The Bottom line: Simple Comparative Analysis

 Bottom Line:

FairTrade (FLO’s certification program) has comprehensive language in its standards and some of its approaches to complicated issues can serve as a model for other programs.  However the program also contains some weaknesses in terms of exemptions from some key labor protections for certain employers, and a lack of clarity in some of its language that could allow a focus on larger scale operations rather than small farms.  Some of this has improved with recent proposed changes to the program, but concerns remain.

Program Evaluated: FairTrade

Associated Organization: Fairtrade International (FLO)

Program Claim(s) in the program’s own language: Fairtrade is an alternative approach to conventional trade and is based on a partnership between producers and consumers. Fairtrade offers producers a better deal and improved terms of trade. This allows them the opportunity to improve their lives and plan for their future. Fairtrade offers consumers a powerful way to reduce poverty through their every day shopping.

When a product carries the FAIRTRADE Mark it means the producers and traders have met Fairtrade Standards. The Standards are designed to address the imbalance of power in trading relationships, unstable markets and the injustices of conventional trade.

Web link to program description/label/claim: (FLOCERT compliance)

Resources used for evaluation:  

FLO materials: List of Fairtrade International standards, Fair Trade Glossary (2011), 2013 Hired Labour Consultation (2013_05_06_EN_HL_consultation), Generic Fairtrade Standard for Hired Labour, May 2011, Project Assignment Hired Labour Standard Review 12.18.2013; Fairtrade Standard for Hired Labour (Environmental section), 2011; EXPLANATORY DOCUMENT FOR THE FAIRTRADE STANDARD For Hired Labour March 2006; EXPLANATORY DOCUMENT FOR THE FAIRTRADE PREMIUM AND JOINT BODY IN HIRED LABOUR SITUATIONS Dec 2007; Fairtrade Standard for Small Producer Organizations Current version: 01.05.2011_v1.1, SPO Standard Main Changes, Public consultation on the Fairtrade Trade Standard Project details and summary of main proposed changes (2013), 2013 Public consultation on the Fairtrade Trade Standard, Generic Fairtrade Trade Standard 01.05.2011_v1.1, Annex 1: Revised Draft Fairtrade Trade Standard, EXPLANATORY DOCUMENT FOR THE FAIRTRADE TRADE STANDARD, Main Changes: Trade Standards (version 01.05.2011), LIST OF IDEAS FOR THE FAIRTRADE DEVELOPMENT PLAN FOR SMALL PRODUCER ORGANIZATIONS, Fairtrade International Prohibited Materials List, Comparison between the Food Composite Product guidelines and the current standard (2011), Food Composite Products: Unavailable Ingredients List, Fairtrade Standard for Contract Production Current version: 01.05.2011_v1.1,  Standard Main Changes: Fairtrade Standard for Contract Production (version 01.05.2011), various specific crop/product standards,  FLO Constitution May 2013, Monitoring the scope and benefits of fairtrade fourth edition 2012, FLO CERT Complaints

Standard Operating Procedure Feb 2010, COMPLAINTS AGAINST FAIRTRADE STANDARDS SETTING - SHORT SUMMARY March 2011, website, personal communications (email and phone)

FLO-CERT materials: SCORE Certification Model Explanatory Document Valid from: 01.06.2012, Derogation for the use of Prohibited Material Explanatory Document (2012), Exceptions and Derogations Explanatory Document 27.03.2013, Small Licensee Policy Explanatory Document Valid from: 01.06.2011, Definition of small producer for Small Producer Organizations Explanatory Document Valid from: 24.11.2011, Definition of small company for Hired Labour Explanatory Document Valid from: 24.11.2011, Public Compliance Criteria – Trade Change Log NSF Checklist TC [Version 6.1] EN-GB, FLO-CERT GmbH Public Compliance Criteria List - Small Producers' Organisations NSF Checklist SPO 7.2 EN-GB, Public Compliance Criteria – SPO Change Log NSF Checklist SPO Version 7.1 EN-GB, Public Compliance Criteria – Contract Production Change Log NSF Checklist Version 7.0 EN-GB, Public Compliance Criteria – Hired Labor Change Log NSF Checklist HL [Version 6.2] EN-GB, FLO-CERT GmbH, Public Compliance Criteria List - Hired Labour NSF Checklist HL 6.3 EN-GB, FLO-CERT GmbH Public Compliance Criteria List - Contract Production NSF Checklist CP 7.1 EN-GB, personal communications (email and phone)

Summary of DFTA findings:

FairTrade International (FLO) and its certification agency FLO-CERT are the most established and widely known fair trade program in existence.  According to FLO, the program’s geographical scope encompasses almost all countries in Africa, Latin America and the Caribbean, Oceania, and the poorest countries in Asia.

There are several strengths to the program.  It is generally following best practices of transparency, public and stakeholder input, and has a diverse board of directors.   At the same time the board and governance bodies could stand to expand diversity and representation, in particular in the areas of labor from the global South and indigenous communities.   The language in the standards is generally stringent and there is model language and approaches in several areas, but in other ways this rigor is undermined by some exemptions or potential loopholes. 

There are two general things to note regarding this program and the DFTA evaluation.  One is that FLO is currently revising some of its standards; draft revisions have been taken into account but ultimately this evaluation is based on current adopted language.  Once revisions are formally adopted some specific aspects of the findings may change. 

The other to note is that FLO uses a scoring system in its program, meaning that the standards are not simply required in a black and white manner.  Under its SCORE system, FLO has some standards designated as CORE, meaning they must be adequately complied with in order for an operation to be certified, and others as DEV (short for development).  No single DEV standard is required in order to be certified; rather an overall average score has to be achieved in each section of the standards.  Some of FLO’s standards are still transitioning to this system.   While this allows for more flexibility, which can be important to be applicable to many different contexts around the globe, this type of system also makes it much more challenging for the consumer, as well as others, to understand fully what is required and what is not; in some cases a standard is written in strong language about what the operation “must” do, when in fact it is a DEV standard and thus not required. FLO-CERT describes SCORE system here:

FLO has a series of different standards applicable to varying scenarios, the primary ones being the Hired Labour Standard (HL), the Small Producer Organization Standard (SPO), and the Generic FairTrade Standard which covers use of the seal, label claims, and the relationship between the buyer and the producer, including pricing and fair trade premiums.   (There is also a Contract Production standard for independent producers that is intended to allow small producers not in an association to be certified, with the intent of a time line through which an association would be formed along with a transition to the SPO standard.)

Protections for workers on large-scale operations (as outlined in FLO’s Hired Labor standard) are overall rigorous.  Fundamental rights are protected, and in some areas such as the Right to Freedom of Association and Child Labor, FLO is being proactive and going beyond the majority of programs to ensure that these essential human rights protections that are sometimes thorny to navigate are dealt with in as progressive a manner as possible.  For example, on the issue of FOA FLO is moving toward requiring employers to not only respect this right but to actively engage workers on the issue and inform workers in writing and other ways of their rights.  In the area of child labor FLO is addressing issues of remediation – what to do when child labor is detected so that the outcome is not simply the exploited child being fired and exploited elsewhere, or the employer being decertified and continuing the violations of children’s rights – in a more sensitive and proactive way than most that can serve as a model for other programs.  In addition, FLO has convened a Workers’ Rights Advisory Committee to inform its decisions.

Regarding small producers, the program seems to do well at encouraging the formation of associations, and producers receive a premium over market price.  Although the price to the producer is not based on cost of production so may not ensure a living wage income in all cases, FLO has been piloting what they refer to as pricing based on a “sustainable cost of production” and has plans to expand it; presumably this refers to ensuring a living wage income for the producer but DFTA will look forward to more information in the future.   While generally stringent, the language revolving around negotiation of contracts with buyers – outside the context of Small Producer Organizations - is somewhat vague.  FLO also certifies operations of a large plantation-scale, which is controversial among some stakeholder communities- these larger operations have a more stringent set of labor standards to comply with (with some potential loopholes that the DFTA is concerned about as described below).

One concern that the DFTA has is that the FLO definition of small producer leaves open a potential loophole for producers who could be of a larger scale and with more hired labor than what the public would generally consider “small-scale”.  Small Producer Organizations only have to be comprised of a majority of smallholders, making it possible for a significant percentage (as long as it is under half) of what is presented as a Small Producer Organization to potentially be larger scale operations.  In communications FLO has confirmed for DFTA that with its current language this is a possibility and may in fact be happening in some cases.

The Small Producer Organization standard contains another limitation that prevents a DFTA endorsement, mainly exemptions for small operations from standards governing labor protections.    Farms without a “significant number” of workers, the exact meaning of which can be left to the discretion of the certification body, are exempt from many of the standards, including some fundamental protections such as Freedom of Association and some occupational health and safety provisions.  DFTA has requested more clarification, and the program has informed us that generally speaking “significant number of workers” is being interpreted as 20 “permanent” or “regular” workers, with room for flexibility as needed based on the local context.  Qualifying the type of worker in this manner further increases the challenge to accurately understand how it is being applied.  For instance, what happens in the case of crops that rely on highly seasonal work force?  Could a producer potentially have up to 20 permanent workers and many times that in seasonal workers, but still be considered a small farm exempt from many of the requirements?  By not having more clear language FLO is leaving open the possibility for loopholes and for confusion in the marketplace and public understanding of the program.   DFTA will continue to engage FLO on this issue. 

It should be noted that some see a lack of applicability of unionizations to very small farms.  But this right is generally interpreted to apply to more than simply unionization but rather worker organizing even on a small scale.  DFTA does not make this distinction and believes that while smaller farms should not be expected to meet all the standards a large farm does, any operation that is large enough to hire labor should meet basic international norms.   The worst forms of abuse, including forced labor and child labor, are prohibited in all cases.

FLO prohibits the production of genetically modified crops and has fairly solid environmental requirements. The DFTA has a couple of serious concerns, however, described below.  Producers are required to follow sustainable agriculture standards that prohibit certain most toxic agrochemicals and govern the use of others, and also include: IPM, water usage, biodiversity, energy usage, waste management, soil and water management, and fertilizer usage.  One overall weakness is that most of these requirements apply only to the FairTrade crops and the fields in which they are grown.  On the one hand this is understandable since the FairTrade price and premium only apply to these crops; but at the same time DFTA is not convinced that people purchasing fair trade products realize that while those products may be free of GMOs and certain banned pesticides, for example, the farm from which the product originates may in fact be growing GM crops or using those agrochemicals.  Allowing this also necessitates a very careful and well implemented monitoring on the part of FLO to prevent both GMO and agrochemical contamination of certified fields, which DFTA is unable to assess at this time.  Pertaining to occupational exposure to toxins and health and safety measures, while workers on large-scale operations are well protected, there are some exemptions in place for workers on farms that are members of Smallholder Producer Organizations with a smaller number of workers (as also discussed above).   And as explained above, on some farms workers may in fact be exposed to pesticides prohibited by FLO while working in non-fair trade fields.

There is one other controversial issue that should be mentioned about which people will have differing opinions.  This is the so-called Mass Balance rule which allows for certified products made from a restricted list of certain ingredients to utilize ingredients that do not derive from certified operations.  The crops for which this is allowed are cocoa, cane sugar, juice and tea.  In all cases the volume and quality sold as FairTrade are equivalent to the volume and quality bought as Fair Trade (taking into account processing yields and losses) so that the certified production is still being supported.  FLO explains this policy based on the reality of the marketplace for these commodities – doing otherwise, they say, would make it next to impossible to certify these crops.  In their words, this policy is in response to “unstable markets and the injustices of conventional trade”.  On the other hand, DFTA is concerned that this creates a complicated system and that consumers are generally unaware that in some cases the products they are purchasing may not actually contain ingredients that derived from fair trade certified farms.

Overall FLO has some real strengths: the standards language is strong, and stakeholder representation is fairly well-balanced and diverse.  There are other areas that are truly innovative and can serve as models.   However, DFTA encourages the program to close some current loopholes so that there is more emphasis on small-scale producers and that all workers’ fundamental rights are protected, even those on small-scale farms.






Key to Chart
The program is exemplary and meets the DFTA's criteria expectations. The program has some innovative approaches to this issue that may serve as a model.
The program appears to have a comprehensive approach to this issue in general alignment with DFTA criteria. There are some concerns or issues to highlight regarding the program's approach to this issue.
The program addresses this issue and may meet some of the criteria, but significant concerns, questions, or shortcomings compromise the approach. There is inadequate information or outstanding questions preventing a reliable assessment of the program's approach to this issue.
The program either does not address the issue at all, or clearly fails to address it in a manner consistent with DFTA criteria. Not applicable / not addressed by program
Summary Indicator
1. Supports small scale and/or family farms
2. Ensures decent working conditions for farm and food workers
3. Supports long-term, direct, and fair trading relationships
4. Adequately restricts materials and practices that are harmful to people and the environment
5. The program is implemented well and has thorough monitoring in place

For a print version of this summary, please click here.