Brendan O'Connell Fair Trade Labeling 2/27/08 WR 122 Research Paper When a product is given the fair trade label

it can be assumed that the producer has agreed to worldwide agreements that assure farmers are paid fairly and a monopoly cannot be created. There have been many studies of the positives, and negatives, of fair trade labeling, but neither side has a definitive advantage. With increasing coffee sales, of all labels and brands, the price for fair trade labeled coffee has remained fairly consistent, while more mainstream suppliers have decreased their prices to try to match the sales that fair trade coffee has. The last time that the market price and the fair trade price were equal was in January of 1997(Glazer 1). The fair trade label applies to more than just coffee though. According to The Fair Trade Almanac, the United States spent nearly $500 million on fair trade coffee alone in 2005(Glazer 1). Coffee is probably the largest fair trade labeled product that people know of and is the most commonly talked about. Fair trade labeling insures the farmers a consistent price that they can live off of. The farmers that don't agree to fair trade must follow the market price which had been under a dollar until 2005. Agreeing to fair trade regulations may cost the consumers more, but they get better quality and are supporting developing nations that would starve if they had only the market prices to sell with. But some free trade economists have said that fair trade hurts the communities by forcing non complying farmers to adhere to the lower prices set by the world market and pressuring them into poverty and starvation. But with the ability to join the fair trade community why do people still refuse to follow regulations and not join the movement? Fair trade, shade grown, organic coffee has recently become the cool phrase when buying coffee or talking about the industry. Yet with only 20 percent knowing what the fair trade symbol, it seems to me that some people don't know what fair trade really is. Gautier Pirotte said that a very general definition is: Fair trade is a commercial partnership, based on dialog, transparency, and respect, the aim of which is to create greater equity in world trade. It contributes to sustainable development by ensuring better trading conditions and guaranteeing the rights of producers and marginalized workers, particularly in the global South.(Pirotte 2)

Over time, this definition has been changed, distorted and altered so many times that people have just assumed that it is a good thing. Well fortunately the people are correct and anybody that buys fair trade coffee is supporting a fair world and the demolition of large crop monopolies that are seen all over the agriculture world. Coffee is now the second most traded commodity after petroleum The world market has come along way from the days when delegates would walk out of World Trade Organization meetings(CMAJ 1). There is a consistent price and demand for coffee of all types is very high and only growing. But getting a free trade mocha at Starbucks will not end poverty and starvation, unless the person buying happens to be in congress and has brought up the issue. Governments around the world need to be more involved in the issue and support what fair trade labeling is doing for the developing countries all over the Earth. Many countries are being given help but often it is not enough to support everyone. Fair trade labeling is one of the best things to happen to the world trade market, but because it is not helping everyone, some people are seeing it as being ineffective. But that idea is too negative and does nothing to help anyone. “Fair trade is a proven system”,(Ruiter 1)The director of the Haveleer Foundation, a European labeling company, feels that way, and even if it is not a proven system it is still a great thing to happen to trade and will help a lot of people in the world. Fair trade is not one group though, many cooperatives and labeling organizations around the world working together to insure that all people are paid fairly and that the quality being sold is what it is marketed as. Before fair trade agreements were made, farmers were being paid next to nothing for what they had. With the taxes in place now and some plantation owners taking a cut, they may not be making much more, but it is something that they can live off of. In the chart shown at the end you can see how much fair trade helps the people and why everyone should be promoting this more and more every day. But in never really started in one distinct area. In western Europe, they started importing things from eastern Europe to try to help Economy over there. But since coffee is a global commodity it mush to regulated and in some cases controlled. Each

continent has their own Fair Trade Organization that they must listen to if they intent to keep on selling as fair trade farmers. The Northern FTO focuses on Farmers with less than 0.7 hectares1(Pirotte 5) and manages most of the co-ops that sell to the larger roasters that then sell to the brewer who sell it to the consumer. In a graph attached it is easy to see that the farmers would be making either nothing or less than nothing if fair trade prices had not been introduced. Nicaragua and Tanzania are two countries that have shown both the good and bad sides of fair trade agreements and will continue to be an indicator of how the system is working. Although these two countries account for less than 2.5 percent of the world coffee production(Pirotte 2) , the workers and the economy are both affected. Since every farmer wants to sell at the higher prices, there is lower demand and the producers make much less money than the fair trade sellers. When fair trade focuses on small-scale producers, it fails to reach the poorest sector of the population, namely the unemployed coffee-plantation workers, who have been laid off in the hundreds by the large plantation owners following the fall in coffee prices(Pirotte 3). Fair trade doesn't just affect the producer, it affects their families, the community and everyone involved in the small crop farm. But when workers are not paid, they can find work elsewhere. The number of people willing to work will continue to decrease until the farmer and his family are the only ones on the farm. This can be easily fixed by creating more co-ops and, for the first time in nearly ten years, raise prices. A few cents per pound can make the biggest difference, and since the price has been so consistent consumers can deal with the raise. The people buying fair trade coffee know that they are indirectly helping hundreds of people. The problem is that not many people know what fair trade labeling is. In studies done by “the Fairtrade towns initiative” and Transfair, an American fair trade labeler, from 2006, only 20 percent of coffee drinking Americans recognized the fair trade symbol(Transfair 18), while nearly 50 percent in the United Kingdom were able to recognize the logo easily(Arond 40). Fair trade can only do so much to help the people though. The problem is that too much coffee
1 1 hectare is equal to 10,000 square meters

is being grown, and it's only grown because it looks profitable. There are too many people that want to be involved and not enough money to support them all, but these problems are not caused by fair trade. Fair Trade Organizations work like unions and will fight for the worker. Richer, larger countries can only help the developing nations so much. The economic state of the world right now is in trouble and only a few countries are willing to spare some money. Countries like Tanzania and Nicaragua may be having trouble with adapting to the system, but there are many buyers and consumers, so when things are dealt with the buyers may see higher coffee prices and hopefully by sometime in the next ten years all producers will abide by fair trade regulations. Fair trade was started to do exactly what the name says, trade fairly to all farmers, no matter what size farm they have. The fair trade industry in not trying to stop corporate producers though, they want everyone to have a fair chance selling what they have. But now since larger companies like Starbucks, Walmart, and McDonald's have started to sell fair trade products maybe we will see a change in production and sales will increase, and make more money for the farmers. Many farmers have said that without fair trade agreements they would not be able to afford many of the things they now have. The co-operatives that abide by fair trade regulations are thriving and farmers that are involved make considerably more than those that only sell at world market prices. Coffee was first consumed in the 9th century, yet fair trade organizations only started in 1997. Yet the idea of fair trade should have been in everyone's head, shouldn't the small crop farmer be able to sell as well as the corporate machine farms? Much of time, these things are taken for granted and are just assumed, coffee comes from a farm, I don't care how big it is. But everyone should care. I have stated that coffee is the second most traded commodity in the world. Think about that and then think how petroleum sells, the consumers really only see it as gas but it had to go through many different expensive stages to get to the consumer. Coffee has to do that as well and we should be rewarding the FTOs for what they have done, they loose money every year yet the project keeps going strong. The philanthropic people supporting fair trade are the people that everyone should be thanking. By

supporting fair trade they help not only the economy and well fare of the developing nations, but also the economy of the world. Fair trade coffee is a growing part of trade that can help a lot of people if it is used correctly. It is still only a project and can only support a very limited amount of people. Governments around the world need to get involved and then maybe a working system will be seen. __________________________________________________________________________________

Fig 1.1 (Utting-Chamorro 7)

Works Cited
Transfair USA, Fair Trade Almanac, 1998-2006, p. 18. Arond, Elisa , “The fair trade Towns Initiative: Lessons From Across the Ocean,” Oxfam America, May 2006, p. 40
Pirotte, Gautier, Geoffrey Pleyers, Marc Poncelet. "Fair-trade coffee in Nicaragua and Tanzania: a comparison.” Development in Practice 16(2006): 10. Utting-Chamorro, Karla. "Does fair trade make a difference? The case of small coffee producers in Nicaragua. " Development in Practice 15(2005): 16. Canadian Medical Association. "Talk failures: food and fair trade.." CMAJ: Canadian Medical Association Journal 169(2003): 1. Ruiter, Coen de . "fair trade Press Release." Max Havelaar Foundation (2007): 2. Glazer, Sarah. "Fair Trade Labeling: Is it helping small farmers in developing countries?.” CQ Researcher. 2007. CQ Researcher. 10 Feb 2008 <>.

Brendan O'Connell 2/27/08 WR 122 ANNOTATED BIBLIOGRAPHY

Gautier, Geoffrey Pleyers, Marc Poncelet. "Fair-trade coffee in Nicaragua and Tanzania: a comparison.” Development in Practice 16(2006): 10. This article argues that it is also critical to consider the wider fair-trade ‘arena’ or set of interactions. The authors focus on Tanzania and Nicaragua and study the role of four key actors— small-scale producers, co-operatives, development partners, and public authorities. The article examines how the co-operative movement in Nicaragua has been strengthened by fair-trade production, in contrast to the situation in Tanzania. This article came from a few different authors and was published in a scientific journal. I see it as a very reputable source that could be used often. It can give a big picture look on the issue and gives two good examples of where fairtrade is helping and where it is hurting a country, the easiest way to see that the article is unbiased. This is also the largest article and can be used throughout the research paper. The article is able to give a good background on the issue and show both sides of the argument. I think this will be very useful. It is a good source to look to if an example is needed or if information is left out. The unbiased nature of the article allows me to show both sides and give a rebuttal to prove wrong. It made me think that there could be a downside to fairtrade labeling. There are many parts in this article that can back up my thesis that fairtrade agreements help nations. -Utting-Chamorro, Karla. "Does fair trade make a difference? The case of small coffee producers in Nicaragua." Development in Practice 15(2005): 16. Showing how fairtrade effects many different people, this article breaks down who gets what and who has to give up what. Easily broken down into Farmer, Buyer, and Consumer groups, it focuses on two groups, SOPPEXCCA and CECOCAFEN and how they are major parts in the circle of free trade and why everyone involved depends on them to support the fairtrade coffee industry. Important to note that this only focuses on coffee, even though fair trade encompasses many different products. It is very useful to see how the fair trade market can affect many different people. The graphs and flow charts used are very interesting and well made. This was a private study done by one person so many things need to be fact checked. The paper is slightly biased toward the side that fair trade could potentially hurt the small crop farmers. The paper argues that it is crucial to analyze the experiences and problems of small coffee producers and producer organizations involved in the fair trade market to ensure that the objectives and claims of fair trade are achieved in practice. This article will be useful to see the opposite side of my thesis and give me something to argue against. It is one of the only biased sources that I have and for that it may be difficult to use often. This article did show how it helped developing countries but mainly focused on why fair trade agreements would benefit no one and cost the country even more. This has been proved wrong in many cases and since it is an older article I will need to see how much of the article is still pertinent now. -Canadian Medical Association. "Talk failures: food and fair trade.." CMAJ: Canadian Medical Association Journal 169(2003): 1. This article focuses on how countries that thrive on agriculture don't have a chance in the market because they need their crops to survive. Talks about trade agreements went badly in Cancun in 2003 and affected how countries all over the world trade. Important fact: 70% of the worlds poor live in rural areas and depend on agriculture for their livelihood. Focuses on the failure of the 2003 World Trade Organization (WTO) meeting in Cancún, Mexico due to attempts of rectifying trade imbalances

caused by agricultural production subsidies. This is a reliable source and all outside facts are cited properly. It is biased towards the side that says trade agreements have only caused more problems and are not effective. Compared to the other articles, it focuses on more of the trade agreements and the problems they have created. It is not a very good source to use though and although it comes from a credible source, it has very little usable information compared to the others. Coming from a medical journal this may not be the most useful article but it does have some interesting statistics that can be used to play ethos. Probably will not use often except for statistics. It showed me that there has been some trouble over this issue and it likely won't be totally resolved for a few more years. The main use of this article to me will be to show the business and world trade side of the issue. -Ruiter, Coen de . "Fairtrade Press Release." Max Havelaar Foundation (2007): 2. A press release from the director of the Max Havelaar Foundation partnered with the Fairtrade Labeling Organization. This states the new requirements for fair trade labeling and that any business, large or small will need to abide by the new regulations in order to keep their label. They state harsher reinforcement for people wanting fairtrade labeling and makes sure that larger coffee producers are not given any special privileges. This is a coming from one person and a press release but it will be used to show a personal aspect of the issue and is not used as a research source. It comes straight from the Fairtrade Labeling Organization website and is clearly biased that fairtrade is good for everyone and needs more people to be involved. This is useful to see how someone working for the actually company feels and what he thinks needs to be done next. I could use this in many different parts, to counter an opposing argument or back up my thesis. Since the press release follows the message that I am trying to get across. I think this will be a slightly useful piece because it only contains so much and doesn't have much information, just feelings. Since he is talking to the larger companies also, I can write about how these agreements affect more than just the developing countries and small crop farmers. -Glazer, Sarah. "Fair Trade Labeling: Is it helping small farmers in developing countries?.” CQ Researcher. 2007. CQ Researcher. 10 Feb 2008 <>. This article is a large collection of information that shows both sides of issue and has many different sources. This may have a lot of information but it is still just like an encyclopedia entry. A very in depth overview at the issue of fairtrade agreements and how they effect different communities. All sources are cited properly and links are inserted when necessary. This is a good site and a great place to find very basic information and definitions. It is a reliable source for basic information, but some quotes and statistics have been cited and the original site would be used instead. The purpose of this article is to show an unbiased view so all sides of the issue can be seen. It does come from a research site, so I would expect everything said to be true, at least at the time of publication. I will probably use this site to find links to other more reputable journals and articles. It does have some definitions for the terminology used that will come in useful. Much of the information given in the article I would like to use but it is not from a source that I see as being very scholarly or in the business. This is just a collection of facts that have been gathered together, basically the purpose of my paper is to to that on my own.