that a significant increase in the number of certified coffee cooperatives came about (Sebrae, pers. comm., 2013). The goal of the RSP project was to link Brazilian coffee farmers with mass market coffee consumers in the US through Fair Trade certified products. The RSP project embodied three components: 1) expanding and improving the quality of supply; 2) increasing producer capacity and 3) raising the market capacity of Brazilian coffee growers (USAID and Fair Trade USA, 2010). It is also in this part of the country that Fair Trade USA decided to certify the world’s first Fair Trade coffee plantation ever, representative of the official start of the ‘Fair Trade For All’ programme. Shortly after, a second plantation was certified. At present, three plantations are certified in Brazil, all in Minas Gerais: FNSF, Ipanema Agricola Coffees and Fazenda Primavera (Fair Trade USA, 2014a).
FNSF is a family-owned organic coffee farm covering a relatively small area, compared to the other pilots5. The second plantation that was certified, Ipanema Agricola, is
5 In some files, Fair Trade USA mentions that FNSF is 230 hectares large, but in general statements on ‘Fair Trade For All’ FNSF is presented as “a 500-acre, family-owned, organic farm” (Fair Trade USA, 2012a; Fair Trade USA, 2014a). 10
much larger and lies right in the middle of a cluster of Fair Trade certified cooperatives. FNSF and Fazenda Primavera are geographically further away from these cooperatives. General data on the certified plantations is summarized in the next table (Table 1) and their respective locations are visualized on the following map (Figure 6).
Table 1: Data on Fair Trade certified plantations in Minas Gerais, Brazil
Name Location Size (ha) Farm workers on yearly basis FNSF Perdizes 230 110 Ipanema Agricola Alfenas 3570 1600 Coffees Fazenda Jequitinhonha 1032 200 Primavera
Figure 6: Location of Fair Trade certified plantations in Minas Gerais, Brazil
As mentioned earlier, almost all Fair Trade certified coffee cooperatives are located in the south of Minas Gerais, very close to the estate of Ipanema Agricola Coffees in Alfenas. A group of cooperatives is very close to the border with the state Espírito Santo. The next figure shows their respective locations (Figure 7).
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Figure 7: Location of Fair Trade certified coffee cooperatives in Minas Gerais, Brazil
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3. Methodology
3.1. Data collection methods
The analysis is based on different sources of data: in-depth interviews with stakeholders, participative observation and literature review.
First, all primary and secondary stakeholders involved in this project have been identified. Primary stakeholders include the intended project beneficiaries and others that are directly affected by the project, whether positively or negatively. Secondary stakeholders are those intermediaries who can influence project outcomes (Brugha and Varvasovsky, 2000; Goldstein et al., 2012). The identification of stakeholders was an iterative process: it is a continuous process in which additional stakeholders were added throughout the data collection phase (Brugha and Varvasovsky, 2000; Freeman, 1984; Reed et al., 2009). There were three phases in the stakeholder identification process. First, an initial list of stakeholders was built based on an explorative review of secondary sources. Second, a distinction was made between primary and secondary stakeholders and those who were actively involved in our case study in Minas Gerais were identified. Third, additional stakeholders have been identified by making use of a ‘snowball technique’, this means that, at the end of each interview, interviewees were asked to identify other stakeholders who play, or could potentially play, an important role in this debate (Varvasovszky and Brugha, 2000).
In total, I have been able to identify eight stakeholder groups. Table 2 lists these stakeholder groups, provides a description of who they are and motivates why I have included them in the analysis. Figure 8 maps them according to their position in the Fair Trade market, linking Brazilian coffee producers with the retail level in the United States. The map is based on Figure 4. Figure 8 lists only those stakeholders relevant to the case study, and includes some specific actors which are active external to the value chain (such as Sebrae). From these eight stakeholder groups, only those that are locally represented in Minas Gerais have been interviewed during August and September 2013. These are the members of BR Fair, the Fair Trade certified plantations and Sebrae. These three stakeholder groups with whom in-depth interviews were conducted are marked in bold in Table 2 and Figure 8.
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Table 2: List of identified stakeholders
Description Motivation
Primary stakeholders
‘Fair Trade For All’ implied that the certifier changed standards and was Fair Trade Certifier who implemented ‘Fair Trade no longer part of FLO. It drastically USA For All’. changed the position and course of Fair Trade USA. ‘Fair Trade For All’ caused the FLO network to split and consequently lose one of the most prominent members, Fairtrade Remaining members of the dissolved Fair Trade USA. They have to International Fairtrade Labelling Organization. reposition their organization and trademark on a global scale, but more importantly on a national level in the US. ‘Fair Trade For All’ cleared the way for a whole range of new Fair Trade Association of Brazilian Fair Trade certified coffee suppliers, which BR Fair certified coffee cooperatives. fundamentally changes the market position of the Fair Trade certified cooperatives. ‘Fair Trade For All’ made it possible for First coffee plantations to receive the Fair Trade plantations to produce under the Fair Fair Trade label: Fazenda Nossa Senhora certified Trade label, which was previously de Fatima, Ipanema Agricola Coffees, plantations impossible. It implies the access to a Fazenda Primavera. new market segment.
Secondary stakeholders
Brazilian company that provides assistance to small enterprises and worked with Fair Trade USA (then called ‘Fair Trade For All’ interrupts the TransFair USA) during 2000s in course Sebrae and Fair Trade USA developing a number of Fair Trade were following together in developing Sebrae certified coffee cooperatives based on the and strengthening cooperatives in this Responsible Sourcing Partnership region. Some fear it will jeopardize Project launched by USAID. Assists in their work. development of cooperatives, logistics, compliance to certification scheme and marketing. Coordinadora Latinoamericana y del CLAC might be defined as BR Fair on a Caribe de Comercio Justo – Latin CLAC much larger scale. They are actively American and Caribbean Network of participating in the debate. Small Fair Trade Producers Small farmers, big change; CRS Coffeelands blog; Fair World Project and others. Series of blogs reporting on These blogs are extensively Bloggers and issues concerning smallholder farming commenting the ‘Fair Trade For All’- NGOs in the Global South, largely covered by initiative. They claim to advocate on Equal Exchange (a US cooperative behalf of producers and consumers. dedicated exclusively to buying and selling Fair Trade products). Downstream These actors might change following Traders, roasters, retailers and supply chain ‘Fair Trade For All’ as the suppliers of consumers actors Fair Trade certified coffee will change.
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Figure 8: Situating the identified stakeholder groups
In Figure 9, the locations of the performed interviews are displayed. All interviews were conducted in southeastern Brazil, in the state of Minas Gerais. A colour code was used, as the interviews are linked to three respective stakeholder groups.
Figure 9: Location of performed interviews
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Table 3 provides an overview of all interviews. Out of the fourteen Fair Trade certified coffee cooperatives (forming the association BR Fair), six have been visited and interviewed. This was an adequate amount as new themes stopped emerging from the data, and the point of data saturation had been reached (Marshall, 1996). E-mail contact with several cooperatives was made prior to arrival in order to explain the purpose of the research and to establish appointments to conduct the in-depth interviews. Not all of the cooperatives responded, as August and September are very busy months for coffee farmers: they are intensively harvesting and marketing their coffee during this time of year (Coffee Research Institute, 2006). Five of the selected cooperatives are located rather close to each other in southern Minas Gerais, while the sixth is close to the border with the state of Espírito Santo, about 600 km further. This particular cooperative (Coocafé) was chosen for an in- depth interview due to views which differ notably from other cooperatives, as noted in secondary sources consulted prior to the field work (Coocafé, 2012). The other cooperatives that were visited are called: Dos Costas, Coopasv, Coocaminas, Coopfam and Ascarive.
Table 3: Overview of interviews
Respondent’s Name Location Date function
COOPERATIVES
Dos Costas Boa Esperança 9/8/2013 President
Coopasv Santana da Vargem 9/8/2013 Commercial manager
Coocaminas Poço Fundo 12/8/2013 President & secretary
Coopfam Poço Fundo 13/8/2013 Administrative force
Ascarive Carmo de Minas 23/8/2013 President
Ascarive Carmo de Minas 27/8/2013 President
Coocafé Lajinha 19/9/2013 Commercial manager
Coocafé Lajinha 19/9/2013 President
Coocafé Lajinha 20/9/2013 Certification manager
FAIR TRADE CERTIFIED PLANTATION
Ipanema Agricola Coffees Alfenas 2/9/2013 Head of Unit (Unit: Rio verde)
OTHER
Sebrae Varginha 3/9/2013 President
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Table 4 lists some general characteristics of the cooperatives that were interviewed. In almost all cases, interviews were conducted with the head of the cooperative. This choice was based on the following reasons: to ensure consistency in order to facilitate the comparison of their respective points of view, as well as facilitate questions regarding communication between the cooperative and international bodies. In one cooperative (Coocafé), it was possible to interview different staff members, and in others it was possible to engage in other activities related to the cooperative’s work.
Table 4: Characteristics of certified cooperatives
Number of Foundation Certification Name Location producers year year Dos Costas Boa Esperança 110 1989 2007 Santana da Coopasv 95 2000 2003 Vargem Coocaminas Poço Fundo 70 2007 2007
Coopfam Poço Fundo 280 1991 1998
Ascarive Carmo de Minas 50 2010 2010 Coocafé Lajinha >5000 1979 2005
Following the interviews with the five cooperatives in southern Minas Gerais, a short interview was conducted at one of the four units of Ipanema Agricola. I chose to interview Ipanema Agricola as this pilot project was mostly mentioned during the interviews with certified cooperatives. The other pilots (FNSF and Primavera) were mentioned far less during the interviews, due to their geographical distance. However, it was very difficult to convince this large coffee producer to agree to an interview. The reason for this was the short period of time they were producing under the Fair Trade label (since January 2013), and the insecurity of talking about a subject that was still rather unfamiliar. They had recently been audited, and there were still some aspects of the certification scheme that had not been implemented properly (Ipanema Agricola, pers. comm., 2013a). Eventually, after I presented myself as a visitor at one of the units, it was possible to have a short interview with the head of the Rio Verde unit. Some general statements were collected, but unfortunately the respondent was not well aware of the issues involving ‘Fair Trade For All’, and kept referring to the main unit (Conquista) for a more complete answer to the questions. At the main unit, it appeared to be impossible to arrange a meeting. At last, the Brazilian company Sebrae was interviewed. As stated in Table 2, Sebrae provides assistance to small enterprises and is actively cooperating with coffee farmers in Minas Gerais. Sebrae is in close cooperation with the Fair Trade certified cooperatives and provides assistance in all kinds of activities: development of cooperatives, compliance to the certification scheme, marketing, and so on. They have also collaborated very closely with Fair Trade USA during the 2000s in the context of the RSP project launched by USAID, Fair Trade USA and Wal-Mart6. The importance of Sebrae for the Brazilian Fair Trade certified coffee cooperatives became clear
6 Some background information on this collaboration is given in the previous chapter ‘Background’, section ‘Background on the case study in Brazil’ (p. 17). 17 during the interviews and the president of Sebrae responded very positively to the request for an interview.
Every interview was semi-structured, performed in Portuguese and registered with a microphone. Semi-structured interviews can help structure data collection while keeping the focus sufficiently broad to allow for hidden or emerging themes (Varvasovszky and Brugha, 2000). The questions in these explorative interviews were related to different aspects of the Fair Trade label and the ‘Fair Trade For All’-initiative and differed according to the type of organisation I was interviewing. The most extensive part of the interviews was related to the ‘Fair Trade For All’-initiative.
The questions can be divided into following broad sections:
1. General introduction to the organization and its history 2. General questions on the Fair Trade label, its implementation and importance 3. ‘Fair Trade For All’: knowledge and opinion on the initiative, discussion of its pros and cons 4. Communication with other relevant stakeholders 5. Reflections on future developments for the Fair Trade market
All interviews were recorded, translated from Portuguese to English and written out in their entirety.
Besides interviewing local stakeholders involved in the ‘Fair Trade For All’ project, participative observation helped in framing the context of the research. Spending time with members of the cooperatives, visiting local warehouses, a well-known organic producer and a coffee processing business provided some valuable contextual information. An important phone call with the main unit of Ipanema Agricola also helped in understanding why they would not respond to the requests for a meeting, as explained earlier. Table 5 summarizes these activities and their added value.
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Table 5: Overview participative observation
Related Activity Location Date Added value organisation Visiting the local school, church Visit to and homes of producers and producers’ Boa Cooperative establishing an informal relation 15/8/2013 community Esperança Dos Costas with the cooperative increased Barra Grande trust between us, facilitating the exchange of information. Provided insight in the logistics and functioning of the cooperative Visit to coffee Boa Cooperative and the magnitude of the coffee 17/8/2013 warehouse Esperança Dos Costas sector in this region. Participated in cupping experiments and quality control. Experiences of organic farmer Farm part of Claudio with Fair Trade certified Visit to Carmo de non-certified cooperatives Ascarive and organic coffee 22/8/2013 Minas cooperative Coopfam suggested a lack of farm Paixão Cocarive efficiency and transparency with certain members of BR Fair. Provided insight in the logistics Visit to coffee Carmo de Cooperative and functioning of the cooperative 27/8/2013 warehouse Minas Ascarive and the magnitude of the coffee sector in this region. Owner of the processing business emphasized the lack of Brazilian Visit to coffee Carmo de Unique Cafés export of processed coffee, processing 28/8/2013 Minas processor causing a significant loss of profit business for Brazilian members of the coffee supply chain. Ipanema Clarified the reasons for the Conversation Agricola Alfenas 10/9/2013 rejection of the invitation to an in- on the phone Coffees (Unit: depth interview. Conquista)
Ultimately, I used academic literature and online articles to frame the broader context of the debate and included the different points of view of those stakeholders that had no local representation in Minas Gerais. These stakeholders included Fair Trade USA, Fairtrade International, CLAC, downstream supply chain actors and critical bloggers attempting to influence the events which were occurring. The representation of Fair Trade USA’s and FLO International’s point of view are listed on their respective websites (Fair Trade USA, 2014a; FLO International, 2011b). CLAC and BR Fair sent official letters to Fair Trade USA to contest their decision, published on the ‘Small farmers, big change’-blog (CLAC, 2012; BR Fair, 2012b).
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3.2. Data analysis methods
The main objective of the data analysis was to examine the conflicting positions that shape the ‘Fair Trade For All’ debate. This allowed for a more in depth understanding of why the different stakeholders involved came to occupy such conflicting positions, and how the situation will evolve from here. The analysis was largely dedicated to mapping the debate, which made it possible to differentiate between stakeholders.
The framework that has been used to map the debate and structure the collected data is that of ontological politics. Law (1999), who introduced the term, emphasizes in his theory that reality is not a single nor a universal concept, but that it is performed through practice. Reality is historically, culturally and materially located. Realities have become multiple. The stakeholder groups that have been identified each have their view on the ‘Fair Trade For All’-initiative based on very different contexts. Each stakeholder has a different way to perceive what happened and a different vision on what direction Fair Trade should take. It means that the ‘Fair Trade For All’-initiative does not have a singular representation, but that different ontologies exist of the project. The term connects ‘ontology’ (branch of philosophy exploring being, existence and what we take to be real) with ‘politics’ (the process of sorting out and choosing ways of living in the world). Adding ‘politics’ to the theory’s name underlines the active mode, the process of shaping reality, and the fact that reality’s character becomes open and contested (Law, 1999; Mol, 1999). If reality is a social construction, this means there are options to choose from. But who has the power to determine what is real? The heterogeneity and the constant tension between multiplicity and singularity becomes a space for negotiation and conflict. All stakeholders have their respective views on what happened, but not all of them are equally heard or valorised (Landstrom, 2000). All of them have different backgrounds and look at ‘the world’ from different standpoints. Ontological politics deals with how this diversity must be valued (Mol, 1999). The theory has its roots in Active-Network Theory (ANT). ANT is at the origin of the concept of multiple realities (or ontologies). It claims that classical sociology applies theory to actors before they even had a chance to act and assumes to have a greater understanding of reality than those they are seeking to understand. ANT follows the actors in order to build up explanations on their reality, accumulating information of smaller details to construct their picture of the world. It proposes to place all actors and entities on the same level without assuming a priori the size, power or complexity of the actors (Dudhwala, 2009).
This approach has been used in the recently published paper ‘Understanding Relations between Science, Politics, and the Public: The Case of a GM Field Trial Controversy in Belgium’ by De Krom et al. (2014). The authors have used this theoretical framework to distinguish five ontologies of a controversial Belgian field trial with genetically modified potatoes in 2011. These ontologically different, co-existing versions of the trial7 gave valuable insight in the public debate on GM crops, as the authors conclude that the institutional handling of the trial as if it represented only a single reality was exactly what led to the opposition of the different stakeholders involved (De Krom et al., 2014). It has also been adopted in the research article ‘Ontological Politics: Mapping a Complex Environmental Problem’ by Carolan (2004). The author examines the ontologically diverse nature of environmental problems and illustrates this with a case study on an environmental dispute.
7 The following ontologies have been identified by the authors: the field trial as a sound scientific practice; the field trial as ‘communication by doing’; the field trial as an application of cisgenic technology; the field trial as a policy and law test case; the field trial as a human health and environmental risk (De Krom et al., 2014). 20
He claims that multiplicity does not necessarily imply fragmentation. It can be coherent, but this requires both coordination and trust.
Applying this to the context of the ‘Fair Trade For All’-initiative, four distinct ontologies of the project have been found and, in a broader perspective, on the Fair Trade label as such. These ontologies are:
‘Fair Trade For All’ as a development tool in the primary production of coffee
‘Fair Trade For All’ as a marketing strategy
‘Fair Trade For All’ as an instrument to fill a legal void
‘Fair Trade For All’ as a governance model for the value chain
The identified stakeholder groups fuel the debate within each of these distinct ontologies. Each actor constructed different perspectives or versions of what happened, which ultimately led to disagreements and conflict. Multiple ontologies exist with regards to the purpose of the Fair Trade label which implies that the ‘real purpose’ is made real differently in the course of individual practices. Fundamental perspectival differences on the role that the Fair Trade label should play in, for example, the development strategy of producing countries have caused the debate to reach a deadlock, making it impossible to reach some form of agreement (De Krom et al., 2014; Goldstein et al., 2012; Umans and Arce, 2014; Konefal and Hatanaka, 2011).
In order to reconstruct these ontologies, the data has been analysed through the use of QSR NVivo software. NVivo is a powerful tool for data analysis widely used in qualitative research and also frequently used to complement quantitative analysis tools (Walsh, 2003). The overall objective of this software package is to reduce the amount of data through concept and theory development. It allows you to upload a very diverse range of sources concerning your research project: Word-files (e.g. interviews, logbooks, transcripts and notes), PDF, PowerPoint-presentations, audio, video, photo, books, articles, webpages, and so on. I have used all of these data types, except for PowerPoint-presentations and audio- visual material. The first step in the analysis is characterised by ‘open coding’ and is aimed at conceptualising your data. The data is scanned to find interesting and relevant analytical material. Each phenomenon that appears to be relevant is labelled, which is referred to as coding. Identical elements are grouped in nodes. The data has been analysed by coding it on the occurrence of arguments defending or contesting Fair Trade USA’s decision to start certifying plantations. A second step is aimed at organizing these nodes: all categories that belong to the same phenomena are grouped and each group is given a name in order to work towards more abstract concepts. In this case, seven categories have been distinguished. Four are hierarchically organized group nodes (or categories) that gather the arguments used to shape the previously defined ontologies. Another category is based on statements that refer to relational information between stakeholder groups, used to contextualize the dynamics within each ontology. A sixth category is based on expressions related to strategies that could be adopted by the cooperatives to cope with these changes. A last category was used for all nodes containing relevant information that did not fit in the
21 other categories. In this step it was very important to compare concepts throughout the whole process. Each new concept was compared with the previous one to assure that it was truly different, and finally, all concepts were thoroughly investigated and compared. NVivo makes it possible to find patterns in these categories, reorganize them and create graphical representations of the data through matrices or networks (Durian, 2002; Mortelmans, 2007).
Based on the presentation of the four ontologically distinct versions of the ‘Fair Trade For All’-initiative, the position of each stakeholder group in the debate has been mapped. Where are they situated in the debate? The majority of the stakeholders are clearly positioned at one “side” of the debate, and are thus either for or against its implementation. However, others do not take a radical position. This variety is represented through a rainbow diagram. A rainbow diagram is a common tool used in stakeholder analyses. It is typically used to graphically represent to what extent stakeholders are affecting, or are affected by, a decision and to what extent they influence the decision (see Figure 10). However, the diagram is usually adapted by using other characteristics that better describe the main differences between key stakeholders in a specific research context (Chevalier and Buckles, 2008). In this case, the “horizontal” range was used to locate stakeholders according to their position in the debate, with those who are respectively against and in favour of the initiative at opposite sides of the diagram. This created a spectrum and enabled the positioning of stakeholders in the debate. The three semi-circles were used to indicate to what extent they have the power to influence the debate (Figure 11).
Figure 10: Prototype of a rainbow diagram
Figure 11: Rainbow diagram used for the ‘Fair Trade For All’ debate
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3.3. Limitations
A first gap in this dissertation’s data analysis is that it aims to analyse the position of all identified stakeholder groups in the debate, while interviews were only conducted with three groups. The research was performed in Brazil, and as a result of being in the country of origin of the coffee, a richer variety of information was available on those stakeholder groups. The representation of other stakeholders is only based on literature review. In addition, the interview with the coffee estate of Ipanema Agricola was not very useful as the respondent was rather reluctant to talk and kept referring to another production unit due to his lack of familiarity of recent developments (Ipanema Agricola, pers. comm., 2013b). As such, this could potentially lead to an overrepresentation of the cooperatives’ share in this debate, though I have been very careful to avoid this by intensively gathering data that defend the certification of large coffee estates. These sources give a thorough representation of the arguments in favour of the ‘Fair Trade For All’-initiative (Coffeelands, 2014; Fair Trade USA, 2012a; Fair Trade USA, 2013; Fair Trade USA, 2014a; Fair Trade USA, 2014c; Hardie, 2013; Neuman, 2011).
Furthermore, the context of the analysis as well as stakeholder interests, positions in the market, alliances and influence are subject to change. The market is inherently dynamic: as one major player’s position in the market changes, other players’ positions are also likely to change. Observations were made over a limited period of time (Brugha and Varvasovsky, 2000). Nevertheless, a stakeholder analysis is a very powerful tool for policy analysis. Its approach allows one to understand a system by identifying the key actors and assessing their respective interests in that system. It is especially relevant in complex situations where there are compatibility problems between objectives and stakeholders. Even though the observations may be considered as a “snapshot” in the course of events, the analysis is valuable to assess the current status of linkages between stakeholders concerning this project. It helps to increase the transparency of some assumptions that might be implicitly embedded in the project and is a very valuable tool in decision-making, as it has the potential to represent the interests of different groups, including the most disadvantaged (Biggs and Matsaert, 1999; Grimble and Wellard, 1996).
A reoccurring comment with regard to qualitative research is related to the issue of research objectivity. Some claim that there is a risk that the researcher himself will become a stakeholder in the project he is analyzing (Reed et al., 2009; Varvasovsky and Brugha, 2000). However, the methodology provided through stakeholder analysis emphasises the examination of actors’ objectives, instead of assuming what these objectives might be. This is exactly where the researcher’s subjectivity might become a problem. Stakeholder analysis has its roots in political economy, in particular in the social-actor perspective (Long and Long, 1992). This perspective makes it possible to explicitly study the perceptions and intentions of stakeholders. It pays direct attention to the diversity of conflicting goals, attitudes, values, aspirations and standards. It is largely adopted as a tool for understanding why things happen as they do, through thorough observation free from preconceived assumptions (Grimble and Wellard, 1996).
Hargreaves (1978) made a distinction between the five capacities that qualitative research has according to him - appreciative, designatory, reflective, immunological and corrective - all of which are still relevant today. The ability of qualitative research to understand and represent points of view which are often obscured and neglected, allowing
23 the identification of a variety of responses to reform and understanding why these have arisen is captured as its appreciative capacity. The aim of qualitative work is to understand, rather than to judge. Its designatory capacity is related to its ability to find the most appropriate language with which to describe people’s experiences as it is based on the kind of close investigation of what they say and do, which is characteristic of qualitative research. A third capacity that Hargreaves identifies is the reflective capacity. Qualitative research can play an important role in highlighting problems that need to be tackled, and it may show that problems have a different character from what is generally assumed. Discussing the immunological capacity, Hargreaves quotes an article by Norton Long (1958): “The local community as an ecology of games”. This article focuses on the diverse orientations that can be found among members of a community and recognizes the multiple and interconnected patterns of activity (‘games’). Relations between these members may vary and range from conflict to competition to cooperation. Qualitative research, then, has the ability to explain the complex trajectories that many policies follow, and the unpredictable outcomes in which some of them result. The final capacity he discusses is the corrective capacity. This capacity is linked to the correction of macro-theoretical perspectives. Many policy-makers base their interventions on economic macro-theories that might neglect the complexity of the world (e.g. the belief that the market is the most effective resource allocation mechanism is not a well-established finding of empirical research). If we are willing to question why policy interventions based on these theories have not had the intended effects, qualitative research has the ability to clarify the meaning and validity of concepts and assumptions built into these theories (Hammersley, 2010).
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4. Results
In this chapter, the results of the data analysis will be discussed. First, the four ontologically distinct versions of the ‘Fair Trade For All’ debate will be presented and thoroughly discussed. After this, the rainbow diagram will be shown to illustrate the positions of the respective stakeholders in this debate.
4.1. Mapping the debate based on four ontologies
As already mentioned, four ontologically different versions of the 'Fair Trade For All'- initiative have been identified. The first ontology discusses ‘Fair Trade For All’ in the development of rural households involved in the primary production of coffee. There is no consensus on who should be the specific beneficiaries of Fair Trade, and this will be elucidated in a first section. A second ontology covers the marketing strategy of ‘Fair Trade For All’. With regard to consumer demand, different perspectives are put forward. When discussing which particular consumer segment the label should target, there are several differences of opinion that will be clarified. After this, the third ontologically distinct version of the debate is discussed: the use of ‘Fair Trade For All’ as an instrument to fill a legal void in producing countries. Not all stakeholders are convinced of the label’s potential to address these supposed voids. The fourth ontology will be covered in a last section. It deals with the governance model that ‘Fair Trade For All’ has designed for the value chain of certified coffee. Conflicting visions exist on how the chain should be governed, and these will be discussed in the last section.
4.1.1. First Ontology
‘Fair Trade For All’ as a development tool in the primary production of coffee
This ontology has a crucial role in the ‘Fair Trade For All’-debate, as it discusses who the label should target. According to Fair Trade USA, everyone involved in the primary production of coffee should have access to Fair Trade. The opponents claim that this will jeopardize the achievements of the label within the existing Fair Trade communities of small- scale coffee farmers, and exclude an extensive amount of smallholders that could still enter the certification scheme. They advocate that Fair Trade has been designed to counter large plantations and conventional trade, and that the certification of these estates is eroding the original purpose of the label.
For Fair Trade USA, addressing the precarious situation of many farm workers in the coffee industry is one of the focal points in their future vision. With the implementation of ‘Fair Trade For All’, they intend to engage farm workers of large coffee estates in the certification scheme. This would enable this large group of vulnerable producers to have
25 access to the benefits and opportunities of Fair Trade. The certifying body believes that the Fair Trade movement should not exclude this important group, and if it does choose to bar them, it is missing out on the important opportunity to reach the majority of coffee producers through better trade. Fair Trade USA wants to double the impact of Fair Trade by 2015 (Fair Trade USA, 2014a).
Workers on farms and in factories are among the most vulnerable groups in global trade structures, and are also being called ‘the poorest of the poor’. Fair Trade began their work to address the problems faced by landless workers in 1994 with the first certified tea plantations. These workers generally lack access to land, or are unable to make a decent living out of it. In many cases, hired labourers lack formal contracts, the freedom of association, basic health and safety assurances, decent wages, and so on (Neuman, 2011; FLO International, 2011c).
According to Fair Trade USA, everyone involved in the production of coffee will benefit from the ‘Fair Trade For All’-initiative. They claim that Fair Trade has a very real potential to empower all small-scale coffee farmers, both organized and independent, as well as hired workers, to fight poverty through better trade (Fair Trade USA, 2013). Fair Trade USA strives to empower farmers and workers, and claims to work on the strengthening of cooperatives while broadening its impact to include all farmers (Fair Trade USA, 2012b).
However, opponents believe that the involvement of large estates in the certification scheme will enhance unfair competition between smallholders and large farms, as the latter are more competitive than small-scale farms.
Ipanema Agricola8 has contracts with very large coffee roasters located all over the world. This can be ascribed to some specific aspects linked to their size and structure. First of all, they are able to deliver a homogeneous coffee, while coffee bought from a cooperative of smallholders is sourced from a lot of small plots, dispersed over a region and treated using different farming methods. This means the quality and composition will fluctuate more than when coming from a single farm (Dos Costas, pers. comm., 2013).
Additionally, the quality of the coffee beans is often quite high, as these large estates have the financial means to invest in tools that improve the quality of their coffee that are not within reach of the cooperatives. Standardized procedures such as mechanized harvesting, for example, reduce the labour costs, are very efficient and quality conscious. Machine harvesting is said to have the potential to improve quality, as coffee berries can be effectively harvested at optimal ripeness (Coffidential, 2012; The Coffee Hunter, 2012). A large part of the coffee beans of select certified cooperatives was of insufficient quality to enter the Fair Trade market. For both Dos Costas and Coocafé, only 30% of their produce met the quality requirements set by Fair Trade. Other cooperatives also mentioned this to be an obstacle (Coocafé, pers. comm., 2013c; Coocaminas, pers. comm., 2013; Dos Costas, pers. comm., 2013). These requirements can even act as a barrier in entering the Fair Trade market for those producers with limited resources to invest in improving quality, which is an important issue to consider with respect to Fair Trade’s aim to demonstrate solidarity towards marginalized producers (Valkila and Nygren, 2010).
8 The Fair Trade certified cooperatives that have been interviewed referred very often to Ipanema Agricola, the large coffee farm that was the second estate to be certified by Fair Trade USA and is located amidst the members of BR Fair. In the region, this farm is representative for the start of the 'Fair Trade For All'-initiative. 26
Furthermore, large farms are said to be more productive than small farms. This means that Ipanema can deliver an aggregated product of homogeneous quality, available in large quantities. Their perception of quantity is also quite different, as the interviewee at Ipanema Agricola mentioned how little one container of coffee is, while the commercial manager of Coopasv, a cooperative of 95 farmers, emphasized how much planning was needed to fill one container of coffee (Coopasv, pers. comm., 2013; Ipanema Agricola, pers. comm., 2013b).
This complements the higher transaction costs that cooperatives of smallholders are facing. It is considerably more convenient to negotiate with only one large producer than with a group of small producers, which means transaction costs are significantly lower (Coopasv, pers. comm., 2013; Dos Costas, pers. comm., 2013; FWP, 2011).
Their lower cost structure allows them to supply the product at a lower price. Cooperatives, on the other hand, have a rather expensive structure. This is especially the case for Fair Trade certified cooperatives, as they have to bear the additional operative costs related to certification: the certification fee, the extra personnel needed to deal with certification, the manual grading that Fair Trade requires for quality improvement, and so on (Valkila and Nygren, 2010).
These costs also stand for other third-party certification schemes. The economies of scale benefiting large farms allow them to adopt a variety of different labels, while for cooperatives of smallholders, this is often unaffordable. This is also given as an argument to contest the introduction of large farms to the Fair Trade certification scheme: most of them already carry a range of other labels that are available in the coffee sector, such as UTZ Certified or Rainforest Alliance which gives them yet another comparative advantage in the consumer market.
As a final argument, the large farms' ability to rely on financial reserves or credit to cope with possibly delayed payments make it comparatively easier for them to engage in contracts. Many cooperatives reported this to be a problem, as they don't have any financial margin to cushion these delays (Coocafé, pers. comm., 2013c; Coopasv, pers. comm., 2013).
All of these characteristics make it much more interesting for large companies such as Starbucks to source from large farms, as these clients want to buy large, homogeneous quantities, lower their expenses as much as possible and serve a standard cup of coffee in terms of quality and taste at all times. The commercial manager of Coopasv sums up the arguments as follows:
“Ipanema has a much faster production of coffee. For example, today I have to make a blend. To fill one container I have to work with at least 15 different producers. Our coffees are very different in many ways. Ipanema fills up a container in no time. […] For Ipanema, no problem at all. They are very fast. On top of that the negotiation only happens with one person, here we are a group of producers. Everything is slower. To fill up a container, everyone here is running, making phone calls, putting pressure on the producers,… A lot of work. Ipanema doesn’t have this kind of problems. […] Their structure is better. No matter how hard we try, we will never be able to compete with them.”
Commercial manager of Coopasv
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BR Fair, CLAC and other participants of the 'Fair Trade For All'-debate (Equal Exchange, Sebrae and Fairtrade International) emphasize that smallholders need their own market segment. For a long time, the Fair Trade label has been the only way for small growers to distinguish themselves on the coffee market. According to the certified cooperatives, this initiative will make it even harder for them to access the market. Some of them already have noticed a decline in their sales since the initiative has been implemented. One cooperative reported that they felt the consequences of the split within FLO as some buyers decided to continue collaborating with Fair Trade USA (Coopasv, pers. comm., 2013). The North American clients are very important to some members of BR Fair (Ascarive, pers. comm., 2013; BR Fair, 2012a). They fear that the inclusion of large farms in the certification scheme will drive them out of business.
The president of the Dos Costas cooperative feared for a threat to the farmers' sovereignty. To him, ‘Fair Trade For All’ is an “anti-cooperative” project. This excerpt from the interview illustrates his point of view:
“And with what’s going on now, they [Fair Trade USA] are taking away his [the farmer] opportunities. What will happen? Probably he will have to sell his property and go to work for others, because that will still be better than having his own coffee production. […] This campaign can be called an anti-cooperative campaign. They are dismantling our way of countering the large multinationals, making us weak and fragile. It will create poverty, because producers will get discouraged and unwilling to work together anymore, causing the cooperative to split. Producers will end up alone, and the large plantations will smother them.”
President of Dos Costas
Moreover, many farmers still lack access to the Fair Trade market. The main entry barriers that have been identified are supply-related. This means that many smallholders are excluded from the certification scheme, and this argument is used to ask that the certification of large estates comes to an end.
Smallholders cannot sell all of their coffee on the Fair Trade market. They claim there is simply no demand for it (Coocafé, pers. comm., 2013c; Coocaminas, pers. comm., 2013; Dos Costas, pers. comm., 2013).
According to Sebrae, 99% of the coffee producers are small-scale, and the IBGE 2006 consensus stated that 34% of Brazilian coffee is coming from family farms (BR Fair, 2012b). BR Fair also claims that currently only 1% of Brazilian coffee farmers are benefiting from Fair Trade’s certification scheme. Coocaminas and Coopfam are located in Poço Fundo, in the middle of an area with 4000 family farmers, all of them growing coffee. Only 400 of these families are registered at either of these two cooperatives. This statement goes hand in hand with the call for the prioritisation of small-scale farmers on a global level when considering the expansion of the Fair Trade movement. More than hundreds of thousands of farmers still lack access to Fair Trade (FWP, 2011). Also, Fair Trade USA acknowledges that many farmers are still not being reached through the label (Fair Trade USA, 2012b). An article posted by Equal Exchange addresses the fact that many organizations of small coffee
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farmers are waiting for buyers in order to get themselves listed as Fair Trade certified producers, whilst those organizations that have already been certified have far more coffee in compliance to Fair Trade’s criteria than they can sell (Equal Exchange, 2013). Valkila and Nygren (2010) concluded that the capacity of small producers who could meet the requirements of Fair Trade certification is about seven times the actual volume of coffee exported through Fair Trade markets. This excessive supply of Fair Trade coffee is also acting as an entry barrier for many small coffee producers. There is no room for them in the cooperative, and this has significant consequences for the social distribution of Fair Trade's benefits, which require further examination (Valkila and Nygren, 2010).
The previous discussion uncovers the disagreements with regard to Fair Trade’s intentional beneficiaries. The difficult situation faced by farm workers is portrayed as a justification to widen the scope of the Fair Trade label by Fair Trade USA, while the cooperatives argument that the participation of large farms will put them in a very difficult position and will prohibit other smallholders to take part in the certification scheme.
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4.1.2. Second Ontology
‘Fair Trade For All’ as a marketing strategy
‘Fair Trade For All’ represents the unmistakable start of a new Fair Trade marketing strategy, one that has slowly but steadily been developing since the beginning of certified, ‘fairly-traded’ products in the 1980s. More consumers should be reached, Fair Trade should put an end to its ‘niche’ profile and, as a result, more and more producers will get positively affected. In order to reach the growth of the Fair Trade market, Fair Trade USA wants to break down the barriers that withhold large retailers to enter the Fair Trade certification scheme and facilitate the sourcing of certified coffee. Opponents claim that the demand should be stimulated, before large farms are included and fear that this will ultimately deteriorate the potential of Fair Trade as the credibility of the brand will water down, and producers will increasingly be subject to conventional market fluctuations. These aspects will be discussed in the following two sections.
Increasing demand while increasing impact
The overall goal of the ‘Fair Trade For All’-initiative is to double the impact of Fair Trade by 2015, which is translated to doubling the sales of Fair Trade certified products in the US by 2015 (Fair Trade USA, 2014a).
The Fair Trade market in the United States is expanding at a very rapid pace (Neuman, 2011; Fair Trade USA, 2012b). Fair Trade USA confirms these figures and has reported a shortage of Fair Trade coffee in the United States prior to the implementation of the 'Fair Trade For All'-initiative. Coffee accounts for 70% of the Fair Trade market in the US, and about 400 of the 750 clients Fair Trade USA has in the US are coffee-related (Neuman, 2011; Hardie, 2013). For these reasons, Fair Trade USA wants to increase the volume of certified coffee that is available on the market. According to them, the inclusion of large producers into the certification scheme will cause an overall expansion of the Fair Trade movement, which will make everybody win, including the historical coffee cooperatives. In order to achieve this, they promise to carefully monitor the US sales made by coffee co-ops to ensure that they are expanding their sales and benefits as the Fair Trade movement expands (Fair Trade USA, 2012b).
However, a crucial issue that has been addressed in every cooperative, is the lack of demand for Fair Trade coffee that they are facing. Many cooperatives sell very little coffee on the Fair Trade market because there is simply no demand for it (Coocafé, pers. comm., 2013c; Coocaminas, pers. comm., 2013; Dos Costas, pers. comm., 2013; Hardie, 2013). If the amount of certified groups were to increase, and therefore also the supply of Fair Trade coffee available for purchase, each individual group would ultimately sell less. Therefore, these stakeholders argue that the number of Fair Trade consumers must increase before Fair Trade USA can consider including these large-scale producers into the value chain of certified coffee. If Fair Trade coffee should become accessible to everybody, the market must grow first. The shortage of Fair Trade coffee available on the US market is contradictory to the large coffee stocks that BR Fair's members have reported, both to me and to Fair Trade
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USA through official letters. BR Fair has repeatedly asked for an explanation for this illogical situation, but Fair Trade USA has never replied (Coopasv, pers. comm., 2013). The president of Coocaminas, a small cooperative in Poço Fundo, is one of the stakeholders who felt consternated about this argument:
“That’s what has been told to us by Fair Trade USA: that there was coffee missing on the market. But all of us had large amounts of coffee stored in the warehouse! So why would you go and certify large properties? That was what the discussion was about.”
President of Coocaminas
Fair Trade USA wants to increase the impact for all actors involved in the production of coffee, be it smallholders or farm workers. Sadly, from the six cooperatives that have been visited and interviewed, only Coocafé believes that this was their true motivation (Coocafé, pers. comm., 2013b). Other cooperatives were more inclined to believe that the Labelling Initiative was looking for a credible approach to raise its turnover. According to them, the first priority of Fair Trade USA with the ‘Fair Trade For All’-initiative is to make profit (Dos Costas, pers. comm., 2013; Coopasv, pers. comm., 2013; Ascarive, pers. comm., 2013). The president of Dos Costas thinks that Fair Trade USA is only implementing this initiative to meet the demand of large corporations in the United States. Statements along the lines of ‘unethical capitalism’ and ‘Americans only think about money’ were frequently made during the interview (Dos Costas, pers. comm., 2013). Of course, the cheaper the product they can offer, the larger the volume of certified products that can be sold and the larger the fee earnings for the Labelling Initiative (Neuman, 2011). The president of Dos Costas expressed his thoughts on ‘Fair Trade For All’ using the following words:
“I think this has been decided out of interest of large corporations, such as Starbucks or Kraft Foods. Even if they [Fair Trade USA] don’t admit that, it’s the truth. More coffee, at a cheaper price, more sales, more income they get from the royalties. That’s the American, he only cares about money. Money, money, money. You see, this whole situation is another example of ‘loucura Americana’: ‘American craziness’. They simply want to dominate the world. The Americans against the rest of the world, even when it comes to ‘Comércio Justo’ [Fair Trade]. It’s just crazy, crazy, crazy. To resume my vision, I think it’s a very big mistake that Fair Trade USA is making. It’s wild capitalism. Capitalism is not a problem, but it needs to be ethical. This initiative is taking away the opportunity of the small to defend themselves.”
President of Dos Costas
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Furthermore, the financial impact for smallholders through the establishment of minimum prices9 is not exactly reaching its desirable effects. One of the most important and structural problems that arose from this research, is the unchanged dependency of certified farmers on price volatility in comparison to conventional farmers. Fair Trade has established a minimum price, which means that when the New York market price plunges under this value, buyers should at least pay the minimum price. When the New York market price is higher, buyers pay whichever price is higher. This pricing policy has very limited effects. This appeared from the data collected in Brazil, but has also been concluded by Valkila and Nygren (2010 and Valkila, 2014).
To begin, I will discuss the different pricing scenarios. According to many interviewees, the market price is often at the same level as the Fair Trade minimum price. This means the price advantage of being certified is intrinsically small for farmers, and that farmers will then also prefer to sell their coffee on the regular market (Sebrae, pers. comm., 2013; Coocafé, pers. comm., 2013b). Marketing Fair Trade coffee was often said to be far more complicated than selling on the regular market. Ascarive and Coocaminas emphasized the large amount of rules and regulations with which farmers had to comply. Coopasv mentioned how hard it was to convince farmers to join the cooperative because of the magnitude of compliance criteria and the rather unclear benefits with respect to the price of coffee. Coopasv’s commercial manager formulated the difference between conventional marketing and selling to Fair Trade buyers as follows:
“So, this is our situation: you [the farmer] need to bring the coffee here, you need to send a sample of that to the foreign country, you need to have that sample approved and go through the audits, you need to plan the sales, you need to exchange the value, you need to make the delivery, and in the end you will receive the money. There [on the regular market], you arrive, you bring the product, and you receive.”
Commercial manager of Coopasv
The cooperatives’ management typically pays farmers in stages, and distant Fair Trade buyers often pay considerably later than the moment in which the farmer is ready to sell and in need of cash. Many cooperatives addressed these delayed payments to be a significant problem for their members. The certified cooperatives lack financial reserves, which make the direct payments made by conventional buyers much more appealing to their members. Cooperatives occasionally offer loans, yet Valkila and Nygren (2010) listed interest rates between 18 and 22% charged by Fair Trade cooperatives in Nicaragua. These can hardly be viewed as favourable terms for their members. When the regular market price is higher than the minimum price, the same preference for the regular market may occur, as farmers do not receive a higher price when selling to Fair Trade buyers.
9 Currently the Fair Trade prices are the following for washed Arabica coffee, conventionally grown: Fair Trade Minimum Price 1.40 USD/lbs and Fair Trade Premium 0.20 USD/lbs (Fair Trade USA, 2011). 32
The president of Sebrae pointed out this scenario as follows:
“Sometimes the co-ops don’t sell all their coffee as Fair Trade. It’s just that, last year, coffee prices went up strongly. A bag of coffee [60 kg] was sold for 500 R$. And Fair Trade doesn’t get to those levels. So producers preferred to sell their coffee on the regular market. That’s the law of demand and supply. Coffee is a very volatile commodity.”
President of Sebrae
Finally, an ultimate price situation is when the New York market price is lower than the Fair Trade minimum price. In this case, buyers need to pay a higher price for certified coffee, while the New York market price ranks for coffee of excellent quality and the Brazilian coffee is ranked 10 points lower than this. This means that buyers then need to pay more for coffee that has intrinsically less value. Ultimately, the certified Fair Trade coffee will appear on the supermarket shelves at a higher price than the uncertified coffee in spite of the fact that the uncertified coffee is of a superior quality. In the end, this peculiarity discourages buyers to invest in Fair Trade coffee (Coocafé, pers. comm., 2013b).
Valkila and Nygren (2014) also point out that certified cooperatives typically only sell a small part of their production on Fair Trade markets, as has been confirmed in the interviews. This means that the impact of higher prices remains limited, and highlights yet again how certified farmers and conventional farmers are subject to the same market fluctuations. Interviewees of the cooperatives Coopfam and Coocaminas literally said that Fair Trade does not protect the farmers from unexpected events within the market.
Lowering the barriers for participation
During the last two decades, ‘ethical consumerism’, and along with it, ‘corporate social responsibility’, have clearly been on the march in the majority of industrialized countries (Nicholls, 2002).Through this initiative, the labelling body wants to make it easier for large corporations to source Fair Trade coffee. Global Exchange, an international human rights organization, has been putting pressure on Starbucks since 2000 to serve Fair Trade coffee in all of their coffee shops (Global Exchange, 2011). Fair Trade USA claims that the overall sourcing of fairly-traded coffee should get easier, in order to reduce the barriers that large corporations seem to face to enter the market (Neuman, 2011). Complying with this argument, Equal Exchange (2012a) acknowledges that working with small producers’ organizations can get challenging and is rather time-consuming.
‘Fair Trade For All’ is not the only strategy of the organization that aims at broadening the market for Fair Trade. Fair Trade USA has recently announced a more flexible labelling requirement for composite products (for example: a chocolate bar which is made from cacao, cacao butter, sugar and other ingredients). In the past, Fair Trade USA operated according to the motto: ‘all that can be fair trade, must be fair trade’. This means that a minimum of twenty per cent of the ingredients had to be Fair Trade certified, and if a Fair Trade alternative existed for a particular ingredient, it had to be used, regardless of what percentage it makes up in the final product. Now that Fair Trade USA is operating
33 solo, they have lowered the minimum required amount of certified ingredients to ten per cent. Furthermore, sugar or other commodities also grown in the US are no longer required to be Fair Trade certified (FLO International, 2011a; Neuman, 2011). This is in line with the critiques on Fair Trade USA’s diluting standards (Moore, 2010).
It must be said that also FLO International has introduced a more flexible label, based on the ‘Raw Product Based’ certification model. This model implies that not all ingredients of a chocolate bar need to be Fair Trade certified, but for example, only the cacao, or only the sugar. A slightly different label is then placed on the packaging. This new label should be implemented this year, in 2014. The model fits in the framework of the ‘Fairtrade Sourcing Partnerships’, which aim at increasing smallholders’ market access. FLO International believes that farmers will only truly benefit from being Fair Trade certified if they sell a large enough quantity on the Fair Trade market. This needs to complement their ‘Product Based’ certification model, where ‘all that can be fair trade, must be fair trade’, and at least twenty per cent of the ingredients need to comply with the standards in order to get the fully-fledged Fair Trade mark (FLO International, 2013). Figure 12 shows the three new labels that FLO International has designed in order to visualize which products participate in the ‘Fairtrade Sourcing Partnerships’.
Figure 12: ‘Fairtrade Sourcing Partnerships’ labels for cacao, cotton and sugar
Oxfam, CLAC and some NGOs disagree with this new turn. CLAC fears that FLO International will ultimately include estates for all commodities and that the increasing flexibility is just a preamble to its official announcement (BTC, 2014). Interestingly, Fairtrade America (the new US based labelling body, established to spread the international Fair Trade mark) has decided not to use this new certification model, as they need to build reputation and withstand the multiple Fair Trade labels in the US (FWP, 2013).
The development of Fair Trade USA’s independent label and the introduction of FLO International’s logo to the North American market are not the only ‘fair trade’ labels in the US. As a reaction to ‘Fair Trade For All’, CLAC has developed the Small Producer Symbol (SPP), a new certification system run and governed by the farmers themselves. This label will be spread through Equal Exchange coffees across the country. CLAC and Equal Exchange are not satisfied with FLO International’s policy either, as they allowed plantations to become a source for almost all Fair Trade products with the exception of coffee, cacao and a few other categories (Equal Exchange, 2013).
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These different labels are in line with the findings of Moore (2010). The author claims there are two competing discourses within Fair Trade: one mainstream, market-based discourse of FLO and one alternative, yet purist, discourse represented by the World Fair Trade Organization (WFTO). The WFTO argues that while FLO may get producers slightly higher prices through mainstream channels, it is jeopardizing the future of the movement by sacrificing crucial social aspects of the Fair Trade ideology (Moore, 2010). The ‘Fair Trade For All’-initiative introduces yet another, “new” model of Fair Trade to the market, which implies that the consumer needs to choose which model to support. According to many interviewees, this is not realistic, and the overload of competing labels making similar claims will only lead to consumer confusion and ultimately, consumer apathy (FWP, 2011; Neuman, 2011; Coocafé, pers. comm., 2013b; Coocaminas, pers. comm., 2013; Dos Costas, pers. comm., 2013; Shreck, 2005). The president of Coocaminas expressed his concern as follows:
“You know, it’s about the consumers out there, far away. They are buying Fair Trade coffee, paying more, thinking that they’re giving some kind of support to small producers in Brazil, or any other country. But that’s not necessarily true! And if that consumer is going to know that maybe it’s coming from a large property, he will think twice and perhaps not even buy the coffee.”
President of Coocaminas
This complements the reasoning that a broad range of points of view, and corresponding labels, will most likely increase the confusion among consumers and will ultimately lead to a decrease in sales of Fair Trade coffee. According to the commercial manager of Coopasv their coffee sales are already decreasing due to possible confusion at the other end of the value chain:
“For example, we’re selling for both of them, for the German Fair Trade [FLO] and for Fair Trade USA. That’s the market. We can’t choose one or the other. But the volumes we sell to both of them shrunk a lot. Like I told you before, there are a lot of other factors: the market, the demand,… but I think it’s also because the consumer got more confused. They arrive to the shop’s shelves and they see German Fair Trade, Fair Trade USA,… What to choose?”
Commercial Manager of Coopasv
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Figure 13 gives an overview of the four Fair Trade labels spread throughout the US at the moment. The third Fair Trade label that is shown belonged to TransFair USA, which is Fair Trade USA before the name-change. This label is still being spread by some retailers. Other labels exist as well, but these are the four that are relevant to the ‘Fair Trade For All’- initiative.
Figure 13: International Fairtrade Label; Fair Trade USA Label; former TransFair USA Label and the Small Producer Symbol
Some roasters, such as Equator Coffee Roasters, decided to stay with the international network. They are making an effort to distinguish themselves from Fair Trade USA’s model in their marketing strategy. Via their website they want to inform the consumer about the different labels that are circulating, they critically discuss the ‘Fair Trade For All’- initiative and conclude that they are supporting the “only authentic Fair Trade label”. These roasters criticize, what they call, “the era of certification”, where large corporations suddenly want a share of growing niche markets, while they were rarely concerned with issues such as the environment or social justice before (Equator Coffee Roasters, 2011).
Moore (2010) critically examines the “mainstreaming” of Fair Trade. Certified products have been moved from world shops and small cooperative stores to being available at large retailers such as Tesco and WalMart, plantations have been included for certain commodities, and finally also for Fair Trade’s core product: coffee. According to the author, this mainstreaming is instigated by large corporations, as an attempt to “cash in” on a growing market, rather than a sincere effort to reform their business model. An article published by the New York Times on the ‘Fair Trade For All’-initiative concludes that companies can now easily become 100% Fair Trade certified without having to change their business practices (Neuman, 2011). After all, if it is easy and cheap to source coffee from large farms, and call it Fair Trade certified, than why would multinationals go through the extra trouble of sourcing their coffee from smallholders (Equal Exchange, 2013)?
From this discussion, we can conclude that profoundly conflicting visions exist on which marketing strategy Fair Trade should adopt. At the one end of the spectrum, Fair Trade USA wants to engage as many retailers and producers as possible, while stakeholders positioned at the other end of the spectrum, such as Equal Exchange, CLAC and the WFTO, advocate a restricted inclusion of smallholders and distribution channels willing to source from these particular producers. FLO International appears to be in between these two poles, including only smallholders for certain commodities and plantations for others, while distributing their products through large retailers and smaller outlets as well. Although at the same time, their strategy seems to be changing as well, with an increasing flexibility concerning label requirements.
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4.1.3. Third ontology
‘Fair Trade For All’ as an instrument to fill a legal void
The following section discusses how the 'Fair Trade For All'-initiative is put forward as an instrument to fill certain legal voids with regard to plantation practices. Through the implementation of 'Fair Trade For All', important assets concerning labour conditions and environmental health would be created for coffee farm workers which are not being assured through legislation. Proponents base their reasoning on the achievements of Fair Trade for small-scale coffee farmers and hired labourers on flower and banana farms. Opponents claim that Fair Trade has not significantly improved the situation of farm workers and is unable to raise the bar above existing norms. Additionally, many interviewees do not believe that Fair Trade is needed to improve the labour conditions of farm workers, as the Brazilian law already ensures that plantations comply with the label's requirements.
Many countries involved in the production of widely traded tropical commodities, such as coffee, fail to ensure that the livelihoods of the producers and workers involved are being safeguarded, or that environmental regulations are being respected. In the absence of action undertaken by the national authorities, the private sector has come up with a range of labels that ensure social and environmental standards through certification and verification, fuelled by increasing complaints by consumer and human rights groups (Bernstein, 2001). From the countless codes of conduct that have been developed, the Fair Trade standards are definitely one of the most familiar. These standards, covering social, environmental and economic aspects, strive at filling the legal void created through a lacking enforcement of official regulations. For example, an article posted on the website of the Council of Hemispheric Affairs (COHA) that dates from November 2010 reports that child labour in Brazilian coffee production is not yet eradicated although the International Labour Organization (ILO), which Brazil's labour legislation is based on, strongly condemns it (COHA, 2010).
At the moment, Fair Trade USA is developing its own standards, following the division within the FLO International network. As has been mentioned earlier, compliance with the certification criteria set by FLO International is audited by FLO-CERT, an independent third party certification and verification body (FLO-CERT, 2012). Producers' organisations and traders, registered with FLO and audited by FLO-CERT, can still sell to roasters and retail-level clients of Fair Trade USA, as Fair Trade USA still “accepts” the FLO- CERT audit, next to their own set of standards (Fair Trade USA, 2012a). The standards that Fair Trade USA is developing independently for farm workers are largely based on FLO's 'Hired Labour Standard'. This document contains five chapters: 1) general requirements related to the certification process; 2) a section on social development, intended to lay the foundations for empowerment and development; 3) requirements on labour conditions to ensure decent working conditions; 4) a chapter on environmental development; 5) requirements set in the trade chapter which specify what you should do when you produce and sell Fair Trade products (FLO International, 2014). The specific content of these chapters is strongly connected to Figure 2 (general principles of Fair Trade).
Through the implementation of these standards on large coffee farms, Fair Trade USA aims at improving the social, economic and environmental development status of hired
37 coffee labourers. Fair Trade USA motivates this choice by referring to the benefits that Fair Trade certification has generated for both coffee farmers and farm workers for commodities such as flowers and bananas (Fair Trade USA, 2012a). They advocate that benefits generated by Fair Trade with regard to, for example, the environment, or education of farmers, are equally valid when certifying larger coffee farms (Hardie, 2013).
In fact, many benefits have been generated through Fair Trade certification, for both small-scale farmers as for hired labourers. With regard to small-scale farmers, the documented benefits do not merely correspond to the cooperatives that have been visited: research performed on this topic has also shown that the label has had numerous positive effects on the livelihoods of smallholders (Bacon et al., 2008; Becchetti, 2008; Taylor, 2002).
With regard to smallholders organized in cooperatives, Dos Costas, Coopasv and Coocafé have emphasised the improved financial situation their members were facing since the implementation of Fair Trade. Since the cooperatives were carrying the label, they were able to export their coffee and became more efficient through technical trainings, which in turn increased their production. Fair Trade’s pricing mechanism, including the provision of a minimum price, has helped several cooperatives especially when regular market prices dropped and the demand for Fair Trade coffee was high. The investments made through technical trainings also led to an improved quality of the coffee beans, allowing the farmers to obtain higher prices (Dos Costas, pers. comm., 2013; Coopasv, pers. comm., 2013; Coocafé, pers. comm., 2013a,b,c).
In addition, all cooperatives were particularly enthusiastic about the access to education and information that Fair Trade had facilitated for their members. The president of Coocafé stressed how he found this aspect more important than the pricing mechanism established by Fair Trade:
"The technician goes to the producer, teaches him things, makes a soil analysis, gives recommendations,… During the years the results are that we’ve improved the productivity, and the quality. That’s a real gain for the producer. Because if he can just sell 5% of his production at a better price, it won’t save his life. But if he’s well educated, well informed, that can save his life. You see?"
President of Coocafé
Farmers are being trained on how to improve their management skills and farming methods, and a specific aspect the interviewees were excited about was the increased awareness with regard to the impact of farming on the environment. Coopfam and Dos Costas underlined how limited the farmers’ apprehension was on the environmental impact of farming prior to participating in technical trainings and workshops. According to the cooperatives, Fair Trade certification undoubtedly led to an improved management of natural resources in the region. The president of Dos Costas described this evolution as follows:
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"Some of the pesticides they used are very harmful for human beings and for the environment. The producers used them in an exaggerated way, because they feared it would jeopardize their production if they didn’t. We work a lot on making the producer more conscious of what he is doing. Before Fair Trade, the producers really had no idea of what harm some of his activities were doing to the soil, for example. Now we have agronomists and technical assistants who work together with the producers."
President of Dos Costas
Overall, the commercial manager of Coopasv was particularly positive about the impact of the Fair Trade label on the farmers’ livelihoods. Sebrae’s president also stressed that the changes that have occurred are truly pervasive:
"They made huge process in these last years, in 5 years’ time. Now, in the communities, you can see schools, maybe with some computers, you can meet a doctor. Did you visit a community there in Boa Esperança? Well, then you saw how cool it is. And in Coopasv, they used to sit at a desk the size of this table. There was nothing. They had meetings with producers under the trees. Now they have a space to organize meetings with the producers."
President of Sebrae
Concerning hired labour, farm workers have already been included in the certification scheme for flowers, bananas, tea and a few other commodities. A series of Fair Trade impact reports, both published by Fair Trade certifying bodies as by independent researchers, show some significant benefits for these hired labourers (Fair Trade USA, 2010a, 2010b, 2010c; FAO, 2011; CEval, 2012).
For example, in the flower sector, certified farms must follow strict safety and environmental guidelines for handling chemicals, and farm management must provide fumigation workers with protective clothing. The sector is notorious for its intensive chemical applications and insecure working conditions (Fair Trade USA, 2010a).
With regard to the banana sector, similar positive investments have been reported by Fair Trade USA. The labelling body discusses the heavy pesticide use, intensive soil erosion and deforestation that widely occur in conventional banana production. Thanks to the label, farmers and workers have the necessary financial tools to implement environmental programs. Many producers have invested in water treatment plants to reduce water usage and reintegrate clean water into the rivers, install mechanical weed control, protection from soil erosion and water pollution through the planting of cover crops, and so on. In this way, the label facilitates the transition from conventional farming to organic farming, which in turn implies a considerable price advantage (Fair Trade USA, 2010b).
Hale and Opondo (2005) have investigated the general impact of Ethical Trading Initiatives (ETI) on the Kenyan cut flower industry, and conclude that these ETI have
39 contributed in improving labour conditions. Equally, an impact assessment conducted by the FAO concludes that Fair Trade has led to better working conditions, including health and safety provisions, a paid leave and strengthened women’s rights (FAO, 2011).
Opponents of the 'Fair Trade For All'-initiative strongly contest the aforementioned arguments. First of all, many members of BR Fair repeatedly mentioned that plantations get severely sanctioned by the authorities when they fail to operate according to the law. On several occasions, interviewees have repeated how strong the Brazilian environmental and labour legislation are. The law already ensures many social conditions that the label is promising. According to them, there is no need for a label that prohibits, for example, child labour, as the law already firmly enforces it. They did stress the difference with neighbouring countries in South America, where child labour on coffee plantations is still subject to a tolerance policy (Ascarive, pers. comm., 2013; Coocafé, pers. comm., 2013c; Coocaminas, pers. comm., 2013; Coopasv, pers. comm., 2013; Dos Costas, pers. comm., 2013). According to the president of Coocaminas, if you examine the Brazilian legislation, you would come to the following conclusion:
"You know, if you consider the Brazilian labour legislation you’re better off working for a plantation than being an isolated small producer. Working for that kind of enterprises means being protected."
President of Coocaminas
Sebrae and Coopasv emphasized the importance of the Fair Trade label for the rural households throughout the region, but it is difficult to conclude that the label was the only motor of change for these communities as Lula da Silva’s presidency (2003-2010) also triggered some extensive social changes. Lula (°1945) is a member of the Brazilian Worker’s Party (PT). He is highly esteemed for his politics that reduced some of the massive social and economic inequalities in the country. His major achievement is the ‘Bolsa Família’ (Family Stipend), a program of cash transfers to the poor. His politics also contributed to Brazil’s powerful position in the world economy today, as he helped the country find new markets for its products. However, he is being widely criticized for not acting out on a highly needed agrarian reform and promoting large-scale agriculture as the motor of the PT’s economic policy (NACLA, 2011).
It is also questioned if the label can truly raise the bar with regard to existing norms and regulations, even if Fair Trade attempts to enforce social and environmental requirements. Valkila and Nigren (2010) investigated the impact of Fair Trade certification on coffee farmers, cooperatives and labourers in Nicaragua and noted little evidence that Fair Trade had significantly enhanced the labour standards of coffee production and processing. The working conditions on Fair Trade certified farms and the informal working conditions in rural Nicaragua did not differ much, and children were commonly seen picking coffee or working in other harvest-related tasks. The FLO labour standards and the Nicaraguan labour legislation largely base their norms on the same ILO conventions, as is also the case in Brazil. It thus remains uncertain whether Fair Trade truly raises the bar for labour standards above the existing norms.
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The compliance criteria that Fair Trade USA has established for the large coffee farms are based on FLO International’s pre-existing standards for banana and tea plantations (Fair Trade USA, 2012a). Although the proponents of 'Fair Trade For All' swear by the positive reports published on the impact of the label on farm workers, simultaneously, several authors state that Fair Trade certification for plantation-based products has had very limited impact on the empowerment of farm workers (Barrientos and Smith, 2007). Furthermore, requirements set by FLO International are often violated. In the Fair Trade certified coffee mills that have been visited by Valkila and Nygren (2010), few workers were using safety belts while the Fair Trade standard recognizes the workers' rights to occupational health and safety. Most of the people working were between 18 and 35 years of age, which contradicts the standard prohibiting age discrimination. This standard encourages the hiring of older employees.
Additionally, Fair Trade USA did not require Ipanema to gradually increase the wages of its employees (Ipanema Agricola, pers. comm., 2013b). This corresponds with literature findings with regard to the wages of plantation workers of certified tea estates. The wages did not significantly differ from what was paid on conventional farms (Besky, 2008; Moore, 2010). The aforementioned FAO impact assessment on certified banana estates considers some positive points related to improved working conditions, however, they equally regret the low wages on certified farms (FAO, 2011).
Wage issues on certified farms are getting increasingly criticized (Oxfam, 2013). As a result, FLO International has announced a revision of their 'Hired Labour Standard'. They are developing a new document, called the 'Workers' Rights Strategy', which needs to, according to FLO, "move Fair Trade beyond a traditional corporate social responsibility model that is merely based on standard-setting and auditing". For now, FLO (and Fair Trade USA) only require companies to pay at the least the minimum wage to their workers. This new strategy includes, for example, the development of 'Living Wage' benchmarks for the sourcing regions. This 'Living Wage' should drive wage levels upward in places where minimum wages are below what workers require for a decent standard of living (FLO International, 2011c). However, Oxfam (2013) regrets that no enforcement mechanism is being implemented. The text suggests that the company negotiates with workers on how a living wage will be reached, but no deadline is stipulated. Interestingly, the article also addresses the working conditions of hired labour on smallholder farms. "Small" farmers generally also employ workers, but rarely does anyone ask how much of the Fair Trade benefits go to these temporary hired workers. More attention should be paid to the situation of seasonal labourers on smallholder farms.
A final, but crucial, problem with the Fair Trade standards is that they do not take into account national or regional variability. The ‘one size fits all’-policy fails to address the needs of different communities. The standards should be designed according to the historical background of the region and the particular power dynamics that are in place (Besky, 2008; Moore, 2010; Shreck, 2005). According to Besky (2008), state- and place- specific institutions should play a bigger role in the regulations of Fair Trade practices on plantations.
To conclude, proponents of the 'Fair Trade For All'-initiative believe that the Fair Trade standards have the ability to deliver substantial benefits to farm workers, based on the results of certification for small and large farms. The opponents, however, claim that the standards do not have the potential to enforce an actual change, as standards often get violated and wage levels are persistently low.
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4.1.4. Fourth ontology
‘Fair Trade For All’ as a governance model for the value chain
When Fair Trade USA decided to break with FLO International, it changed the rules with regard to the governance of Fair Trade certification. Fair Trade's attempt to reach democratic chain governance may be one of its most important elements, as it does not only focus on outcomes, but values process and tries to ensure a voice in the decision-making process for those that are structurally marginalized by traditional supply chains. Fair Trade USA believes that farm workers need to be empowered through engagement in democratic- decision making and social programs, while opponents of the initiative do not believe the certification of these estates will have a true impact on the social position of these labourers and that Fair Trade USA should not support undemocratic structures such as plantations. This will be discussed in a first section. In a second section, a closer look is given to the way in which Fair Trade USA has implemented this new project. According to the labelling body, the successive steps are carried out very carefully, while its opponents criticize the lack of a clear, mutually discussed framework in which the initiative can be enacted.
Upstream governance model
Fair Trade USA believes the workers of large farms need access to the Fair Trade premium to improve their living conditions (Fair Trade USA, 2012a). The Fair Trade premium for social development, paid supplementary to the price for labelled coffee, needs to be shared based on a democratic and transparent decision taken by the beneficiaries (FLO International, 2011a; Fair Trade USA, 2012a). The premium allows farm workers to invest in community development projects. It is of crucial importance for the labelling body that the workers are engaged in the decision-making process on the use of the premium (Fair Trade USA, 2010a; Hardie, 2013).
Ipanema has already set up a committee representing the workers of the entire estate. Each unit chose two representatives. Together, these agents form the ‘joint body’. They should meet monthly and decide how to spend the premium (Ipanema Agricola, pers. comm., 2013b). In this way, the farm workers themselves are able to decide in which type of activity or project they wish to invest the premium. At Ipanema Agricola, the interviewee explained the establishment of the committee as follows:
"The committee has representatives of the workers, the company management and of Fair Trade as well. Workers from the 3 different fazendas [farm units] had to be represented. And so we started to have meetings. And then, last year, they [Fair Trade USA] came to the farms, they stayed for a few days and checked if the committee was working well and decided to grant us the certificate. This year they came back, checked if the committee was working, if people are attending the meetings, if we are following their rules. [...] They are very demanding. We had to build up a whole committee, specifically for Fair Trade! Every fazenda has two representatives, and we have monthly meetings. You have to follow their agenda."
Head of Unit Rio Verde at Ipanema Agricola Coffees
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Ipanema Agricola has only recently started to sell on the Fair Trade market, which is why they have not received any premium earnings yet, and no projects have been started. However, the workers have already indicated that they would like to establish a medical first-aid station when the first funds arrive (Ipanema Agricola, pers. comm., 2013b). Workers of the first coffee pilot, FNSF in Perdizes, have already invested their first premium earnings in eye and dental care (Fair Trade USA, 2014c).
There are numerous examples of successful community development programs implemented on flower and banana farms. For example, at Hoja Verde, a large flower farm in Ecuador, Fair Trade premiums have been invested in materials and financial support for the local school, a microcredit program, vaccinations, medical services for preventative and urgent care and breast cancer screenings. Another certified plantation, located in the North of Kenya, has invested Fair Trade premiums in the construction of two primary school classrooms that included the installation of water fountains and storage tanks. The premiums have also been invested in women’s empowerment programs, for example through workshops meant to encourage female participation in community activities (Fair Trade USA, 2010a). Equally, in El Antojo, a Fair Trade certified banana plantation in Colombia, Fair Trade premiums have been invested in student scholarships, sports tournaments and a low-interest loan fund to help farm workers who wish to purchase, improve or construct their own homes (Fair Trade USA, 2010b).
Correspondingly, an independent Fair Trade impact assessment conducted by the Center for Evaluation of the Saarland University confirms positive results for the investment of premium income, in particular for educational purposes. Especially for the flower plantation case study in Kenya, they have noted very good results of the premium’s direct investment in educational institutions, which had an impact that extended beyond the workers of the farms (CEval, 2012). An impact study conducted by the FAO in 2011 for banana plantation workers on certified farms in Ecuador, the Dominican Republic and Ghana, confirms improved housing and education levels with regard to premium investments (FAO, 2011).
However, opponents of the 'Fair Trade For All'-initiative have serious doubts on the empowerment of farm workers through certification, the formation of 'joint bodies' and the allocation of Fair Trade premiums.
Unlike cooperatives, plantations are not organised as democratic institutions. This is widely criticized, as the initiative is perceived as an encouragement for this type of corporate structures (Equal Exchange, 2012a). In the past, the Fair Trade label has been praised for its potential to stimulate a new business model based on democratic decision- making (Haight, 2011; Moore, 2010). Moore (2010) concludes that Fair Trade may empower the plantation manager within the supply chain, but does little to empower the workers. The author had been conducting research on Fair Trade certified tea plantations in India and witnessed little improvement for the position of tea pickers on the plantation.
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When asking the certification manager of Coocafé about her thoughts on the initiative, she answered as follows:
"The motivation of the project is good: farm workers are in need, nobody is claiming that they are not. But let’s be clear: it is not the same to help the workers of a large farm as to help a large farm."
Certification manager of Coocafé
Moreover, some stakeholders opine that the empowerment of large farms will not generate any tangible benefits for the community. These plantations could even impoverish the community, they say, as their structure often depends on an investor who is not a member of the local community. The revenues are concentrated in the hands of one single owner, and not spread among different producers, as is the case in a cooperative. This means that the return leaves the community in contrast to the local circulation of money (Dos Costas, pers. comm., 2013).
Compared to family farms, these large farms are also said not to create considerable labour opportunities. The total output of Ipanema is estimated to be equivalent to the production of 600 farming families, but this does not necessarily translate to 600 times more job opportunities, as small producers depend largely on manpower to do the work and rely less on technology or mechanized production. It is said, for example, that one picking machine is able to replace the work of 100 people. Opponents of the 'Fair Trade For All'- initiative claim that this project stimulates the growth of these estates, which would imply that the importance of technology and labour-saving investments would only increase in the future (Coocaminas, pers. comm., 2013; Coopasv, pers. comm., 2013; Dos Costas, pers. comm., 2013). This confirms the train of thought that the certification of large farms is not adding any value to the wider community.
The president of Dos Costas summed up the arguments listed in the previous two paragraphs as follows:
"A plantation impoverishes the community. Why? A plantation holds many hectares, but creates little labour because of its intensive use of technology. This means that the earnings will circulate far less in the local economy. And generally, the large ‘fazendas’ are built on a foreign investment: large amounts of capital coming from outside of the community. All the money that is made leaves the community. The profit of a plantation leaves the community, goes back to its origin. When you have, on the contrary, a set of small producers, the money that has been created circulates within the community. That’s why FLO is so strong on a social level. The money that a plantation makes is basically stolen from the community. You know, the local economy is really logical. If you put one million of R$ in the hands of one person, or you put the same amount in the hands of a hundred, the money will circulate. "
President of Dos Costas
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Concerning the investment of the premium, some interviewees claim that the large farms will not invest the premium in their workers, and it will instead merely be stated on paper and remain quite meaningless in practice (Coocaminas, pers. comm., 2013). They also claim that it is highly uncertain whether the benefits generated through the premium would be available for seasonal workers as well as for those who work throughout the entire year. Approximately 1600 people are employed by Ipanema, of which 75% are seasonal workers employed only during the harvest period. The respondent at Ipanema Agricola confirmed that it is not certain whether seasonal workers will benefit from the investments made through Fair Trade (Ipanema Agricola, pers. comm., 2013b).
With regard to the strengthening of workers’ organizational capacity, Valkila and Nygren (2010) have found that no trade unions existed in the certified coffee mills in Nicaragua and most of the workers had stated that they would probably get fired if they tried to organize themselves. This contradicts the Fair Trade labour standards, which require that the organization recognizes 'the right of all employees to join an independent trade union, free of interference from the employer, the right to establish and join federations, and the right to collective bargaining' (FLO International, 2014).
Besky (2008) even suggests that the rapid adoption of Fair Trade certification in Indian tea plantations has eroded the power of labour unions. India has a very strong Plantations Labour Act, which guarantees plantation workers’ social welfare, insisting that the owner provides proper housing, health care, food rations and schooling. It also puts forth unionization as a necessary precondition for any good social welfare record. The Act contains a very detailed description of requirements, unlike the Fair Trade standards, which she finds ambiguously formulated and too open to interpretation. The members of the ‘joint body’ have ideally been elected by their peers based on their ability to represent the needs of their community, and they should democratically decide how to invest the Fair Trade premium. Besky (2008) did not witness a single meeting during her three month stay, and claims that the body was composed only of male managers and supervisors and a few female office staff members. She questions the fact that the Fair Trade labelling bodies agree with such composition, and criticizes the technical implementation of these democratic structures. Imposing a democratic structure does not in itself guarantee that its aims will be accomplished.
According to the author, certified plantations were complying far less to the Plantations Labour Act than conventional plantations, as governments started to see the Fair Trade audits as a proxy for regular checks on owners’ compliance with the Act. The audits have been critically examined by Moore (2010). She calls them ‘snapshot’, or ‘checkbox’ audits, and claims that they focus on superficial compliances rather than on a genuine improvement of workers’ rights. The visits happen once a year and are pre- announced. This seems inadequate to identify more complex, and less obvious issues. Barrientos and Smith (2007) confirm this as well. They say that social standards are often audited from a 'technical compliance' perspective, which fails at identifying problems related to the acquaintance of enabling rights10.
The opponents of the 'Fair Trade For All'-initiative all strongly defend the cooperative model. Dos Costas’ president believes establishing cooperatives is the only way to reinforce the local rural economy, as producers make money for themselves and spend
10 Enabling rights are intrinsic principles of social justice that enable workers to claim their rights, such as the principles of freedom of association (Barrientos and Smith, 2007). 45 them on a micro-level. He also claims that sharing the responsibilities leads to an improved quality of life and an enhanced care for natural resources, as producers see themselves as part of a bigger picture (Dos Costas, pers. comm., 2013). According to Sebrae, an economy based on family structures without an established form of governance does not function well in the market (Sebrae, pers. comm., 2013).
Additionally, Sebrae and the president of Coocafé were very enthusiastic about the ‘cultural change’ that the establishment of cooperatives had stimulated. These interviewees stressed the collaboration and communication between members and management. Farmers are being stimulated to reach compromises and negotiate with each other, which was not the case prior to being part of a cooperative. Furthermore, the 'organizational culture' had changed, and this is where Sebrae had made a great contribution. During their collaboration with Fair Trade USA and USAID, in the framework of the RSP project, they have assisted cooperatives on how to professionalize their organization. Particular attention was paid to marketing and presentation skills at the annual SCAA fairs held in the United States. According to the president of Sebrae, the professionalization of the cooperatives was very necessary (Sebrae, pers. comm., 2013). ‘Market apprenticeship’ and organizational strengthening have also been cited by Taylor (2002) as tangible benefits of Fair Trade certification for cooperatives of smallholders.
A major change that was mentioned in three cooperatives (Dos Costas, Ascarive and Coopasv) was the ability to negotiate prices. Ascarive’s president explained how farmers used to sell their coffee at the end of each picking day to middlemen who were offering very low prices. Although doing so provided direct cash for the farmers, the prices they are able to reach now through certified markets and negotiation are far higher (Ascarive, pers. comm., 2013).
Furthermore, Coopasv and Coocafé’s staff members elaborated on the benefits that the Fair Trade certified co-ops were generating for the wider community. Participation in courses funded through the social program was not limited merely to members of the cooperative, but was extended to include other community members (Coopasv, pers. comm., 2013). It is a requirement that the premium gets applied in the ‘most social way possible’, and thus reaches as many community members as possible (FLO International, 2011a). The cooperatives also generate employment for non-coop members of the community, both in the cooperative management as well as in the fields of their members (Coocafé, pers. comm., 2013a).
However, it is necessary to mention that due to the cooperatives' largely unchanged exposure to market fluctuations, the income generated through the premium also fluctuates significantly (Coocafé, pers. comm., 2013a). Ascarive mentioned how many members still live in precarious situations, and that the price of the coffee does not always cover for its production cost. This has been confirmed by Coopfam as well. That is why the social premium is often redistributed among members to make up for the low revenues, instead of being invested in social programs for the cooperative members or the wider community. Ascarive’s president also made clear that this was a tool to convince farmers to stay in the cooperative (Ascarive, pers. comm., 2013). Valkila and Nygren (2010) have also addressed this issue following their research in Nicaragua. Their findings show that, in several cooperatives, at least half of the funds from the social premium were being used to pay for Fair Trade certification fees and to improve the cooperative structure, rather than being invested in social programs as intended. This corresponds with the research performed in Brazil, as some cooperatives were insecure when asked to point out which
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social programs had been funded through the premium. Although it was clear that the cooperatives’ administrative capabilities and infrastructure had considerably improved through Fair Trade certification, it remains questionable if it is right to spend a substantial portion of the Fair Trade premium intended for social development on the cooperatives’ normal business costs rather than on promoting widely targeted social development programs in the coffee-growing communities.
Fair Trade USA and stakeholder engagement
When Fair Trade USA announced the certification of large coffee estates, they immediately stressed that a very detailed evaluation process and a thorough impact assessment would accompany the project, in order to monitor the success and to assure that the sales of historical coffee co-ops would not get affected by their decision. The results of the impact assessment were to be published on their official website by early 2014, but up until now, nothing has been reported. It is not clear what will happen if the results are not what they have aimed for. They also repeatedly emphasize the great care that is dedicated to the implementation of the initiative (Fair Trade USA, 2012b).
However, many bloggers and authors have been criticizing a sequence of Fair Trade USA’s decisions made over the past decade (Neuman, 2011). The idea to start certifying coffee plantations dates back to 2003, as was explained in Chapter 2 (Historical Background). Equal Exchange and CLAC disapprove of the allowance of plantations for other commodities such as flowers, sugar, bananas and tea. According to them, Fair Trade USA has been prioritizing large scale players over Fair Trade’s original primary stakeholders for years (Equal Exchange, 2012b; FWP, 2011). Fair Trade USA is said to have a poor track record with regard to the engagement of stakeholders when implementing new initiatives. An example is when they unilaterally decided to change their name from TransFair USA to the current Fair Trade USA, causing a lot of protests and concern in the Fair Trade community, as has been explained earlier. The fact that no real debate or stakeholder consultation proceeded the implementation of ‘Fair Trade For All’, as well as with their ultimate decision to leave the international Labelling Organization, confirms this trend of unilateral decision-making (FWP, 2011). When asking the cooperatives on how this new strategy had been communicated to them, and if there was any consultation prior to its effective start, they all said they had received an official letter via e-mail to inform them of the changes in the Fair Trade coffee certification scheme. Their opinion on the subject has never been asked. The president of Dos Costas explained it as follows:
"One day, all of us at BR Fair received an e-mail. “Since today we decided to give the Fair Trade certificate to everybody.” Nobody asked our opinion. No, we received just a notification. Then we sent them a letter to tell them how worried we were, and we wanted to ask for an explanation [this letter has been posted online, see BR Fair, 2012a]. But no one ever answered. [Fair Trade USA did answer, but only online – I showed him the answer, see Fair Trade USA, 2012b]. But they never sent us a clear answer to the letter! Their main concern is their image with the consumer, on selling products with their label. That’s why they posted this online. This is just one more piece of evidence that they are not worried about the producer."
President of Dos Costas
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However, the president of Coocafé has a slightly different opinion than the other cooperatives that have been interviewed. These other co-ops are simply against the certification of large estates, but what is mostly troubling the president of Coocafé is the fact that the certification process of large farms is not occurring within a clearly defined framework. He gave his support to Fair Trade USA to start certifying large farms, under the condition that the supply of these farms would be limited to ten percent of Brazil's Fair Trade certified coffee export and their produce would complement the product line of the cooperatives (for example, through organic coffee or special gourmet varieties). He agreed to the certification of FNSF, where organically-grown coffee is produced on 500 acres of land. The president firmly rejects the certification of a plantation like Ipanema Agricola, because of its enormous size and location amidst the cooperatives. The coffee is also quite similar to what is produced by the cooperatives, and thus implies a direct threat to BR Fair’s members (Coocafé, pers. comm., 2013b). Fair Trade USA has presented Coocafé on their website as a cooperative that understands the needs of farm workers and supports the initiative (Fair Trade USA, 2012a). The president of Coocafé firmly disagrees with this, and he said the cooperative would only be able to support the initiative if Fair Trade USA would come to an agreement with BR Fair, CLAC and other small producers’ organizations on the terms of participation (Coocafé, pers. comm., 2013b).
Therefore, the president of Coocafé proposes a new model of supply chain governance for Fair Trade USA. He suggests that certified large farms are given the opportunity to make up for periodic shortages of Fair Trade coffee in the US. As has been explained earlier, the pricing mechanism of Fair Trade is not only failing to protect smallholders from unexpected events in the market, but it is also creating a fluctuant supply of Fair Trade coffee to the US. Although the cooperatives are currently facing large stocks of coffee, when regular prices are high, little certified coffee is being sold due to the aforementioned complications when marketing Fair Trade coffee. Therefore, large farms might participate, but only to assure a continuous supply of certified coffee or to deliver certain specialty coffees. It may be assumed that when regular market prices are high, cooperatives are not negatively affected. However, for the president of this cooperative, it remains of crucial importance that these decisions are taken in consultation with BR Fair's members and other stakeholders of the Fair Trade community (Coocafé, pers. comm., 2013b). This model seems to have some interesting elements, but how the practical disbursement of social funds will be governed on these estates if their participation is only limited, and workers are usually engaged for seasonal work, is a different story. Moreover, it remains questionable if the large farms will be interested to pay certification fees and remain uncertain of marketing their coffee with the Fair Trade label. Also, buyers want to know where they source their coffee from, independent of market prices. The potential implications of this proposition require further examination.
To finish, it seems that Fair Trade USA has given more attention to the governance model at the level of producers and workers than to stakeholder consultation in the decision-making process prior to 'Fair Trade For All'. They believe that farm workers and farmers should be empowered in their communities, but are being criticized for the unilateral way in which this decision has been taken.
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4.2. Stakeholder positioning
Following the previous discussion on the four distinct ontologies that exist of the ‘Fair Trade For All’-initiative, this section covers the positioning of the stakeholders participating in the debate. A map of the identified stakeholders, through use of a rainbow diagram, positions them in the debate. Admittedly, the rainbow diagram seems an abstraction of a complex debate. However, it is complementary to the discussion of the four ontologically distinct versions of the initiative. It is meant to be used as a practical tool. It assists in uncovering how the debate will evolve from here. Although it has been proven that the debate is not merely dichotomous, nor is it limited to solely one aspect of the initiative, it is possible to provide a general stakeholder map that identifies the stand of each group with regard to the implementation of ‘Fair Trade For All’, and, at the same time, visualises their respective capacity to influence the debate.
For completeness, a recapitulation of the four ontologies is provided in Table 6 .
Table 6: Summarizing the four ontologies
Ontology Aim Proponents Opponents ‘Fair Trade For All’ Including large estates Defining who the as a development Farm workers need will cause damage to label should tool in the primary access to Fair Trade the smallholders target production of coffee involved Retailers not willing to Defining how the As many retailers as ‘Fair Trade For All’ source from labelling body possible should be as a marketing smallholders should be should market included in order to strategy excluded from the Fair its products maximise impact Trade market The requirements set by Fair Trade are Labour and similar to the environmental ‘Fair Trade For All’ Defining why the legislation, at the same legislation fail to as an instrument to initiative is time standards get address the fill a legal void needed violated and wages are precarious situation as low as in of farm workers conventional production Changes that ‘Fair Trade For All’ wants to ‘Fair Trade For All’ Defining how the The initiative evoke are insufficient to as a governance certification promotes democratic empower workers while model for the value scheme should decision-making for decisions of Fair Trade chain be implemented all producers USA are being made unilaterally
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For a review of the stakeholder groups, I refer to Table 2 (p. 14). The eight stakeholder groups that had been identified are:
BR Fair Bloggers and NGOs CLAC Fairtrade International (FLO) Fair Trade certified plantations Fair Trade USA Sebrae Downstream supply chain actors
The positioning of the stakeholders is visualised through a rainbow diagram (Figure 14) and the subsequent table (Table 7) gives a clarification of why each group is placed in a particular position. The diagram consists of three horizontal parts, respectively from those stakeholders who are against the initiative, those who are indecisive to those who are in favour of it. The three vertical slices indicate to what extent each stakeholder group has influence in the debate. The outer slice of stakeholders have the least influence, the central part has moderate influence and the inner slice holds those stakeholder groups with most influence to change the course of the debate.
Figure 14: Final rainbow diagram
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Table 7: Motivation of stakeholder positioning Stakeholder Horizontal position Vertical position group The members of BR Fair are against the BR Fair has little influence on the certification of large estates as it might initiative, as they represent only a small jeopardize their unique position as only group of coffee cooperatives compared to BR Fair suppliers of Brazilian Fair Trade certified the global scope of Fair Trade USA’s coffee. partners. They have also indicated during Note: Coocafé is positioned more to the the interviews that Fair Trade USA is not middle, as they leave room to reach a communicating with them about the compromise implementation of ‘Fair Trade For All’ CLAC has relatively more influence on the CLAC, the equivalent of BR Fair for the initiative than BR Fair. The group is one of South and Central American continents, is the three official Fair Trade producer radically against the initiative. Due to CLAC networks (with Asia and Africa). The multiple public statements and the launch of the Small Producer Symbol is a development of a new label (the Small powerful signal in the debate, although it Producer Symbol), they are placed at the is unclear to what extent this label will utter left of the diagram matter in the future Fair Trade The plantations were granted a new label They have a moderate influence on the certified with potential benefits for owners and initiative because of their magnitude and plantations workers. It has provided access to a new, contacts with important retailers and growing market segment roasters
The function of the company is to assist Sebrae has little influence on the initiative small and micro-enterprises. Therefore Sebrae as they operate only on a regional level in they have no interest at all in seeing large a producing country with little importance estates get certified which might threaten further down the value chain their partners in the region The bloggers and NGOs that are actively These bloggers and NGOs organize participating in the debate are against the boycotts, consumer petitions, Bloggers and initiative, as they defend the rights of publications, and so on. Their activities NGOs smallholder farmers and advocate for a are based in the consuming countries, global trading system that is socially therefore they are granted more influence justified, two elements that ‘Fair Trade For in the debate as they have the potential to All’ works against, according to them affect consumer behaviour FLO has a very large influence on a global FLO does not agree with the certification of level, as they are the largest international large coffee estates, although they do Fairtrade network of Fair Trade labelling bodies. certify plantations for other commodities. International However, this debate takes place above all Therefore they are positioned more to the in the United States. Fair Trade USA has (FLO) central part of the diagram, as CLAC and a wider reputation as a national certifier, some bloggers fear that FLO will ultimately and therefore FLO’s influence is still bring these coffee estates on board as well comparatively small at the moment Fair Trade USA is the most important Fair Trade labelling body in the US and enjoys Fair Trade As Fair Trade USA decided to implement a widespread brand recognition. They have this initiative, all they can do is support USA the power to change the rules of the game the certification of large coffee estates and therefore have a lot of influence in this debate The position of this large group of traders, roasters, retailers and consumers in the These actors have the highest capability to Downstream debate is insecure and depends largely on influence the debate. If this group comes supply chain further developments. Two elements are to disagree with the initiative, Fair Trade important: the price of certified Fair Trade actors USA will most likely have to change its coffee coming from these plantations vs. current strategy traditionally sourced Fair Trade coffee, and the (perceived) legitimacy of the new label
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5. Conclusion
The ‘Fair Trade For All’-initiative, a project based on the inclusion of large coffee farms into the certification scheme, has further increased the ideological distance between different members of the Fair Trade community. An intensive debate is occurring: opponents and proponents of the ‘Fair Trade For All’-initiative bombard each other with all kinds of arguments. Throughout this master dissertation, the arguments underlying this dispute have been clarified and finally, insights were gained on how the conflict developed into its current form. In order to do this, I have focused on the implementation of the initiative in the Fair Trade certified coffee-growing communities of Minas Gerais in Brazil. The process consisted of three separate steps, being the 1) identification of relevant stakeholders, 2) discussion of each ontologically distinct version of the initiative and 3) differentiation and categorization of stakeholders according to their position, constructing a clear map of the debate that takes place within the Fair Trade community.
The identification of relevant stakeholders demonstrated a mix of ‘market’ actors, located across the value chain of certified coffee, and ‘movement’ actors, such as NGOs or Equal Exchange (Reed, 2009). In total, I have identified eight stakeholder groups relevant to the case study in Minas Gerais. Of those eight, four were primary stakeholder groups which are directly affected by the project: the certified cooperatives and the certified plantations in the region, and the two labelling bodies of Fair Trade USA and FLO International. Furthermore, four secondary stakeholder groups have been listed: Sebrae, a company that provides assistance to the co-ops in the region; CLAC, which is the network of small Fair Trade producers in Latin America and the Caribbean; bloggers and NGOs and a group of downstream supply chain members.
A second phase consisted of a thorough analysis and structuring of the debate. The analysis of this initiative through the lens of ontological politics made it possible to distinguish four distinct, ontologically different, versions of the project. These ontologically different versions are 1) ‘Fair Trade For All’ as a development tool in the primary production of coffee; 2) ‘Fair Trade For All’ as a marketing strategy; 3) ‘Fair Trade For All’ as an instrument to fill a legal void and 4) ‘Fair Trade For All’ as a governance model for the value chain.
Our analysis showed that the reality of the project was not singular and stable, but rather shaped different according to the different contexts that the participants were in. The debate developed gradually, and the perception and notions of Fair Trade’s success, or failure, have grown in different directions. This ultimately lead to conflict and standstill within the debate. The conflict is not limited to the isolated, time-specific event of the implementation of ‘Fair Trade For All’. It is dynamic in nature and has grown more complex over time. The demarcation of these four ontologies increased the insight as to why and how the different stakeholders came to possess such different ideas on what Fair Trade should represent (Umans and Arce, 2014; Konefal and Hatanaka, 2011; De Krom et al., 2014). A clear definition of these four ontologies also raised particular attention to each of the distinct issues they represent. This stimulates all stakeholders involved not to let any of these four overarching issues at stake to get ‘snowed under’ by a dichotomous reasoning of being simply “for” or “against” the inclusion of large farms in Fair Trade’s certification scheme. The discussion raised attention to the livelihoods of farm workers, an issue that was traditionally overshadowed by a discourse strongly focused on smallholders. Questions
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were not only being raised on who Fair Trade should include as beneficiaries at farm-level, but also as partners at the retail-level. There is no consensus on how far the corporate involvement should reach within Fair Trade’s value chain. Furthermore, the legitimacy of Fair Trade as a tool to implement social, economic and environmental standards is, on the one hand, being applauded, while criticasters argue that the Fair Trade label is not capable of making tangible changes in the livelihoods of primary producers of coffee. An ultimate issue concerns the governance of the Fair Trade value chain. The retail-driven character of this initiative was perceived as a threat to Fair Trade’s governance model as the increased control of these hierarchically organized corporations over the chain would erode the basic principles of Fair Trade, originally founded on democratic decision-making and multi- stakeholder engagement.
It is argued that Fair Trade USA tries to narrow down the debate, by placing a strong emphasis on the ethical arguments related to the inclusion of farm workers in the benefits of Fair Trade’s certification scheme. By not seriously considering the other three ontologically different versions of the initiative, and failing to closely interact with the different actors in the arena, they have contributed to a large extent to the protest and discontent within the Fair Trade community.
Following the discussion of the debate, it was possible to position these stakeholders within the conflict, and, more interestingly, underline their respective power to influence the debate. The retailers and consumers are perceived to have the largest level of influence within this debate. This highlights the ‘retail-driven’ nature of this initiative. The cooperatives of small-scale coffee growers in Minas Gerais have not even been contacted by Fair Trade USA prior to the implementation of ‘Fair Trade For All’. There has been a lack of communication for some time now. Their say in the development of this new strategy is marginal.
The future development of this initiative will thus mainly depend on the reaction of stakeholders located downstream of the value chain. Will the Fair Trade market continue to grow in the United States, or will these increasing degrees of corporate involvement at both ends of the chain ultimately cause the market to fall apart? And what are its repercussions for the coffee growers involved? However, possible actions undertaken by the producers are not to be overlooked nor underestimated. A few scenarios for the future are possible at both ends of the value chain, which will be briefly touched upon in the following, and ultimate, section. Further research is required to investigate the consequences and further developments of ‘Fair Trade For All’. For example, by means of global value chain (GVC) analysis (Reed, 2009).
In conclusion, this initiative is said to be symbolic for the label’s official rupture with the original ‘social economy’ variant of the Fair Trade value chain. In this case, the chain was oriented towards the social goals of maximizing the value that goes to small producers and, even more importantly, their empowerment. The incompatibility of this ‘social economy’ value chain with the ‘corporate’ value chain is at the heart of the friction within the Fair Trade community. The disparity between these two chains is a basic difference in goals, where the first variant focuses on maximizing the aforementioned social goals and the latter on maximizing profit. Fair Trade is operating both in and against the same market economy that they supposedly wish to alter, and for now, it remains unclear whether it will be possible to maintain this strategy while keeping all actors on board (Reed, 2009; Shreck, 2005).
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6. Possible scenarios for the future
The ‘Fair Trade For All’-initiative will undoubtedly have repercussions for the Fair Trade value chain. At this stage, it is unclear whether these developments will be positive or negative, and who they will affect. In this section, I will briefly touch upon some possibilities for both ends of the value chain. The interviewees of the Brazilian Fair Trade certified cooperatives unanimously feared for a decrease in their sales of Fair Trade certified coffee in the future. During the in-depth interviews they have indicated several strategies to prepare for this scenario, which I will concisely discuss. Moreover, I have conducted two SWOT- analyses for the competing labels of Fair Trade USA and Fairtrade America. The main results are mentioned in a final paragraph. Future research is definitely recommended and necessary to further investigate the project’s possible outcomes.
A first possibility that was mentioned by the certified cooperatives was to collectively invest in the adoption of other labels. The interviewees explained that most of their buyers express interest in coffee with multiple labels. Especially the organic label delivers a particularly high price premium. However, the switch with regard to conventional farming practices requires a strong commitment from the farmers. According to Coopfam, Fair Trade sensitizes farmers to environmental issues, and therefore makes the conversion to organic farming easier (Coopfam, pers. comm., 2013). However, the strict regulations accompanying the label demotivated most of the interviewees (Dos Costas, pers. comm., 2013; Coocafé, pers. comm., 2013b; Coopasv, pers. comm., 2013). Sebrae could potentially assist farmers willing to make this change.
Furthermore, two ideas were put forward to shorten the supply chain and, in this way, increase revenues for the primary producers. On the one hand, the president of Sebrae strongly believes the future lies in the stimulation of coffee processing and roasting in Brazil, contrasting the enormous export of green coffee at the moment. On the other hand, Sebrae wants to stimulate Brazilian consumers to purchase Fair Trade coffee. An initial project, under the name ‘Grão Justo’ [Fair Grain], has been launched where the first samples are being sold in Poços de Caldas, the ‘first Fair Trade town in the Southern hemisphere’. According to Sebrae, up until now, only tourists are buying this coffee. However, the president of the company truly believes there is an enormous potential for Fair Trade in Brazil (Sebrae, pers. comm., 2013). The cooperatives had very mixed reactions to this idea. Some claim the project will fail because Brazilian consumers are not ready at all for, in the words of the president of Dos Costas, “conscious consumption” (Ascarive, pers. comm., 2013; Coocaminas, pers. comm., 2013; Dos Costas, pers. comm., 2013). Others are very enthusiastic about the project and are actively participating (Coopasv, pers. comm., 2013).
Besides the aforementioned innovative suggestions, the certified cooperatives have also indicated to focus more on European and Asian Fair Trade buyers (Coopasv, pers. comm., 2013; Ascarive, pers. comm. 2013).
I will briefly compare the situation for the competing labels of Fair Trade USA and Fairtrade America in this last paragraph. The first label benefits from a larger network of retailers and roasters in the US and a cheaper sourcing of large volumes of coffee. Their marketing message is different, as they can highlight an ‘inclusive’ model. This means that everyone involved in the primary production enjoys the benefits linked to Fair Trade
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certification. The situation of farm workers is not being overlooked. However, they do face a controversial reputation in the market and it is not clear how the situation will evolve for them if negative critiques persist.
For Fairtrade America, the new US-based Labelling Initiative of FLO International, the situation is quite different. The label is unknown in the US, and there is a significant possibility that they might get obstructed in the market by the independent label of Fair Trade USA. However, they benefit from their reputation as Fair Trade pioneers. Coffee- sourcing is still restricted to smallholders organized in cooperatives, which underlines their ‘original’ character.
Nevertheless, both labels might face decreasing market shares due to the on-going splintering of the Fair Trade community. Moreover, the overall Fair Trade market might shrink, because of a plausible decrease in consumer confidence, as has been explained earlier.
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