Question and Answer with Paul Rice, President and CEO of Fair Trade USA: Part 2

May 3, 2012 2:55 PM ET

Posted by Julie Fahnestock

"Don't we want to democratize fair trade? Don't we want fair trade to be more than a white, middle-class movement? Don't we want consumers, no matter where they shop, to have access to great products that also do right in the world?"

If you missed the first part of my interview with Paul Rice, do not fret. Click here to read Paul's explanation of why Fair Trade USA left Fair Trade International.

Innovation. Innovation. Innovation.  Innovation is what pushed Fair Trade USA to leave Fairtrade International and prioritize the certification of estates.  Paul Rice, President and CEO of Fair Trade USA, wants to reach small farmers and this, he thinks, "will serve the billions of people around the world struggling with poverty."  But can the independent, farm worker truly be served without the protection of a cooperative? And why did they begin their new, "innovative" journey with such low standards? All this and more in to follow.

Question: How will producers be represented in Fair Trade USA's future? Will producers have a voice in your standards?

Paul: Most of our opponents frequently suggest that we aren't involved in stakeholder engagement, so I'm so glad you asked this question so I can set the record straight. From day one, (laughing), frankly in our DNA as an organization, we've believed in stakeholder engagement. It's at the very core of our organization and our process in terms of how we do business. We've always had a multi-stakeholder platform that allowed for multiple voices and perspectives. We don't serve just one constituency, the farmers and farm workers around the world. And that's why we're here, to help lift them out of poverty.  But we do that in partnership with the industry, with companies, importers, brands, retailers which are second. Third, is the consumer.  If consumers don't buy fair trade products then the whole thing fails. But, yes. Absolutely. We firmly believe in engaging with producers. We've had a coffee farmer on our board for many years. We added a second leader from our coffee producers in Columbia.  We also have NGO leaders, labor rights lawyer on board, social entrepreneurs on board, and Oxfam leadership council.  And we just recruited Erik Nicholson from United Farm Workers. The point is we want to hear from all sides as we craft new standards, as we craft new strategies and we believe that's the strongest way to develop our new program--is to include collective wisdom from various constituencies.

Question: Are you hearing from individual workers? Will the voice of the producer be heard? Will it be the loudest voice? You mentioned two of them on your board. 

Paul: We are using all the ways you can to hear from producers. From assemblies, to small group meetings, to emails, to one-on-one, to our Coffee Council. We are using them all. There are a lot of ways to reach out to people and as you might guess, some people in the fair trade coffee producer world are more equipped to be a voice. We know who those luminaries are. We created the Coffee Producer Advisory Council made up of 11 of the best and brightest from the coffee co-op world.  We have co-op leaders from Guatemala, Nicaragua, Mexico, Columbia, Sumatra, Brazil, and Ethiopia. We've selected the best and brightest from around the world.  The council formed 5 or 6 years ago and has been chewing on every major policy and strategy issues we've encountered over this period. They are our panel of experts. We go to all of the members of that council to get the feedback on the standards. Not everyone thinks alike on the council. Not everyone is whole heartedly open to opening coffee to estates, some have their concerns and they are legitimate. To your point, we are absolutely seeking and taking into account the input of the growers, but again, frankly, leaning more on the luminaries in the co-ops in the movement who have so much to contribute. They've been running co-ops for 30 years and their co-ops aren't little funky, village co-ops. Their co-ops are $40 million dollar businesses. Carlos Vargas from Costa Rica was literally born on a coffee farm, picked coffee, became president of a co-op at 19 and now he's in his 50s. He is one of the men who knows his ****. He's not a technocrat. He's rooted in reality. He leads the Coffee Producer Council and sits on our board.

Question: Switching gears, what was the reasoning behind certifying products that weren't 100% fair trade? I was appalled when I saw a bag of chocolate covered espresso beans with only fair trade certified chocolate, not the espresso beans, the vanilla, sugar or cocoa butter. I felt so deceived! I want to know that everything that can be certified is certified. I don't want to be fooled because otherwise it feels like a marketing scheme. So, why were the standards so low? How did you respond when stakeholders complained?

Paul: The logic behind our multiple ingredients product policy was to maximize impact for farmers. In the past two years, Fair Trade USA's partners have delivered over $3.4 million in community development premiums to farmers via sales of Fair Trade Certified multiple ingredient products.

Our standards are higher now than they have ever been.  In order to use the full Fair Trade Certified label, the product must be 100% Fair Trade Certified.  For the new "Ingredients Label," the product must contain at least 20% Fair Trade Certified ingredients.  Previously, a product containing 25-100% Fair Trade Certified ingredients could use the full label.  The majority of companies we work with strive to include as many Fair Trade Certified ingredients as possible - and we help them with this journey.

In the case of the chocolate-covered espresso bean, both the chocolate and the espresso bean would need to Fair Trade Certified because our policy states that "100% of the ingredient (in this case ingredients) commonly associated with the product must be Fair Trade Certified." However, you might find a chocolate bar that contains Fair Trade Certified cocoa and non-certified sugar.  Why?  Because Fair Trade Certified sugar is not readily available at the quantities, qualities or price points that brands require.  As we work to resolve this supply issue, we want to be able to help cocoa farmers right away. We also want to make it clear to consumers that the bar is not 100% Fair Trade Certified - in this case, the bar would bare the Ingredients Label. We are very proud of our impact on cocoa farmers as a result of this policy. We see sugar as a big area of opportunity and impact, and we have a team working on the supply issues with producers.

Fair Trade USA made this update in January in direct response to stakeholder feedback from a variety of sources, including producers, brands and consumers. We believe this policy strikes a better balance between producer impact and clarity around product labeling by encouraging more companies to use more Fair Trade Certified ingredients in their products and by increasing transparency through better defined labeling and website disclosure requirements.

Question: Do you think that companies are "fair-washing" consumers and are using fair trade as a marketing scheme? Is fair trade just another piece of their CSR plan?

Paul: That's a great question. I think the fears of green-washing are legitimate and I certainly don't consider myself a green-washer, far from it. I think we have actually raised the bar of fair trade by being more inclusive. Embracing the entire family, the entire community is actually a higher bar in my mind than staying with this narrow, privileged group that have exclusive rights. The threat of green-washing exists in all labeling. It's a legitimate part of the conversation in this movement. But am I afraid that we will be used by companies? No. Absolutely not. And here's why:

Dunkin Donuts for example. Do some research.  Go into a few Dunkin Donuts. Or Starbucks. Or Brueggers. Go into any store you can imagine that has fair trade products and look at the level of advertising and promotion and celebration of fair trade relative to what else is going on in that store. I think what you'll find is that it is very understated. The visibility of fair trade is actually commensurate with the activity. In Dunkin Donuts it's very hard to find. It's very understated. So is Dunkin Donuts green-washing? Absolutely not. I don't think that's green-washing. Why don't they do more?  That's a complex business decision and we cannot force the pace.

Question: Does Fair Trade USA feel isolated in the movement? Do you feel like you are working alone?

Paul: No! So much of what we're doing now is in response to what our closest stakeholders have been asking us to do for many, many years. Whether its social, justice organizations who are concerned about the farm worker situation and don't understand why we don't work with them or it's from mission driven companies who don't understand why they can't certify all of their coffee because they buy some of their coffee from co-ops and some from larger farmers, to co-op leaders themselves.

To me and to the vast majority of the 800 companies and the numerous NGO's we work with, when you ask us, what is fair trade, fair trade is social justice. Fair trade is a market based approach to alleviating poverty. Fair trade is empowering consumers and empowering producers to improve their lives. Now notice, I didn't mention cooperatives in any of that. Cooperatives are a means to an end. Cooperatives are one tool. As a co-op organizer myself, I can tell you that it's not the only tool. So I would argue that those who have limited vision that fair trade equals co-ops, they are missing the boat. I don't think that fair trade is or can be that narrowly defined. Fair trade has to be more inclusive. Back to Santiago and Armando: We have to include the whole family. We can't discriminate within the community. And that doesn't mean we are going to solve everyone's problems all at once. I'm not that stupid, right. We aren't going to solve the world's problems overnight. It's going to be a long march, taking generations, but I think in principle we have to be open to embracing the entire community and not just a portion of it.

And in terms of the strategy, I don't believe small is beautiful. We have realized that there are so many poor people out there who need our help and for whom fair trade could be truly meaningful. Our model is not built to reach them and if we don't innovate and change the model… and by the way, everyone is innovating. Look at Apple, everyone. Why can't innovation be part of the fair trade movement? It baffles me that somehow innovation in our movement is unacceptable. In any event, our approach, we believe, is that we have to engage. That's our key word. Engage, engage and engage. If I can engage with mission driven companies then I want to because I love them and they are doing God's work. But if I can engage with the big companies, on my terms, then I want to engage with them too. If I can engage with conscious consumers, the kind of folks who are shopping at co-ops and are tuned into social and environmental issues, I definitely want to engage with them. If I can engage with the "light-green" consumers, people who don't have time to get involved, but want some reassurances that there's no slavery in their chocolate bars and no worker pesticides poisoning on their flowers, I want to engage with them too. And they don't all shop at co-ops. Some of them shop at Wal-Mart and Costco. Some of them drink lattés at Starbucks, others drink coffee at Dunkin Donuts. Don't we want to democratize fair trade? Don't we want fair trade to be more than a white, middle-class movement? Don't we want consumers, no matter where they shop, to have access to great products that also do right in the world?

Many thanks to Paul Rice and Katie Barrow for answering my tough questions and for engaging in this discussion.

Stay tuned for next week's posting where I pick up where I left off in my critique of the fair trade movement. And coming soon, we hear from the "other side:" Q&A with Fairtrade International. 

Click here to read Paul's explanation of why Fair Trade USA left Fair Trade International.