Fair Trade Pioneer and Protector: Equal Exchange Chocolates

Equal Exchange is one of the leading distributors of fairly traded and organic products, particularly coffee, cocoa products and tea. The company has been involved in fair trade from its conception in 1986 and has fought to ensure fair treatment, fair prices, safe working conditions and direct trade relationships for small-scale farmers and farming co-operatives as well as providing education to its consumers on available products. In the last ten years, Equal Exchange has found itself in opposition to one of the most well-known names of fair trade (mostly because it has the words in its name)- Fair Trade USA. Equal Exchange has retaliated against Fair Trade USA’s CEO Paul Rice’s campaign, “Fair Trade for All,” which plans to expand the certification of fair trade to large plantation owners. Equal Exchange, through its countless protest resources, emphasizes that this inclusion of big business and plantations will only foster negative competition for the farmers and farming co-ops that fair trade organizations try so hard to protect.

The Backstory

In 1986, Jonathan Rosenthal, Michael Rozyne and Rink Dickinson co-founded Equal Exchange as a challenge to the existing Fair Trade business models and as an attempt at creating a “closer connection” between the consumers and the farmers (“History of Equal Exchange”). They were previously involved in a food co-op in New England and decided to bring their knowledge of the relationship between producers and consumers into a realm that would benefit international, small-scale producers.  Once a week, for three years, the three met and discussed the best strategies to ensure more control for farmers, to create higher quality standards for producers, and foster a community and a company “that would be controlled by the people who did the actual work,” (“History of Equal Exchange”).

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The co-founders of Equal Exchange

Originally, the company sold Nicaraguan coffee, called “Café Nica,” which they imported through a loophole in the Reagan administration’s embargo on products from Nicaragua as a show of opposition towards the Sandinista government. This embargo was placed on Nicaraguan products in the late 1980s to further cut off any and all financial assistance to the Nicaraguan government as punishment for the Sandistas allegedly providing material support to the Salvadorian guerrillas (Leogrande). The embargo did not inhibit the founders from importing Nicaraguan coffee but during these years the three located and began trade relationships with other farming co-ops in South America and Africa. It was not until later years that the company would begin to sell fairly sourced tea and cacao products in addition to coffee.

The Business Model

Equal Exchange is a fully democratic worker co-operative that emphasizes equality among workers. The company depends on four main principles for its employees: “the right to vote (one vote per employee, not per share); the right to serve as leader (i.e. board director); the right to information; and the right to speak your mind,” (“Worker-Owner”). Each worker involved in the employee has an equal stake in the company so there is no hierarchy of salary or superiority among positions. The company is involved with over forty co-operatives in North America (mainly Mexico), Southern America (mainly Peru, Ecuador and Paraguay), Central America, Africa and Asia.

This video is taken from the Equal Exchange website narrating the worker-owned business model (if the video resets to the beginning of the Equal Exchange playlist, it should be video 16: Co-ops: Can We Do it Ourselves?):

The Introduction of Cocoa

In 2001, Equal Exchange surveyed their consumers and figured out that cocoa was a highly desired product. In 2002, they added hot cocoa mix to their product list, quickly followed by baking cocoa powder in 2003 and three varieties of chocolate bars in 2004. Their 2002 hot cocoa mix was the first U.S. cocoa product to display the Fair Trade Certified seal and to use Fair Trade Certified sugar (“History of Equal Exchange,”).

“…We put together a hot cocoa mix that met our standards of quality and social responsibility — a partnership between cocoa, sugar, and dairy cooperatives. Our hot cocoa mix has helped us reach out to a different group of farmers and has provided options for people who want to be certain that their cocoa is not being harvested by slave or child labor. It has allowed children in the U.S. to participate in promoting Fair Trade along with their parents,” (“History of Equal Exchange,”).

Cocoa Production and Products Today 

After the initial introduction of Equal Exchange’s three chocolate bars in 2004 they have expanded their products to twelve varieties of chocolate bars (Extreme Dark, Very Dark, Panama Extra Dark, Milk, Dark Chocolate Almond, Dark Chocolate Caramel Crunch with Sea Salt, Milk Chocolate Caramel Crunch with Sea Salt, Dark Chocolate Orange and Dark Chocolate Lemon Ginger with Black Pepper), milk and dark “chocolate minis,” milk and dark chocolate chips, hot cocoa mix, dark hot chocolate mix, spicy hot cocoa mix and one bulk sized option of cocoa powder (“Chocolate Bars,” “Chocolate Chips,” “Chocolate Minis,” “Cocoa,”). Each of their products is certified organic and Kosher.

organic-chocolate-ecuador-dark
“This bar is made with chocolate liquor from Fortaleza del Valle co-operative in Ecuador and cocoa butter from co-ops in the Dominican Republic. The sugar and vanilla are also fairly traded and organic. The sugar comes from co-operatives in Paraguay and the vanilla from a co-operative in Madagascar,” (“Organic Ecuador Dark Chocolate (65% Cacao)”).

 

 

The chocolate bars are made with cacao sourced from “small farmers in Central and South America,” and are accompanied with a story explaining the origin of the cacao, sugar, and any other ingredients in each bar (“Chocolate Bars,”). The website states that “All of our Fair Trade and organic chocolates and cocoas are made with pure ingredients from small-scale farmers in Peru, Panama, Ecuador and the Dominican Republic,” (“Chocolate and Cocoa,”).

 

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“This bar is made with chocolate liquor from the COCABO co-operative in Panama and cocoa butter from CONACADO in the Dominican Republic. The sugar and vanilla are also fairly traded and organic. The sugar comes from co-operatives in Paraguay and the vanilla from a co-operative in Madagascar,” (“Organic Panama Extra Dark Chocolate (80% Cacao)”).

The “Fair Trade” Debacle 

When Equal Exchange began it had a goal to challenge the existing conditions of the larger organizations who dealt with producer-consumer relations. The co-founders of Equal Exchange could recognize the issues with large, corporate structures dealing with fair trade and wanted to refine the process to help more small farming operations in better ways.

Fair Trade Certification is socially understood to be beneficial for the small farmers and farming co-operatives and an effective way for consumers to directly benefit the producers of their goods. Fair Trade USA  promises to encourage the following ideas in its trade relationships with producers:

  • Direct trade between producers and manufacturers
  • Fair prices for goods
  • Safe working conditions
  • No exploitation of labor
  • No child labor
  • Gender equity
  • Democratic and transparent principles
  • Reasonable work hours
  • Community development to support education, healthcare, etc
  • Environmental sustainability (Martin)

However, these goals are not completely satisfied by the organization. There are many issues with the Fair Trade system, such as not enough money directly returning to farmers, a lack of standardized quality control,  and the high cost of certification. Unlike Equal Exchange, it is not a worker-owned, fully democratic organization so workers do not have the autonomy and voice that they would if they were involved in smaller organizations. The most problematic of the shortcomings of the system- in the eyes of Equal Exchange- is the fact that Big Food has slowly become more involved in the Fair Trade system which leads to a higher involvement of large plantations rather than small farmers.

In 2011, Paul Rice, CEO of Fair Trade USA stated that he wanted to expand the Fair Trade Certification system by allowing larger plantations and suppliers of cacao, sugar, cotton and coffee to take part in the system (“World Affairs Council of Northern California”). In his explanation of his “Fair Trade for All,” campaign, Rice stated that the definition of Fair Trade should be expanded and allow for the purchase of goods from collections of famers or larger plantations, as long as they meet the proper certification requirements; however, this inclusion of large plantations will foster new competition in the Fair Trade system that may ultimately hurt small farmers. Farmers who are a part of the fair trade system became involved due to excessive competition from major producers and the resultant financial inequity; thus, Rice’s plan to broaden the scope of Fair Trade will recreate this type of harmful competition between producers. Rice’s defense for this campaign centers on the idea that Fair Trade should be inclusive and should work to involve as many producers as possible.

“I Stand With Small Farmers”

Almost immediately, Equal Exchange responded to Fair Trade USA’s plan with harsh criticism. Equal Exchange began a response campaign, named “I Stand with Small Farmers,” through which they ask consumers and manufacturers to stand in solidarity against the expansion of Fair Trade ceswsfemailsignature_0-1rtification to include plantations. The founders have hyperlinked statements and resources on their webpage that argue against the claims of Rice and Fair Trade USA, including lists of ally partners and media sources covering the debate.

The following quote is taken from their public petition against the Fair Trade for All plan:

“Therefore we vigorously oppose Fair Trade USA (previously TransFair USA)’s Fair Trade for All initiative, which seeks to allow coffee, cacao and other commodities from plantations into the Fair Trade system. This strategy means that small farmers will now be forced to compete with large plantations for market access… We oppose the lower standards Fair Trade USA proposes and the lack of farmer and producer governance on Fair Trade USA’s board. We believe that their Fair Trade For All initiative threatens small farmer co-operatives’ existence and Fair Trade itself.”

In 2012, Equal Exchange published a report on their fight with Fair Trade USA. The background summary explains that in the 1990s, Equal Exchange had collaborated with other organizations to create the certifying agent of TransFair USA which was supposed to create more consumer confidence in the products they were buying. Eventually, TransFair, which changed its name to Fair Trade USA in 2010, lowered their certification standards, began to certify major food businesses such as Chiquita and Dole and broke off from the FairTrade Labelling Organization (“Background Summary”).

Overall, Equal Exchange emphasizes its distrust of the organization and its issue with the idea of allowing large plantations to compete with already struggling small farmers.

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Their self-published document, “Campaign FAQs” includes the following objection to Rice’s plan:

“Rather from our 26 years of Fair Trade experience we think their new methods represent a loose and misleading use of the term [Fair Trade] and a much diluted approach to product certification. We think their new criteria constitute little change from the status quo and, in fact, will undermine the substantial economic and social gains that the global Fair Trade movement has achieved to date,” (“Authentic Fair Trade Campaign FAQ’s”).

In his 2011 speech, co-founder of Equal Exchange Rink Dickinson states that this new plan is a threat to the stability and the success of fair trade development. He states:

“The gravest threat is the ongoing lowering of fair trade standards to the point where real fair trade groups cannot compete in the market because fair trade in name is cheap and well connected with the market and access is actually worse than it was before this movement started in earnest in the eighties… This threat plays out with few farmers coops beyond coffee and fair trade coffee coops getting weaker and being replaced by plantations, unaffiliated small farmers, and fake co-ops” (Dickinson).

Conclusion and The Effect of the Split

Equal Exchange has defended fair trade business strategies since its conception in 1986. The company goes above complying with fair trade standards but works to defend the name of “Fair Trade,” when it is put in jeopardy. It has expanded its own business ventures while reaching out to more farmers and more farming co-ops, ultimately trying to protect small producers from big business. The two most probable outcomes of this split between Fair Trade USA and Equal Exchange is increased competition among fair trade certified producers, which will ultimately hurt the smaller scale farming co-ops and benefit the large plantations, and a lack of unity among fair trade products. The already small percentage of fair trade products on the market will be splintered over brand-name recognition and popularity of big business.

 

Works Cited:

“Authentic Fair Trade Campaign FAQ’s.” Equal Exchange. 24 February 2012. Web. 03 May 2016.

“Background Summary.” Equal Exchange. January 2012. Web. 03 May 2016.

“Chocolate & Cocoa.” Fair Trade Chocolate and Cocoa. Web. 03 May 2016

“Chocolate Bars.” Organic Milk and Dark Chocolate Bars. Web. 01 May 2016.

“Chocolate Chips.” Organic and Fair Trade. Web. 01 May 2016.

“Chocolate Minis.” Gourmet Chocolate Minis. Web. 01 May 2016

“Cocoa.” Organic & Fair Trade. Web. 01 May 2016

Dickinson, Rink. “An Analysis of Fair Trade: Reflections from a Founder.” InterReligious Task Force Conference. Cleveland, Ohio. 23 October 2011. Speech.

Gunther, Marc. ”A Schism over Fair Trade.” Marc Gunther. Web. 30 April May 2016.

“History of Equal Exchange.” Equal Exchange. Web. 30 April May 2016.

Leogrande, William M. “Making the Economy Scream: U.S. Economic Sanctions Against Sandiest Nicaragua.” Third World Quarterly Vol. 17, No. 2 (1996): 329-348. Print.

Martin, Carla. “Alternative Trade and Virtuous Localization/globalization.” African American Studies 199x: Chocolate, Culture, and the Politics of Food. MA, Cambridge. 6 Apr. 2016. Lecture.

“Organic Ecuador Dark Chocolate (65% Cacao).” Fairly Traded Coffee, Chocolate, Tea & Snacks. Web. 30 April 2016.

“Organic Panama Extra Dark Chocolate (80% Cacao).” Fairly Traded Coffee, Chocolate, Tea & Snacks. Web. 30 April 2016.

Rice, Paul. “Fair Trade for All.” Leaders Forum, Shaping the Global Sustainability Agenda. St. Gallen, Switzerland. February 2015. Speech.

“Worker-Owned.” Equal Exchange. Web. 01 May 2016.

“World Affairs Council of Northern California.” Speakers. Web. 01 May 2016.

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