Forum Activity for @Kristy Leissle

The High Cost of Certification

Posted in: Opinion

Rodney, your comment about the farmer perspective -- on small farm size and low yields -- really brought me back to what was one of the more powerful moments of my fieldwork in Ghana. I had been working with farmers who sold to Kuapa Kokoo, the fair-trade cooperative, and with farmers who sold to Akuafo Adamfo, a licensed buying company that did not have FLO certification, but that was nevertheless doing plenty of social development work.

I was talking one day with a farmer who sold to Akuafo Adamfo, her name is Mercy, and when I mentioned fair trade to her, she had never heard of such a thing before and asked me to explain (this was common among farmers in Ghana - hardly any of them knew what fair trade was). I told her that consumers in the US and Europe pay a little more for a chocolate bar, so that farmers in Ghana could earn a little more for their cocoa beans.

Mercy looked at me as if I had six heads. I'll paraphrase her response: "Why would I want to earn a little more for my cocoa?" she said. "If I want to make more money, I must work harder to grow more cocoa."

Her response stopped me in my tracks. I had always thought first about price -- raising cocoa's price was paramount for me (and in many ways, still is). I had never thought before that simply growing more cocoa was a solution.

But I think you have hit the nail on the head with the low yields/small farm size issue, Rodney. I forget sometimes, thinking and writing about fair trade, that what appears most important to me, a white Western woman who has the privilege to sit around and think philosophically about trade issues, does not necessarily resonate with cocoa farmers. At the heart of Mercy's material poverty was the fact that she grew a tiny amount of cocoa, which she sold for a tiny price. The small addition of a few more cedis from an unknown entity called "Fairtrade" meant nothing to her. What was of much greater interest to Mercy, as well as most of the farmers I worked with in Ghana, was the national spraying program, in which the government supplied pesticides and spraying machines. This did increase yields, sometimes significantly.

We in the West never, ever sit around and think, "If only we could spray more pesticides on the cocoa trees, farmers' lives would be so much better!" But living as she did on the margins, Mercy did think that, along with plenty of other farmers. I realize that this is hardly a solution and I am not advocating that we all champion pesticide application now. This post probably raises more questions than answers. But I did want to share what was, for me, an enlightening moment, when I first realized that what *I* believed to be fair was not what a farmer believed to be fair -- that realization started me down a long road of critical thinking, the end of which I am nowhere near as yet.

The High Cost of Certification

Posted in: Opinion

Clay, I could not agree more. Certification fees are a real issue for cooperatives, as is the gargantuan reporting responsibility they must undertake to prove they meet FLO producer standards. I do not see how either one is germane to fairness -- especially in a system (ethical trade in general) that was instituted to redress ECONOMIC imbalances between producers and the people who manufacture and consume their products.

I have spent time thinking this issue through in a different way, asking how distinct Fairtrade really is from the predominant economic and ideological system of neoliberalism. Too often Fairtrade is presented as a separate and alternative system, when in fact (as the numbers I offered above show), it can be indistinguishable from the world market. I just made the full article excerpted above available on my blog , and here is the direct link to the article for anyone who is interested in these issues. Though I deal with FLO in general, my case study is the cocoa-chocolate trade, particularly in Ghana and Britain.

The High Cost of Certification

Posted in: Opinion

I often teach and write about fair trade (my doctoral work was on the cocoa-chocolate trade, part of it on the FLO system), and I find that I run increasingly thin on ways to justify Fairtrade to my university students, or anyone who sincerely desires a way to direct their purchasing power ethically.

I am intrigued by Clay's use of the term "moral mafia" to describe the FLO system -- the suggestion being that to be considered "fair," producer co-ops are beholden to this particular model. Of course they are not -- there are plenty of artisan makers trying to circumvent it -- but the fair trade model remains by far the most visible to consumers, even if they don't fully understand how it works. So in that way, yes, it does have a stranglehold.

I did some research this summer for an article on FLO, and below are the figures I came up with. Note that I quote ONLY the FLO price floor for cocoa, which was $1600 per metric ton until January 2011. The more common protocol is to combine the social premium of $150 (now $200) with the price floor, which in my opinion artificially inflates the reported price for cocoa beans ; the social premium almost never reaches farmers as cash for their crop, and goes almost exclusively to development projects, which is NOT a direct form of compensation. Here is my analysis:

For most of its existence, FLO has set the Fairtrade Minimum Price for conventional (non-organic, bulk) cocoa at $1600 per metric ton; in January 2011, it raised the price floor by 25%, to $2000. Taking into account this recent increase, between January 2006 and May 2011, the Fairtrade Minimum Price was higher than the world market price during eight months, at an average of $38.50 per metric ton. For fifty-seven months, the FLO price floor was lower, by an average of $987.51. That is, for all but eight months of the last five and a half years, certified cooperatives have received the world market price for their cocoa. To compare the two pricing schemes in a different way, FLO raised its price floor for cocoa to $2000 per metric ton in January 2011. For the twelve months preceding this raise, the average world market price for cocoa was $3,132.99.

The Fairtrade Minimum Price for cocoa seems to run much more in parallel with, rather than as alternative to, the price set on the world market. In the absence of derivation specifics (which are not given in either the Fairtrade Standards for Cocoa, which detail the commodity-specific price floor and premium, nor the global Minimum Price and Premium Table), the Fairtrade Minimum Price seems to be a sort of average of world market prices, moving irregularly upwards as market prices also rise. Of course, because agricultural commodities are subject to large price fluctuations, from year to year or even over the course of a single growing season, by guaranteeing a minimum price over the long term, Fairtrade does introduce a degree of security into a volatile system, smoothing budgetary forecasts and guaranteeing a certain amount of revenue. If the market price should fall below $2000 in the coming months, Fairtrade certification would protect participating cooperatives. Yet in practice, the Fairtrade Minimum Price has not, at least in recent years, demonstrated a meaningful alternative to the trade terms set on the world market.

Note: I calculated world market prices using the ICCO Monthly Averages of Daily Prices, available on the ICCO website, http://www.icco.org/statistics/monthly.aspx