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Leading Fair Trade Certifiers Break Down their Standards

Introduced and Interviewed by Sue Kastensen

 

 When we purchase certified products, we expect them to meet a standard we both desire and understand. We want the label to be meaningful.  

The process of certifying a product first involves multi-stakeholder input to set standards that clearly reflect intended outcomes.  Measurable and verifiable criteria are then generated to articulate and quantify the standards.  Finally, products and practices are inspected and evaluated against the criteria to verify compliance that the standards are met.   

Organic certification for a product such as soybeans is a fairly clean process in the above mentioned chain.  The standards, criteria and verification rather simple:  synthetic pesticides and fertilizers are prohibited, and soil tilth and health should be built naturally. They are also governed by a single set of governmental regulations within each country, which assures consumers the label is meaningful and avoids the risk of fraudulent labeling.  This level of commitment to widely accepted and regulated standards has grown the global organic marketplace significantly.  But it wasn’t always this way.

Organic certification was messy at first.  Like fair trade today, there was a basic set of principles that different certifiers agreed on and adhered to.  But beyond that each certifier had standards of their own to differentiate themselves and their interpretation of organic from other certifiers.  Important differences included organic product content thresholds for organic claims.  Some certifiers considered farm working conditions and wages important components of organic certification.

When the US Dept. of Agriculture (USDA) was mandated by law to develop regulations for organic certification, they shied away from including labor standards.  Soon after, organic certifiers eliminated those criteria as well.  Sadly, organic certification does not ensure farm workers are treated or paid any better than on conventional farm.  Consumers with high standards were left looking for alternatives that would ensure a deeper commitment to social justice from their food suppliers.   

For many years fair trade practices were verified voluntarily through commitments within alliances and trade associations.  This practice works fairly well with crafts where the actual “production step” is rather transparent, but not so well with supply chains involving agricultural commodities and complex processing operations. Large groups of smallholder farmers and large processing operations require a thorough evaluation and rigorous inspection to verify that workers are paid fairly, working conditions are humane, and farming practices are sustainable.  Now the verification process becomes much more complicated.

The principles of fair trade seem simple: fair prices for goods, fair pay and conditions for workers, fair treatment of the environment for all to continue to benefit from and share, and an additional contribution to community development – but these ideals have nuances that expose complicated relationships.

Quantifying ethics into neat little boxes that can be checked off is very difficult.  For starters, what does the term fair trade mean to you, or even the word fair   Does it include democratic representation in the workforce or producer representation in setting standards   How about community benefits and environmental sustainability   Must intermediate processors as well as final brand holders participate in fair trade practices as well

To begin to understand what goes in to fair trade certification, Fair World Project asked three fair trade certifiers, Fair Trade USA (FTUSA), IMO and Quality Certification Services (QCS), to answer the following five questions about their fair trade certification program:

1. Do you have producer representation on the board
Explain stakeholder participation particularly the role of producers and consumers.
 

Fair Trade USA

Fair Trade is a global movement to alleviate poverty in ways that are socially and environmentally sustainable. One of the key pillars of the Fair Trade model is democratic participation in decision making processes. It’s extremely important to the very mission of Fair Trade that community decisions are made by community members, empowering them to take their future into their own hands. This is why producer representation throughout the Fair Trade system is key to its success.

At the global level, the board of Fairtrade International (FLO) is elected by FLO’s General Assembly, and includes:

5 representatives from the 24 Fairtrade Labelling Initiatives (includes Fair Trade USA)
4 representatives from Fair Trade producer organizations (at least one from each regional network)
2 representatives from registered traders
3 external independent experts

 

IMO Fair For Life

The approach of IMO—with local inspectors spending a lot of time with producers—ensures producer feedback is incorporated in the approach and philosophy of the Fair for Life program. Producers will be invited to become formal members of the new Fair for Life advisory board that is planned to be set up in 2012. Consumers of fair trade products certified by IMO expect that IMO does a diligent and accountable job in ensuring fair trade criteria are adhered to in production. Our stakeholders directly interested in IMO work include all producers, manufacturers and traders of products certified by IMO, as well as many national and international NGO’s who work in the fields of organics, sustainable wild collection, and fair trade in general. IMO’s Fair for Life program was developed under the principles of the ISEAL Code of Good Practice for Setting Social and Environmental Standards (P005, Version 5.01 – April 2010) comments were invited and considered from a wide range of stakeholders through public consultation in two consultation rounds.

 

Food Justice Certified, QCS

The QCS board has farmer, handler, and consumer representation and benefits from the strong leadership of our Executive Director who was a farmer for decades. The board of directors has supported growers since its inception in 1987. Recognizing the disadvantages to small farmers in our increasingly industrialized and consolidated organic and sustainable food sector, QCS has specifically prioritized offering certification services to small farmers. The board has also participated in the creation of the Agricultural Justice Project since 1999 as a way to help sustainable family farmers differentiate themselves in the marketplace. Finally, the organization’s outreach and education programs encourage direct links between farmers and consumers as a way of ensuring the livelihoods of small farmers.

In addition to farmer participation in the QCS board, farmers and consumers, as well as farmworkers, food coops, certifiers, and other food business workers have strong representation and participation on the advisory council and standards committee of the Agricultural Justice Project. The AJP approach recognizes the need for fair trade to consider all those who labor for our food as well as to actively engage them in setting the bar and overseeing the program. AJP stakeholders participate in standards revisions, oversight of AJP policies, and participation in the conflict resolution process as appropriate. The advisory council reviews all standards and policy changes at annual in-person meetings and on a regular basis via conference calls and email. The AJP standards and policy manual are available publicly on the website (www.agriculturaljusticeproject.org) and comments are taken on an ongoing basis in addition to slotted comment periods. Finally, the day-to-day management team of AJP includes a member-based farmworker organization, organic farmers and consumers, and representatives from farmer and consumer advocate organizations.


2. Do you certify entire supply chains
Explain your approach to certification and how it relates to the supply chain.
 

Fair Trade USA

Yes, we certify entire supply chains. FLO-CERT, the international certification arm of Fairtrade International certifies groups at the farm level. FLO-CERT also certifies exporters, processors and manufacturers in the country of origin. Fair Trade USA is responsible for the certification of importers and manufacturers on U.S. soil.

Each level of certification is crucial to the maintenance of sustainable, transparent supply chains. It is also important to note that Fair Trade certification requirements are different in each sector of the supply chain. For example, at the farm level producer groups are audited against things like waste management, GMO’s, greenhouse gas emissions, labor conditions, worker health and safety, and document traceability. On the trade level (processors, exporters/importers, manufacturers), groups are audited against things like physical product traceability, financial transfers and label usage. To be clear, Fair Trade certifies product supply chains, not companies.

[Ed. Note: Fair Trade USA is clarifying that the final brand holder in the supply chain is not certified against fair trade criteria.]
 

IMO Fair For Life

Fair for Life is a supply-chain focused certification—more so than other major fair trade certification on the market. This aspect is probably one of the key attributes that really sets Fair for Life apart, as there are requirements for certification of producers, which is similar to other fair trade certification programs, but beyond that we also require the buyers, as well as brand holders and intermediate handlers in the supply-chain to undergo audit requirements that focus on fair trade criteria, as well as social responsibility of their own operations (and how they treat their own workers). Also significant processing and contract manufacturing operations in the Fair for Life supply-chain are required to undergo social responsibility certification.

Another facet of our supply chain approach is that we require traceability and separation throughout the Supply chain, and therefore Fair for Life certified products can be traced all the way back to their individual certified ingredients production origin, and in this sense we are much more strict than other leading eco-social or fair trade certifications.

 

Food Justice Certified, QCS

Yes. AJP Food Justice certification is a combination of process and performance. Food Justice certification ensures compliance to the social justice standards for entities (rather than products) ensuring that all workers are protected when an operation is certified. The entire supply chain is encouraged to be certified; however, it is flexible enough to allow certification of small farms and businesses who do not have leverage to compel other entities to be certified. Labeling policies aim to accurately reflect where certification begins and ends.


3. What is your policy in regards to democratic participation in the workplace
 

Fair Trade USA

Fair Trade standards require that worker’s freedom of association and collective bargaining rights are respected. Workers and employers have the right to establish and/or to join organizations of their own choosing, to draw up constitutions and rules, to elect representatives and to formulate programs. Workers are also protected against acts of anti-union discrimination, and are given the right to decide democratically how premium payments should be spent at the community level (for things like education, health care…etc).

It is extremely important for all workers to be fairly represented in the Fair Trade system. Through the requirement and encouragement of democratic decision making and collective bargaining rights, we see things like increased community involvement, women in positions of leadership and integrated efforts to improve business and production.

 

IMO Fair For Life

One of the minimum requirements of Fair for Life certification is for operations (throughout the supply-chain) to not discriminate against freedom of association, and not discriminate against worker representatives, as required by ILO Conventions 87 and 98. A written grievance procedure must be developed and communicated to all employees and workers of a company.

 

Food Justice Certified, QCS

Democratic participation in the workplace is a bedrock standard of Food Justice certification. The standards require employers to inform employees of their right to participate democratically and to collectively bargain. The standards are backed by a thorough verification process that includes interviews with workers during inspection. This requirement means reliable verification of compliance. The unique participation of worker advocate organizations on the inspection team ensures more accurate verification of compliance with worker rights standards.


4. How do you determine minimum price for a product
 

Fair Trade USA

Minimum prices are determined based on the cost of sustainable production as well as comprehensive consultations on what price is fair and workable. FLO regularly consults with industry partners and producers, who inform on the cost of production at the farm level and reasonable pricing schemes at the retail level.

Additionally, this minimum floor price fluctuates with the market. Fair Trade USA ensures that in return for their commitment to social and environmental sustainability through the Fair Trade standards, farmers receive a price that is always higher than the market price. When the market is high, like we see today, the Fair Trade price equals the market price. On top of this, farmers also earn an additional premium for community development, as well as a premium for organic certification.

 

IMO Fair For Life

The minimum price for a product is determined by the producer, often in consultation with their buyers. The minimum price is based on cost of production and living wages, which includes some amount extra for savings and investment. IMO verifies these price calculations during the producer audit through extensive interviews with producers.

Therefore, IMO Fair for Life does not set a ‘one size fits all’ minimum price for ingredients, but rather relies on individual cost calculations of the producer operations themselves with their unique production costs and local market contexts to determine this important ‘safety-net’ price.

 

Food Justice Certified, QCS

AJP standards protect farmers in markets experiencing extreme price volatility by requiring minimum fair prices to be negotiated by the farmer and buyer that overrule market prices when market prices fall below farmer’s cost of production. This price must include consideration of additional product qualities and is based on world or regional price (whichever is higher) and documented farmer and buyer costs. In addition to minimum price protections, AJP standards require payment of a fair price. Fair prices are established by encouraging farmers to calculate their costs of production carefully and to set their prices so that they can cover these costs. Production costs must include living wages for the farmers and for everyone who works on the farm. AJP is designed to reward farmers and businesses who reject the status quo by ensuring comprehensive attention to transparency in policies and terms (including wage, prices, and financial realities). When a fair price is not financially feasible, the buyer is required to open their books to the farmer and justify their inability to pay a fair price. The same is required of farmers if their economic situation means they cannot afford to pay living wages. A strong tenant of the program is honest and open negotiations.


5. What are the considerations in the cost of becoming certified
 

Fair Trade USA

There are a few different types of costs that members of the Fair Trade network may encounter. At the farm level, producer organizations incur a fee for certification, which is a very small percentage of their total trade. Grants also are available through Fairtrade International to help with initial certification costs. At the trade level, importers and exporters must also pay a small certification fee. Finally, at the retail level, brands are required to pay service fees to Fair Trade USA (varies by product, but aims at ~1% or less of wholesale price; discounts for volume, commitment, and promotion apply). In addition to certification, service fees support supply chain development, awareness building activities to create a market for Fair Trade products in the U.S., measurement and reporting of impact, and fundraising to support community development and R&D efforts.

 

IMO Fair For Life

IMO only charges for the cost of the audit, evaluation and certification process, with an extra office and certification fee. The inspections are yearly. There are no license fees, logo fees, or volume fees.

 

Food Justice Certified, QCS

Certification fees cover file reviews, inspection costs, and licensing fees. Since QCS is accredited to conduct multiple different certification scopes, such as organic and GLOBALGAP, we try to combine audits to bring costs down. For a client who is already certified with QCS for organic the AJP file review costs $75 plus the inspection costs (which is client specific) and the licensing fee. AJP makes all its fees transparent in their policy manual available on the AJP website.


Conclusion:

In summary, we can clearly see a common understanding of the principles of fair trade among the three certifiers, but we also see differing approaches to verify the meaning. To learn more about what is behind these certifications and labels, you can review the standards of these certifiers on their respective websites. Fair World Project will continue to dig deep and report our findings.

 

Certification for ethics is not easy…to articulate, to quantify or to verify. The consumer is a very important stakeholder in the development of fair trade right now. Until we have global agreement and understanding of standards and criteria, as in the case of organic certification, the consumer is both the most important investor and the ultimate judge.

 

Fair World Project is excited to participate in the fair trade movement as it transitions from fringe to familiar. Join us in making trade fair for all.

 

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