Making History TransFair USA, Annual Report 2009 About Us TransFair USA is a nonprofit, mission-driven organization that tackles social and environmental sustainability with an innovative, entrepreneurial approach. We are the leading independent, third-party certifier of Fair Trade products in the United States, and the only U.S. member of Fairtrade Labelling Organizations International (FLO). We license companies to display the Fair Trade Certified™ label on products that meet our strict international standards. These standards foster increased social and economic stability, lead- ing to stronger communities and better stewardship of the planet. Our goal is to dramatically improve the livelihoods of farmers, workers and their families around the world. Our Mission TransFair USA enables sustainable development and community empowerment by cultivating a more equitable global trade model that benefits farmers, workers, consumers, industry and the earth. We achieve this mission by certifying and promoting Fair Trade products. Letter from the President & CEO Contents Dear Friends, 04 2009 Accomplishments In 2009, the Fair Trade movement In 2009, we certified over 100 million As we move forward, we have renewed ushered in a new era. Our eleventh year pounds of coffee for the first time, more hope for economic recovery and of certifying Fair Trade products saw than was certified in our first seven continued growth in sales of Fair 06 Fair Trade Certified Apparel social consciousness emerge as a top years of business combined. We saw Trade products. This next phase of priority for consumers, and the numbers opportunities for farm workers broaden Fair Trade is just beginning, and the 08 Social Sustainability reflected it. Yet in many ways it was as we expanded from fewer than 30 Fair accomplishments of 2009, though the first year forward after a decade Trade product categories to more than monumental in their own right, are 12 Community Empowerment of gathering valuable experience. 100. As this expansion occurred, we saw but a small step towards the ultimate Throughout the country and throughout schools and clinics being built, farmers goal of alleviating poverty through a 22 Environmental Sustainability the world, the feeling that 2009 marked learning new methods of production, revolutionary economic model. a new beginning was palpable. A sea and women armed with pride and 24 Building the Movement change seemed to be occurring in the leadership skills. We watched children Sincerely, way people saw their place on the planet, proudly take their first steps down and Fair Trade was ready for the world newly paved roads to schools where 28 Industry Momentum to turn our way as people embraced the they would encounter opportunities concepts of environmental, economic that their parents would never have 32 Fair Trade Imports & Products and social sustainability. even dreamed of. Paul Rice President & CEO 38 Supporters 42 Financial Summary TRANSFAIR USA ANNUAL REPORT 2009 5 Farmers Make Progress Apparel Standards Go Live In 2009, U.S. companies sourced Fair Trade products from 325 After a decade working to improve livelihoods on farms, TransFair farming cooperatives around the world. This powerful partnership USA moved to address the plight of factory workers in the apparel generated $48 million in above-market prices and additional income sector. To ensure impact and integrity, we incorporated multi- for hardworking farming families. Funding for Fair Trade community stakeholder input and public comment in our pilot factory standard, development projects increased 25 percent to nearly $14 million. which extends the strict social, economic and environmental protections found on Fair Trade farms to benefit garment workers. Industry Partners Grow The first Fair Trade Certified apparel and home goods hit U.S. retail shelves in fall 2010. Over 800 U.S. businesses joined our movement by year’s end, 10 percent more than in 2008. With the expansion of product categories available for certification, the number of Fair Trade Skoll Renews Support 2009 Accomplishments Certified™ products available to U.S. consumers skyrocketed past In 2009, TransFair USA received its second grant from the Skoll 6,000. Foundation for $1 million. Paul Rice was first honored by the Coffee Reaches Historic Milestone foundation in 2005 as one of the inaugural recipients of the Skoll Imports on the Rise Award for Social Entrepreneurship. The award invests in, connects TransFair USA certified 109 million pounds of Fair Trade coffee in 2009, more than we certified in our first and celebrates leading social entrepreneurs with the potential for seven years combined. Certified coffee and sugar import volumes jumped more than 25%, large-scale positive impact. despite the recession, while bananas – our second-highest volume category – doubled. In newer, smaller categories, imports increased an impressive 500 percent for wine, 300 percent for rice, 400 percent Retailers Innovate for mangoes and 1,000 percent for avocadoes. Whole Foods Market nearly doubled the number of Fair Trade Certified products on its shelves to end the year with almost 1,500. New Products Launch Sam’s Club, Costco, Target, Trader Joe’s and scores of other retailers expanded their certified product offerings as well, despite the TransFair USA significantly increased the number of certified choices recession. available in the United States, introducing all remaining products certified through our international network, Fairtrade Labelling Organizations (FLO). These new offerings include quinoa, Brazil nuts, Our Efforts are Recognized olive oil, spices and herbs, vegetables, and even sports balls. Thanks in part to these many accomplishments, TransFair USA was named one of Entrepreneur Magazine’s Top 100 Brilliant Companies Access to Credit Expands for the second year in a row. TransFair USA and Starbucks joined forces to create the Small Farmer Sustainability Initiative, which provides farm loans, technical assistance and market linkage to small-scale coffee farmers. $1.2 Billion in U.S. Starbucks pledged to increase its farmer loan programs to $20 million by 2015. “ Retail Sales. ” TRANSFAIR USA ANNUAL REPORT 2009 7 Fair Trade Starts with Higher Standards Worker Training In 2009, we developed a new, unprecedented standard for Fair Trade Most factory training programs today are geared towards Certified™ apparel, benefitting not only underprivileged cotton management and do not give workers the tools needed to advocate farmers but also garment workers at the other end of the supply for their basic legal rights. Our approach to Fair Trade clothing starts chain. Our rigorous pilot standards build on core International with workers. Worker training is an essential requirement for facilities Labor Organization (ILO) standards. But beyond the basics, the seeking to sell certified apparel. distinctive Fair Trade principles of better livelihoods and democratic organization of farmers and workers are central to this ground- Worker training programs will feature: breaking initiative. • Local educators who use local-language curriculum Core factory labor standards address: • Peer training that builds capacity and develops leadership Project management skills needed to implement Wages and Benefits Freedom of Association • • • development projects • Health & Safety • Non-Discrimination • Child Labor • Environmental Management Rigorous Factory Monitoring • Forced Labor • Women’s Rights TransFair USA partnered with Verité, a highly-respected monitoring organization that supports fair labor practices worldwide, to develop What makes this standard unique, relative to other codes of conduct tools that will measure factory compliance with Fair Trade standards. in the apparel sector, is that both cotton farmers and factory After conducting a test audit at a facility in Rwanda, Verité helped us workers will earn a significant “Fair Trade premium” for each item develop a more robust and rigorous monitoring protocol. sold with the Fair Trade Certified label. This premium, set at 5-10 percent of the factory cost of each garment, effectively doubles Our monitoring approach highlights worker participation: the wages of factory workers over time. Workers can decide to Worker representatives participate in opening and closing distribute Fair Trade premiums as cash bonuses or invest them in • meetings of the audit community development projects. The pilot Fair Trade standards go beyond most existing codes of conduct by requiring manufacturing • Auditors directly interview workers at work and at home New Standard for Apparel companies to raise wages over time to a true living wage. • Auditors solicit input from local NGOs and unions Extending Fairness From Farm to Factory During the public comment period on the pilot standard, we Lending a Hand to Cotton Farmers In 2009, we laid the foundation for Fair Trade Certified™ apparel by developing rigorous pilot standards, a worker training received input from 55 organizations in 15 countries. In response Small, family-run cotton farms in India and West Africa often struggle program, and tools to monitor sewing facilities against the standards. to input, we strengthened the standard as it applies to living just to survive. Fair Trade standards help certified farmers get a wage requirements, environmental sustainability and women’s better price for their harvest and support sustainable agriculture. rights. TransFair USA will review the apparel standard again at the Until now, Fair Trade Certified