Serious Eats - seriouseats.com

Thanks for these listings! This give my teenage twin daughters a way to revitalize one of our favorite holidays. They have a "Fair Trade and Forgotten Children" Club at their high school and are starting to realize that what they choose to buy can make a difference in someone else's life.

Awesome post. Fair Trade is unfair.

@pheel - This is my opinion and there is no need for me to present a balanced view.

@timruddell - it is a fair comment and very much central to the question at hand.

By "Fair Trade" I mean FLO - the international Fair Trade Licensing Organization (headquartered in Brussels) and the various licensees, including Trans Fair USA.

What many people fail to recognize is, that no matter its humanitarian manifesto, Fair Trade is, first and foremost, a business. Two of the reasons Fair Trade is not more widely accepted are:

a) the business model is fundamentally flawed
b) there are not enough checks and balances in the system

The business model is flawed (in my opinion) because:

a) The cost of certification is born by the co-ops being certified. There is an annual recurring fee that amounts to a kick-back which, in some cases, represents a significant portion of the premium the co-op receives for its crop. In order to be "fair" Fair Trade should bear the cost of certification.

b) All of the market risk is born by the co-ops. Fair Trade receives the same licensing fees no matter what the price of cacao is on the world market. The premium paid to the co-ops floats with the market price and goes down as the market price goes up. Above a certain price point, Fair Trade actually makes more more money than the farmers! To be fair, the prices paid to Fair Trade should reflect market economics and the differences in market economies in different countries.

c) The ultimate consumer (the chocolate eater) does not realize that most of the extra money they pay for Fair Trade certified chocolate does not go to the farmer, it goes to the manufacturer of the chocolate. If the average premium paid to the farmer is US$.10 (ten cents) per pound, and Fair Trade makes US$.10 per pound from every organization that wants to license the Fair Trade label, and on average, one pound of cocoa beans is made into two pounds of chocolate, then the premium the consumer pays for a Fair Trade chocolate should not reasonably be several dollars per pound.

d) While the certification process focuses on environmental and labor practices, it overlooks areas that would significantly increase output and quality. Training farmers in simple orchard management techniques (e.g., proper pruning) has been demonstrated to as much as double production. Training farmers to improve fermentation practices increases quality - and the prices they can command for their cocoa.

There are not enough checks and balances in the system:

Although Fair Trade requires that certified co-ops be democratically organized, it is the management of the co-op that decides what is done with the premiums: There is no mandate that the premiums get paid to the farmers. There is also the assumption that because the co-ops are democratically organized that they are not corrupt. This is not a valid assumption.

I have visited cacao plantations in four countries - Ecuador, Venezuela, Mexico, and Belize - including Fair Trade certified co-ops and Rainforest Alliance certified co-ops; and I am about to visit several more in the Dominican Republic. In the case of the Fair Trade and Rainforest Alliance certified co-ops I made two or more visits over the course of 18 months to two years. So when I say that there is corruption in the management of certified co-ops it comes from first-hand experience.

The place where I have seen Fair Trade work is when a company gets closely involved overseeing its investment in the co-op and its farmer members. That place is Belize and the Toledo Cacao Growers Association. In this case, Green and Black's has (or at least had until earlier this year when that person succumbed to pneumonia - I don't know if he has been replaced) a full-time representative in Punta Gorda overseeing the operation ensuring that the money gets distributed properly and that information about crop prices and premiums paid is accurate.

On the other hand, in the Luz y Guia co-op south of Guayaquil in Ecuador, the local national cacao growers association, Fedecade, routinely appropriates the premiums and uses them to solidify its political base - in other words the monies are used to cover the "overhead" costs of managing the co-op and little or none of the money makes it to the farmer. Or at least that was the case in 2005 when I was last there.

Part of the problem is that there just aren't enough people in the system. When I was in Belize in May, 2007 I learned that Trans Fair has one field worker for cacao for all of Latin America. That's not enough.

@tnewms - I did not use the word "widespread." I said that there are abuses, however I don't believe the figures that are used. There are over 600,000 smallholder farms in the Ivory Coast alone. If the number of field workers in Western Africa is even 100 times larger than it is for Latin America that means that each field worker would have to visit 6,000 farms to collect the data they present. However that's not the case so they're using statistical means to arrive at their figures, and, as the old saw goes, "there are lies, damn lies, and statistics."

I am not a statistician, so I don't know what the sample size would have to be in order to be statistically accurate. However I know of at least one way that the numbers can be skewed. Most of the reported abuses I have been made aware of are near the border with Mali. So, if the sample, or a large part of it, is drawn from this region then when extrapolated out across the entire country the numbers would be high.

It is also important to remember that these are family farms. In the US, every day young children participate in farm work, some of it involving threats and hazards from farm equipment and chemicals. During harvest times, these children are sometimes even be asked to work from dawn to dusk to get the harvest in - easily twelve hours. Do we consider that to be abusive child labor? If not, why not?

It is important to educate children - and many adults - about inequities in the world. It is just as important to get the facts right and, from my perspective, this campaign does not and presents the "facts" they do present in an alarmist way.

For all its shortcomings, Fair Trade provides "a" solution - not "the" solution. However, the Fair Trade movement has garnered huge institutional acceptance and there are not enough people looking at what they are doing and saying, "You Can Do Better. You Should Be Doing Better." We need to promote alternative methods and processes and figure out which ones work and which ones don't and realize that what works in one country might not work in another and not impose a single system worldwide.

I am one of the surprisingly small number of people who do not accept Fair Trade at face value and speak up. If you really want to know what's going on, I suggest you make it a point to travel to a third-world country and see the actual situation on the ground and not rely on anyone else's reports. Even mine.