Faulty Fair Trade: The Hidden Realities of Fair Trade Chocolate

In today’s interconnected world, one’s decisions are no longer decisions merely. Every choice is a statement, a declaration of personal values. For example, purchasing a Prius or installing solar panels can reveal your stance regarding the state of the environment. In a similar fashion, purchasing Fair Trade certified chocolate provides an option for chocolate lovers to enjoy a delicious treat while contributing to the well-being of cacao farmers and indirectly shunning “bad” chocolate companies that utilize modern day slave labor. In fact, one research showed that consumers sought the Fair Trade label to a point that they were willing to purchase the same amount of certified Fair Trade chocolate each year, even after an increase in prices (Hainmeuller 23).

Above: Promotion of Fair Trade chocolate for Valentine’s Day. The Fair Trade brand has become a part of consumer decision making.

Thus, the demand for Fair Trade is clearly present. In theory, Fair Trade helps cacao farmers “build better livelihoods for themselves, their families and communities” (Fair Trade Briefing 10). More specifically, Fair Trade aims to stabilize incomes for cacao farmers, whose livelihoods fluctuate in response to the volatility of chocolate prices[1] (Ibid 11). For example, Fair Trade guarantees a “minimum price of $2,000/tonne for Fairtrade certified cocoa beans, or the market price if higher” and works to ensure that “forced labour and child labour are prohibited” (Ibid). According to Fair Trade such measures “[help] producer organisations and farmers weather low and unstable markets by encouraging greater access to financing, relationship building between buyers and sellers, and improved contract terms” (Ibid 17). But is the existing consumer demand for Fair Trade chocolate feeding a truly “fair” system? While the Fair Trade theory is desirable, the realities are much less so. Despite Fair Trade’s efforts, cacao farmers continue to struggle with chocolate pricing, costs of obtaining Fair Trade certification, and ambiguity of Fair Trade standards in cultural contexts.

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The ideal results of Fair Trade Chocolate

Fair Trade’s claim on providing cocoa farmers with better prices has been questioned in recent years. Entrepreneurship lecturers Alex Nicholls and Charlotte Opal point out that returns are “marginal at best, non-existent at worst,” and that “a typical Fair Trade chocolate bar only returns about 4% of its final price to the producer” (Nicholls 29). Seventy% founder Martin Christy, founder of Seventy%[2], stated that “the Fairtrade premium—about $400 per tonne of cacao—is not enough to make much difference to farmers lives and there’s plenty of anecdotal evidence that not much of that actually reaches the real farmers” (Ramsey). Christy adds, “if you do the the maths backwards from a £1.30 100g Fairtrade bar there’s no way, once you’ve taken off all the margins, that the farmer is getting enough to live on” (Ibid).

According to a transnational investigation hosted by the Forum for African Investigative Reporters, farmer testimonials support Christy’s claims. Frédéric Doua—owner of a cocoa farm in the Ivory Coast—revealed that his harvested product often sits in warehouses, waiting for the occasional Fair Trade buyer to come along (Fair 6). According to Doua, he was hoping for “higher prices and welfare premiums,” but instead became “overly dependent on cocoa prices and Fair Trade buyers” (Ibid). This is due to the fact that “as a member of a FAIRTRADE-certified cooperative, one ‘cannot sell beans outside the FAIRTRADE circuit’” (Ibid). In other words, even if Fair Trade can provide better prices (which Nicholls and Christy have shown isn’t necessarily true), they do not guarantee consistent purchases, despite forcing farmers to sacrifice their freedom to choose their buyers.

But restriction on clientele is only one of the many hoops Fair Trade farmers must jump through. In the first place, gaining Fair Trade certification is a challenge for many cocoa producers. Economist Peter Griffiths notes that “the costs of achieving certification are an unavoidable negative impact” (Griffiths 363). Farmers are expected to pay fees for receiving certification (Certification). For a small farming cooperative of just twenty workers, such a fee can run upwards of $5,000 (Ibid). In addition, Fair Trade does not cover the costs incurred by farmers in order for them to meet Fair Trade standards. A major Fair Trade requirement is the use of sustainable agricultural practices (Brodersen). Thus, cocoa producers that use herbicides must switch to manual weeding, which usually results in higher wage costs. In such cases, Fair Trade does not compensate farmers accordingly (Griffiths 363).

Two additional issues exacerbate the cost problem of Fair Trade certification. The first is that Fair Trade is “unable to certify the total production of registered organizations” (Muradian 2033). For example, in 2001 only about 13% of total production was sold as Fair Trade, thereby resulting in “a large gap between potential and actual certified sales” (Ibid). Farmers’ fears of certification costs are usually sated by projected sales, which are based on selling annual production in its entirety as Fair Trade. However, the reality of partial certification sales causes farmers to rarely restore the money used in order to pay for Fair Trade certification in the first place. The second problem is the lack of a strong regulatory force on Fair Trade’s part. Mislabelling—when non Fair Trade products are sold as “fair trade”—is a rampant problem, allowing non-certified products to enjoy the benefits of price premiums (Parry). The global nature of the chocolate market makes label enforcement difficult, which means that real Fair Trade certified farmers aren’t protected. One seller might lie about being “fair trade,” which is unfair for the producers who had to spend their own money to officially earn Fair Trade certification.

An unexpectedly ambiguous source of contention is Fair Trade’s policy on child labour. Simply stated, Fair Trade has zero tolerance for child labour, especially in a production process as risk-heavy as cacao farming (Child). Injuries from the use of tools such as machetes are common, as well as illnesses caused by contact with various agricultural chemicals (Alliot 10). The confusion arises from determining the line between child labor and family labor. According to Fair Trade:

A major cause of the use of child labour is poverty: farmers receive such low prices for their produce that they can’t afford to pay hired workers. Even where farmers want their children to attend school, this is often hampered by poor availability of education in rural areas, and parents not being able to afford to buy schoolbooks or pay teachers. (Fair Trade Briefing 8)

But from farmers’ perspectives, Fair Trade’s child labour regulations are what leads to such “poverty” (Ibid). Without the help of family members, farmers simply cannot harvest enough to pay for their children’s school fees (Etahoben 16). Furthermore, the generalization that any child participating in work—even if that work is the family business—is considered a violation of Fair Trade values seems excessive. A Cameroonian farm owner Dat Williams explained: “When it is time to break the cocoa pods, I collect my children and any family children around at the time and take them to the farm to help. This is considered as part of the household chores children do to help their parents” (Ibid). Etahoben added “It was an exciting experience when we, as kids, were taken to the farms to break the cocoa, suck the seeds and drink the juice from the pods. We considered it part of becoming a responsible family member” (Ibid). While no parent should get away with abusing children and placing them at risk, the issue of child labour requires greater scrutiny and careful judgment so as to prevent unintended harm caused by good intentions.

 

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A child helping with the cacao harvest. The boundaries between familial work and child labour are sometimes unclear.

With Fair Trade no longer being a clear-cut good, and standard chocolate brands already having been criticized for unsustainable business practices, who can consumers turn to? Organizations like Direct Cacao, founded in 2012, are attempting to provide alternatives to the Fair Trade model. Whereas Fair Trade requires cocoa producers to essentially become members of a global organization and work under standardized guidelines, Direct Cacao works directly with small farmers and create specific relationships based on individualized circumstances (Declaration). Without a singular structure and a set of regulations that apply universally, this direct interaction model does run the risk of creating inconsistent standards. In addition, the process of following each producer through their cocoa production and discussing the best price is time-consuming and in many cases, expensive. The time and money costs can limit the range at which direct interaction can have an impact. However, as Direct Cacao points out, this new approach frees farmers from having to meet Fair Trade standards that aren’t universally easy to achieve.

Another alternative to Fair Trade is an alternative trading organization (ATO). ATOs share the goals of the Fair Trade movement, but each ATO takes its own approach to achieving those goals (Abufarha). Alter Eco, a France-based company founded in 1988, is a representative example of an ATO. All of Alter Eco’s chocolate is Fair Trade certified, but the organization also pursues particular principles that are not apparent in the Fair Trade’s broader manifesto. For example, Alter Eco places a special emphasis on gender equity within the chocolate industry (Alter). While the Fair Trade movement has a general mission to improve the well-being of cacao producers, they are not as specific as Alter Eco’s. Because Alter Eco is part of the Fair Trade movement but doesn’t manage every source of Fair Trade cocoa, they are more mobile and better equipped to place more focus on individual producers. In essence, ATOs are a compromise between Fair Trade and Direct Cacao.

It’s important to note that the presence of such alternatives does not necessarily mean that Fair Trade has failed. Fair Trade’s ideology comes from a desire to help people and create a more sustainable world. Despite the problems discussed above, there are plenty of success stories with Fair Trade—as there should be, given its 70-year history. Still, consumers should approach products with a critical mind. It’s not enough to claim one’s participation in ethical consumerism simply by purchasing a Fair Trade chocolate bar. Without proper scrutiny, the Fair Trade brand will quickly fall from being a symbol for change to being a pawn of consumerism, manipulating the consumers’ guilt complex and desire to “feel good.” In the case of Fair Trade, the organization as a whole should work to ensure stable income over higher per unit prices, redirect cocoa premium investments toward children’s education—thereby alleviating parents’ concerns regarding school fees—and implementing an organized regulatory force that effectively prevents others from taking advantage of the Fair Trade label, so as to protect the investment and hard work of farmers toward Fair Trade certification.

Works Cited

“About.” Seventy%. N.p., n.d. Web. 8 May 2017.

Abufarha, Nasser. “Alternative Trade Organizations and the Fair Trade Movement.” Fair World Project. N.p., 2013. Web. 09 May 2017.

Alliot, Christophe, Matthias Cortin, Marion Feige-Muller, and Sylvain Ly. The Dark Side of Chocolate: An Analysis of the Conventional, Sustainable and Fair Trade Cocoa Chains. Rep. N.p.: Bureau for the Appraisal of Societal Impacts and Costs, n.d. Print.

“Alter Eco Nourishing Foodie, Farmer and Field.” Alter Eco Foods. N.p., n.d. Web. 08 May 2017.

Brodersen, Pernille Louise. How Fair is Fairtrade? Thesis. Copenhagen Business School, 2013. Copenhagen: n.p., 2013. Print.

“Certification fees.” FLOCERT. N.p., n.d. Web. 9 May 2017.

“Child and Forced Labour.” Fairtrade International (FLO): Child and Forced Labour. N.p., n.d. Web. 07 May 2017.

“Declaration.” Direct Cacao. N.p., n.d. Web. 06 May 2017.

Etahoben, Chief Bisong, Bjinse Dankert, Janneke Donkerlo, Selay Kouassi, Benjamin Tetteh, and Aniefiok Udonquak. The FAIRTRADE Chocolate Rip-off. Rep. Ed. Evelyn Groenink. N.p.: n.p., 2012. Print.

Griffiths, Peter. “Ethical Objections to Fairtrade.” Journal of Business Ethics 105 (2012): 357-73. Print.

Hainmueller, Jens. Consumer Demand for the Fair Trade Label: Evidence from a Multi-Store Field Experiment. Diss. Stanford U, 2014. N.p.: n.p., n.d. Print.

Muradian, Roldan, and Wim Pelupessy. “Governing the Coffee Chain: The Role of Voluntary Regulatory Systems.” World Development 33.12 (2005): 2029-044. Web.

Nicholls, Alex, and Charlotte Opal. Fair Trade: Market-Driven Ethical Consumption. London: Sage, 2011. Print.

Parry, Hannah. “Beware the Fairtrade fraudsters: Shoppers warned to watch out for produce with fake labels as criminals attempt to cash in on premiums on ‘ethical’ goods.” Daily Mail Online. Associated Newspapers, 06 May 2015. Web. 9 May 2017.

Ramsey, Dom. “How Fair Is Fairtrade Chocolate?” Chocablog. N.p., 1 Mar. 2013. Web. 8 May 2017.

[1] Some of the causes behind price volatility are: political instability in cacao producing countries, variable weather, and changes in supply and demand (Fair Trade Briefing 5)

[2] Seventy% is an organization founded in 2001 whose aim is “to raise awareness of the quality and origin of the chocolate we eat” (About)

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