March 16, 2021
With so many companies making fair trade, ethical, and sustainability claims, it can be difficult to navigate the nuance from one label to the next. In this episode, we’re taking a break from the ingredients in the KitKat bar to look at the label that wraps them all together.
Before a fair trade label became just one of many ethical labels in the marketplace, fair trade was a movement, built by and for small-scale farmers. A movement rooted in democracy, transparency, equity, and long-term trade relationships. As for the labels themselves? Those are just a tool. The real goal is to get companies to commit to trading fairly with the people who grow their ingredients. When Nestle’s UK KitKat bar became fair trade certified, some wondered if this could be a turning point. Instead, in the middle of a global pandemic, they dropped fair trade for Rainforest Alliance—a labeling scheme with no minimum price guarantee.
This episode, we head to the coffee fields of Nicaragua to speak with Merling Preza, one of the original leaders of the fair trade movement and the General Manager of PRODECOOP. Merling helps us wrap up the first half of this season by bringing together fair trade’s history with a vision for its future. And together, we find out how we can all support small-scale farmers and their vision for a more fair economy.
Over the last few episodes, we’ve talked about cocoa, sugar, and palm oil—the main ingredients that make up a KitKat bar. And in this episode, we’re going to talk about what wraps them together: the label on the outside.
Last episode, Anna talked to Robin Averbeck of Rainforest Action Network about palm oil, and the destruction that industrial palm plantations are wreaking on our planet. In that conversation, Robin mentioned an old Greenpeace video calling out Nestlé for their use of conflict palm oil. The video is pretty shocking – a guy bites into a KitKat bar & gets the blood of an orangutan all over him. It’s a gory way to make the point –that industrial palm oil is killing orangutans and their forest homes.
It is bad enough to know that so many of the foods on the shelf in the grocery store are fueling environmental destruction and exploiting people. But theKitKat bar that the guy in the video bit into? It had a Fairtrade certification label on it.
The tension between that harm & the ethical label stamped on these wrappers is what‘s been driving this series. And so today, we’re going to delve right into it. Because one of the comments I’ve heard a few times since we’ve launched this series is “OK, but what kind of chocolate should I buy then?” And the conversations we’ve been having make it clear that the answers to that question aren’t simple or easy.
Over the past few episodes, we’ve heard from some inspiring people who are building on a vision for a new economy. In Paraguay, the Manduvira cooperative is tackling the exploitative sugar industry head-on. And last episode, we heard from Safianu Moro of SERENDIPALM, an organization working with small-scale farmers that are growing a vision for palm oil that regenerates the land, instead of destroying it.
These small, independent workers and farmers ARE changing the world for the better. And they are doing so even while operating in the shadow of Big Food Corporations like Nestlé, which can – and has – rebranded itself by slapping on an ethical seal to hide their human rights abuses.
To wrap up this series, we’re taking a little departure from the ingredients that go into a chocolate bar and—oddly enough— looking at the coffee bean crop. Because we can’t talk about fair trade without talking about the role coffee farmers from Nicaragua played in sparking this movement.
For this, Ryan Zinn, Fair World Project’s Political Director, talked to Merling Preza. Merling is the leader of the Nicaraguan coffee cooperative, PRODECOOP – and one of the original leaders of the fair trade movement. Merling lays out a little of the back story, and what’s at stake for the movement now and going forward.
Hi, it’s Ryan. If we’re going to talk about the growth of the fair trade movement and fair trade certification in the US, Nicaragua’s small-scale coffee farmers are essential characters in the story. Flashback all the way to the 80s. The U.S. had an embargo against Nicaragua, choking off all trade in an effort to force out the leftist Sandinista government. Meanwhile, the US was also funding the Contras, a right-wing counter-revolutionary force and their violent guerilla warfare. It was a deadly conflict for the people of Nicaragua, destroying livelihoods and making it dangerous for them to go to their coffee fields to pick their coffee. In an attempt to protect their communities, Nicaraguan people put out a call for international solidarity: come help us harvest our coffee and cotton fields. And people came – they came from the US, from Canada, and from as far away as the United Kingdom.
In addition to their labor in the fields, these solidarity brigades gambled that their presence would provide a little safety for the Nicaraguans they worked alongside – they believed that the Contras would be less willing to jeopardize the lives of people from the U.S. and other foreigners out of fear of diplomatic backlash.
Returning to their communities, these solidarity “brigadistas” bore witness to what they had seen. Not just stories of picking coffee, but of the dark consequences of U.S. policy abroad.
Archival audio: “Fifty thousand people died in the war. Some of the fiercest fighting took place in the central and northern highlands along the border of Nicaragua and Honduras. Land mines were heavily used to slow troop movements in the steep mountain trails that cut across the area.”
And they shared those stories over a cup of Nicaraguan coffee. While “fair trade” wasn’t a household term yet, the movement got a boost from these international solidarity connections. And as for those Nicaraguan coffee farmers, some went on to form cooperatives that have defined what fair trade looks like today.
That’s where my guest today comes in. Back in the early 90’s, Merling Preza was working at an NGO in Nicaragua. My conversation with her took place in Spanish and the voice you’ll hear is a voice actor.
Back in the early days, Merling’s job was to support small-scale coffee farmers and help them earn a better price for their coffee. But those coffee farmers had a bigger vision.
At first, my organization supported the coffee farmers with trainings on finance and marketing. But the producers demanded sales support as well. PRODECOOP was born with fair trade because the market we had was Fair Trade. We started selling to fair trade coffee roaster Equal Exchange who is based in the United States.
Remember the embargo against Nicaragua we mentioned earlier? Equal Exchange got their start at that time, buying coffee from small-scale farmers in Nicaragua. The embargo forbade US companies from doing business with people in Nicaragua. But a loophole in the law meant that if the coffee was processed somewhere else, it was labeled as a product of that processing country. And so Equal Exchange worked out a deal with a fair trade company in the Netherlands to roast the coffee before bringing it into the U.S. PRODECOOP wasn’t an official organization yet, but some of their member farmers’ coffee might have been part of those shipments.
At that time, fair trade was a movement. My life in fair trade began in 1993 together with PRODECOOP.
Fast forward nearly three decades.
PRODECOOP has member cooperatives in 10 municipalities, in 3 departments, and in 100 communities in the countryside.
Our members’ farms are in the mountains. Normally when visitors come, we go to the closest farms for reasons of distance and security. However, there are farms very, very deep within the mountains. The coffee-growing region where we are is in the northern part of the country, far from the ports.
The roads out to the farms are long, and then, you get off the road and must continue on into the communities and farms by trails. Access to farm services is quite far. 75 – 80% of our producer members have less than 3 hectares of land. They are relatively small.
These producers have been improving their farms through the cooperative organization. Because of the distance, it is hard to get the coffee to the processing facilities, to get it to the warehouse and storage facilities. It’s also a long way to haul inputs.
When the farmers who Merling and PRODECOOP work with pick the coffee from their farms, it looks really different from what you and I grind and brew at home. That coffee bean is actually the seed of a little red fruit that looks like a cherry. Once picked, there’s a lot of processing that has to happen to husk off the rest of that little red fruit, and then remove the protective layers from the little coffee beans inside.
That’s why PRODECOOP has created infrastructure with and for our members. We have our own collection centers,
That’s where the farmers bring in their coffee to sell to the co-op.
we have wet mills,
Where the coffee skin and fruity pulp that covers the precious little coffee beans are removed
We have a central processing mill that allows us to control the quality of our coffee as it arrives at the final warehouse.
The cooperative provides technical assistance to producers in the communities to do all these things—it would be very difficult and expensive to get this kind of technical assistance in these remote areas otherwise. But this is one of the benefits of being organized.
It’s definitely still difficult to access resources. The cooperative lends resources to our members so they can tend to their crops and also diversify their farms so they have other sources of income. Historically, coffee has been grown as a mono-crop. But we have helped producers to diversify their farms so that they have other sources of income. We have been working for many years to help farmers to improve production, to improve diversification, to guarantee the sustainability of the family. There are many great challenges. There is a lot of price volatility and climate change affects us and so we fall, and we rise again. Then you are affected by diseases such as the coffee rust that swept through the coffee lands in 2013-2014.
This coffee rust, also called “la roya,” is a fungal infection that hit coffee trees across Latin America hard. It’s a nasty disease that damages the leaves & fruits of the tree, causing the usually red fruit to blacken and drop in the most severe cases. In some areas, farmers lost upwards of 50% of their crops. And as the climate changes, it’s not just a question of temperatures getting warmer. The shifting balance of wet and dry seasons also stresses the trees, and diseases and pest damage increases. Just one or two degrees increase in temperature can create favorable conditions for a “La Roya” or coffee rust outbreak.
There are great challenges. Climate change is one that affects the small coffee farmer the most.
These days, every fair trade farmer organization I talk to tells me something like this. I ask Merling a bit more on how climate change has been impacting the members of PRODECOOP and what their plans are.
We have been working hard because climate change is an enormous challenge…We work for food security, we work to find the varieties of coffee that are the most hardy. We practice organic agriculture. Our members are working on diversifying our crops to create other sources of income. We have been developing plans at the farm level to increase resilience in the face of climate change. Of course, there are things that are out of our hands, like the coffee rust. But we have been working to recover our production and it is improving every year. Now the latest challenge is: how do we get to the field in a healthy way despite COVID-19? Here in the countryside, there are fewer infections right now. But when people come from outside the community, they can carry the disease, so we are working on prevention. Right now, we are preparing for the next harvest, working on cleaning and hygiene protocols that prevent COVID-19 in the communities.
Small-scale farmers are on the front lines of climate change. Now, Covid-19 is further challenging their daily operations—which were already hanging on by shoestring margins. But there’s one theme that Merling keeps coming back to as we talk:
But this is one of the benefits of being organized.
The benefit of being organized in a democratic cooperative. I ask her what being organized means to her and the small-scale farmers she works with.
As small producers, we have such small volumes that we can’t really sell our products to market alone. The cost of logistics would consume any money we could get for a product like coffee. Working together as a cooperative helps us guarantee quality standards, guarantee volume, and gain economies of scale, helping to reduce costs, and guarantee all the conditions required by the international market.
This is a really important logistical point that Merling makes here. A small-scale coffee farmer might harvest just a hundred pounds of coffee in a year. Meanwhile, coffee is exported in massive 53-foot shipping containers that hold something like 38,000 pounds of coffee. Alone, no one farmer could get anywhere close to filling that shipping container. But together, they are able to own the processing infrastructure that transforms the little red coffee fruits into coffee beans that are ready to export. Owning these mills means that the farmer organization owns and makes all the decisions around quality and export contracts that come along with the processing. It also means that they get to keep each additional bit of value generated at each step. As in so much of farming, most of the price of a finished product goes to all the processors along the way.
But the more of that processing the farmer organization owns, the more of that price they get to keep. And, instead of enriching some big corporation, they can invest that money in their own communities.
This is a theme that we’ve picked up throughout our conversations in this series—the same victory that Andres Gonzales talked about in Episode 2, where members of Manduvira Cooperative are truly changing the way the sugar industry operates. The practice is a bit more common in the coffee industry, but the economic impacts remain the same. And keeping those profits in the community has a ripple effect—it’s not that it’s making these small-scale farmers rich, but instead it’s giving them control over some more resources. And that control also extends beyond finances. It gives farmers a seat at the table.
But the most important thing is that when we are organized, we can also participate in the fair-trade processes. It allows us to participate democratically in the decision-making of the fair trade system, at the national level, at the regional level, and at the international level. We can join our ideas with other producer networks from around the globe to make the system more and more democratic with our participation. Internally, it allows our producer members to make joint decisions around the best investment of the fair-trade premium and the best distribution of earnings for the benefit of all our producer members.
This fair trade premium that Merling mentions is probably one of the best-known aspects of fair trade. Most fair trade certifications set a minimum price per pound for a crop like coffee.
And that minimum price should be considered as just that—a minimum price, not the maximum you pay. Fairtrade is different from other sustainability labels in that regard.
On top of that minimum price per pound, there’s an additional sum—the fair trade premium—that the buyer pays to the farmer cooperative. The farmer organizations come up with a plan to spend this money—democratically, as Merling described.
The community development projects that this premium goes towards are what gets promoted a lot in the short version of fair trade. But when I ask Merling about what fair trade means for her and the small-scale farmers she works with, the price and premium dollars are just one piece of it.
For us it is more than price, it is a way of life, because in principle fair trade was created to bring disadvantaged small-scale farmers closer to the market. But these small farmers must have environmentally sustainable production and a fair price to complement the economic and social part. It must have 3 axes: the economic, the social, and the environmental. Fairtrade is a way of life for our communities. Saying it is more than the price does not mean that the farmer should receive less, but rather that they should receive a price that allows their farms, their families, and their communities to work sustainably.
While “fair trade” often gets shorthanded to price, Merling reminds us that it’s a much bigger, more holistic concept than that.
We must work towards the industry making a commitment to their suppliers. They need to commit to a broader concept of sustainability. That’s where I always think we have a problem. When it comes to sustainability, the industry is always ready to say, “We are sustainable because we have a project with water or with trees.” And then they go and mark up the price because of that. But instead, I think that when it comes to sustainability they should talk about the sustainability of the family, of the producers, and of the product over time.
We must work with consumers in this context, which is much more difficult for everyone. We are concerned that everything is reduced to the economic part, and the consumer buys cheaper products because they are certified with some seal that makes some kind of sustainability claim. We must encourage consumers to buy fair trade because fair trade makes a difference. So, we must work on that in partnership with the different actors because we as producers cannot do it alone.
Sustainability is so much more than planting a tree or doing a water project. But unfortunately, it’s those singularly focused projects that dominate the sustainability conversation. It kind of makes sense, that’s what’s easy to quantify: X number of trees planted, Y people with clean water – you’ve probably heard those claims. And it’s not that trees or water or whatever are bad. It’s just that they are a very inadequate measure of the actual health and sustainability of a farming family.
And big corporations like Nestlé are master deflectors in conversations about sustainability. They’ll tout their own in-house social responsibility programs or certifications that are full of nice marketing slogans. But do they actually center the needs of the farmers involved? Unfortunately, as we heard from leaders of the Ivorian Fair Trade Network in the first episode, not so much.
Merling’s story of fair trade started out with a handful of small-scale farmers organizing themselves around democratic principles to build economies of scale. But along the way, their quest for a fair livelihood got reduced by big corporations and their marketing machines to just another checkbox on a label. And now, as Merling points out, it’s possible to buy a product that’s cheaper and checks the boxes as far as labeling claims. But all those labels don’t mean the same thing.
It is unfortunate that there is confusion in the market–there is a confusion about what the label means. The producer is in the field trying to get his product out and get a little more for his coffee and the whole political part of how the system works is complex… Because different seals have different standards, different prices, there are different benefits for producers. But the consumer looks and just sees sustainability in everything. This impacts us as producers a lot, and we have lost market volume in some cases because the buyer prefers to buy a cheaper product without looking to see what the label on the product actually means.
Merling has brought us right from early fair trade organizing to one of the key problems that those in the fair trade system face. It’s the conundrum of market-driven change.
The truth is that the part of the market that we have for fair trade is still very small in the global market. There are many more certified producers today. This has increased supply significantly, but demand is not growing in line with supply. On average, something like 35% to 40% of fair trade volume is sold on Fair Trade contracts.
That number varies per crop. For coffee farmers in the fair trade system, around 28% of their total crop gets sold on fair trade terms. For cocoa farmers, on average it’s about 1/3 of their crop. The farmers and their organizations have put in the labor to meet the certification standards in their growing and processing. They’ve dotted the I’s, crossed the T’s, and filled out all the certification paperwork. They just don’t have buyers. There are very few companies lining up to buy their fair trade crop.
The producer must sell whatever is left over under conditions of conventional trade, or conditions that do not guarantee a minimum amount. How do we think it should grow? I believe that we must work more with the consumer, so that the consumer can understand the difference between a Fair-Trade product and a non-Fair-Trade product and how important this is in terms of guaranteeing a quality exchange. Because the producer receives a guaranteed minimum price, but also really works to guarantee the sustainability of the product, to grow a quality product, and to work in harmony with the environment. It is an ethical product in its entirety and one that is sustainable with the 3 legs, as we say, the economic, the social, and the environmental.
On the one hand, small-scale farmers are doing the work and trying to build this holistic sustainability. Yet buyers are not stepping up in the final leg and buying their crops – be it coffee or cocoa. This isn’t a new problem. Indeed, it’s been hotly debated within the fair trade movement for at least a decade. Because while small-scale farmers and their partners have carved out a small piece of the market, the majority of coffee and chocolate out there is being bought and sold by massive multinational corporations. Companies like Nestlé, who we’ve been talking about throughout this series.
I ask Merling what role she sees for these massive multinationals in a fair trade system.
It’s a bit complicated. We consider that it is more complex when a multinational participates at the local level…However, internationally, we require that market. We need this market to be able to expand sales through fair trade. Whatever happens, there must be a commitment beyond what there is so far. Multinationals should buy more Fair Trade products and pledge to the fair trade system itself and not just have a small portion of certified products.
Small-scale farmers need the market. Yet as Merling already pointed out, in the market, too often it seems that any sustainability certification or label is viewed as interchangeable. And that’s where we started this whole series: with Nestlé, one of those multinationals who had been buying fair trade cocoa and sugar. And then decided to drop it in 2020. I asked Merling for her perspective on the switch.
Of course, the impact on the producers is significant because they sold fair trade products to Nestlé. It will be difficult to find buyers to replace that sales volume. They already had the supply chain set up to sell to Nestlé, and then with very little warning, Nestlé dropped fair trade. This directly affects producers because another certification does not replace the income that the small producer gets under fair trade terms. That is one of the things that we must work towards more is increasing the commitment of companies to the producers they work with directly. Not just getting them to use the certification system, but committing to the small producers who sell in the Fairtrade system. The system is only a tool, the certificate is only a tool for producers to put the product on the market.
Fairtrade labels exist to serve farmers. They’re just a tool. Merling sets the record straight: The ultimate goal isn’t just to have a certified product, but for corporations to actually commit to working with small-scale farmers. To actually commit to trading fairly.
I wrap up my conversation with Merling looking toward the future and asking her what her hopes are for the future of fair trade, both as a farmer-led movement and for the fair trade market.
In the movement, there are always great challenges, such as the effective participation of farmers and artisans, because that requires time. Now with COVID, things and technological issues are changing so that farmers are always closer to the market. It is part of the challenges, we must decide how to develop global meetings in these new contexts, where the bigger decisions are made.
But our main challenge remains continuing to grow in the fair trade market since we still aren’t able to sell 50% of the crops grown by fair trade certified producers on fair trade terms. There are many other farmers who want to become fair-trade certified, but we still do not have a market to offer them. Our biggest challenge in the coming years is to showcase how fair trade is different. Then the fair trade market can grow and small farmers will be able to sell more of their products on fair trade terms. I believe that there is a great opportunity in the North American market. It is a huge market; we currently occupy a small part of that large market and we could eventually grow. But for that, we need to be united and strengthened.
I believe that for us farmers in Latin America, and in the world where there are thousands of us small farmers, this time is a time when human beings must change our ways of seeing life. We cannot see ourselves as unique in any part of the world, together we are a whole. COVID-19 originated in China but is impacting everyone in the world. We too must see ourselves as a whole and that the welfare of our families will be the welfare of the consumers’ families. We need to keep working together. People need to continue to consume our products, our coffee, bananas, cocoa, and all the others. That way, we hope to have more fair exchanges and greater satisfaction in the lives of people and in our communities.
My conversation with Merling really highlights the tension that exists at the heart of fair trade. On the one hand, there is the farmer-driven movement for “more fair exchanges,” as she puts it. The vision of building a global trade system that mirrors our interconnectedness that Merling concludes with. Fair trade as a solidarity movement that bridges the globe.
And then there is this other aspect of fair trade: the reality of the market. Small-scale farmers have built up some amazing organizations in Nicaragua where Merling is based, and in Paraguay, where Andres and Manduvira are processing sugar. And in Ghana, where Safianu works with farmers growing oil palm. And in Côte d’Ivoire, where we started this series, talking to Franck and Fortin, of the Ivorian Fair Trade Network, whose members were selling cocoa to Nestlé.
These organizations allow farmers to process more of their crops on their own terms and keep more of their earnings. Fairtrade contracts may earn them a little more money. But if the goal is for that additional money to do the work of transforming lives and livelihoods the way that we talk about, there needs to be volume moving. More crops sold on those fair trade terms.
It was that quest for more fair trade sales that made campaigners push for Nestlé to switch to fair trade in the first place, before Nestlé decided to nix it. And it worked – sort of. For a decade, Nestlé’s UK KitKat bar was made with fair trade sugar and cocoa. But those sales were just a tiny fraction of Nestlé’s overall purchases.
Nestlé used that fair trade KitKat bar to “wash their faces,” as Andres of Manduvira cooperative put it back in Episode 2. Putting a nice, clean face on their long history of exploitative business practices.
And that’s the problem in a nutshell. Fairtrade started as a movement led by and for small-scale farmers. We started this episode hearing about how Merling and others helped grow that movement. As Merling put it, fair trade labeling is just a tool – what corporations need to commit to is actually making the change to trading fairly. But that kind of change goes deeper than just a label on a wrapper.
We’re going to wrap up this series back where we started: With Nestlé’s decision to drop fair trade certification for the KitKat bar that they sell in the United Kingdom, and how they switched instead to Rainforest Alliance’s little label with the frog on it.
In making the switch from Fairtrade to Rainforest Alliance certification, Nestlé has also selected the certification that has no minimum price requirement. That’s even as Nestlé Group’s net profit shot from about 7 billion in 2017 to roughly 13.7 billion Swiss Francs in 2019—that’s a lot of money. And they made that decision to drop Fairtrade certification not too long after Fairtrade announced that they were raising the minimum price for cocoa. Coincidence? While I can’t answer that for sure, it certainly fits with the larger pattern that we’ve seen.
Just as there’s a corporate race to the bottom for wages and worker protections, there’s also a race to the bottom for certifications. We see corporations, like Nestlé, choose labels that have easier standards and are much cheaper. All these competing “ethical” labels means that small-scale farmers and their fair trade vision are facing off against multinational corporations who have the budgets to outspend them on marketing. Meanwhile, those brands are just business as usual for too many of their other products.
You’ve probably heard about corporate “greenwashing.” That’s the term used when, for example, a company hypes the sustainability and recycled content of one of their products even as the rest of their operations fuel destructive business as usual.
The same is happening with fairtrade and corporations. Fairwashing is this thing that corporations do where they use whichever “ethical” label to make themselves look good and distract us from the abuses built into their business model.
And really, that’s what’s at the bottom of it. The abuses that we’re trying to stamp out are built into their business model. While we’ve been recording this podcast, Nestlé has been in the U.S. Supreme Court defending themselves against a case brought by 6 people who were formerly enslaved and forced to work as child laborers in their supply chains. A piece of Nestlé’s defense comes down to this: that taking accountability for this case could impact their “competitive advantage.” Think about that.
What we’re seeing here is the limits of these voluntary corporate commitments and why they are NOT enough. Whether it’s child labor on cocoa farms or the destruction of forests and wildlife for palm oil— we’re talking about real people’s lives, families, homes, and livelihoods. We’re talking about the climate of the planet that we all share.
These massive multinational corporations have largely skated by for decades, going on unaccountable for atrocious human rights abuses. They have spent millions diluting fair trade down to a consumer choice—the idea that if enough people make ethical choices while shopping, we’ll get social change.
Change is of course more complicated than that. And really, that’s OK. We have the power to do several things at once. We can do a little research before shopping to see who our dollars are supporting–and we can also demand better laws and policies. Laws to hold corporations like Nestlé accountable for the deforestation that their palm oil and cocoa causes. Laws to hold them accountable for human rights abuses, and the futures of children forced to work in their supply chains. We can demand better rules and we can also support the efforts of so many to build a different way of doing cocoa, sugar, and palm oil – as so many of our guests have talked about. Those choices we make in the grocery store are just a tiny fraction of what we can do. Together.
And that brings me to the end of today’s episode. Thank you for listening to For a Better World. This wraps up our series on the KitKat bar—but stay tuned over the coming weeks as we reach out to some of the other players in this story for their thoughts and reactions. If you’ve been listening throughout this series, please take a moment to share a review wherever you’re listening. It helps other people find the podcast and join the conversation.
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For a Better World is made possible by our small (but mighty!) team:
Our show is edited by Stefanie De Leon Tzic
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Anna Canning is our script writer
Our storytellers are Anna Canning and Ryan Zinn
Our music was composed by Mark Robertson
And I’m your host and the Executive Director of Fair World Project, Dana Geffner.
Thanks for listening.