A Square Deal

Fair Trade Is Good Business For Third World Producers

In America, a tremendous amount of energy is devoted to upholding the rights of consumers to be treated fairly. Misleading advertising and labeling, poor quality products, unsafe food, price gouging—all are without question taboo. The other side of the equation, however—the fair and safe treatment and payment of those who make or harvest products, and the environmental consequences of that production—is only now catching up, especially when the workers are outside the U.S.

A small but growing group of businesses and nonprofit organizations is working to introduce to American consumers products that are “fairly traded,” i.e., which treat producers ethically, offering a fair price for the fruits of their labor, and harvest raw materials sustainably. Fair traders, also known as “alternative trading organizations,” have initially concentrated on a few products, such as coffee, crafts and handmade clothing, produced by individual artisans or local cooperatives. Their message is receiving increased attention as concerns over the exploitation of cheap labor in economically depressed parts of the world increase.

By giving artisans a degree of financial security and control over their lives “we are opening the doors to dignity, opening the doors to self-respect,” says Pushpika Freitas, president of MarketPlace: Handwork of India, an Evanston, Illinois-based nonprofit purveyor of fairly-traded clothes made by disadvantaged women in India.

Pennsylvania-based Ten Thousand Villages is a pioneer, having utilized fair trade principles in the production and importing of crafts since the 1940s. A nonprofit arm of the Mennonite Church relief agency, today Ten Thousand Villages runs over 60 retail shops in the U.S and Canada and last year had retail sales of $13.6 million. The company tries to establish long-term, stable relationships with craft producers. The stable income enables them to keep their farm and stay in the countryside, avoiding the flight to the city taken by so many rural residents in poor countries, says Larry Guengerich, media coordinator for the organization.

Many fair traders are nonprofits, but fair trade principles are not counter to the running of a for-profit business. “We are proof positive that that works,” says Eliza Brown, marketing coordinator for Equal Exchange, a Canton, Massachusetts-based, worker-owned cooperative which has imported fairly-traded coffee from small scale growers in South America, Africa and Indonesia since 1986. Last year, Equal Exchange had $4.5 million in U.S. and Canadian sales.

“People can make money and, at the same time, be socially and environmentally responsible,” says Darren Stepanik, national sales director for Boulder, Colorado-based Tribal Fiber, a start-up importer of hand-woven, naturally dyed hemp products made by village cooperatives in northern Thailand. Although Tribal Fiber considered setting itself up as a nonprofit, in the end its partners believed that, as a for-profit business, greater benefits and continuity would ultimately accrue for those who craft its products, Stepanik claims.

Although some corporations have been pressured into improving standards for overseas workers, or say they “buy direct” from local producers, such piecemeal practices do not constitute “fair trade,” notes Equal Exchange’s Brown.

In addition to buying direct and eliminating “middlemen,” Brown says, fair trade means committing to paying a fair price, guaranteeing a minimum price, providing advance credit, working with only democratically-run cooperatives, promoting sustainable agriculture, and paying a premium for organic products. These formal “fair trade” guidelines are adhered to by members of two associations, the Massachusetts-based Fair Trade Federation (FTF), an alliance of retail shops, and the International Federation for Alternative Trade, representing a broader global membership of producers, traders and retailers.

“We are very focused on raising consumer awareness in the U.S.,” says FTF Executive Director Mimi Stephens. American consumers’ global perspective, and concern, has lagged well behind that of Europeans, Stephens says, but she hopes to build on the rising interest in organic food here to get U.S. consumers “to think about the conditions under which products are made,” as well as grown.

Coffee is currently the largest fairly traded product, with global retail sales of about $200 million, says Brown. Other food items, such as honey, sugar, tea, bananas and cocoa can and are being imported by fair trading groups too, she adds.

The future looks good. The introduction in the U.S. of a fair trading certification label for food products—the internationally recognized “TransFair” symbol of a figure holding two bowls—is currently in the works. Public interest is up in North America and fair traders are projecting increased sales, which will benefit artisans and growers around the world as well as the bottom line.

LAUREN OTIS has written widely on the social implications of business practices. He lives in Trenton, NJ.