The Fair Trade Dilemma

When the US Federation members went on a tour of Madison worker co-operatives everyone expected to learn a lot about how we practice cooperation in Madison. We didn’t expect to get the incredible education about Fair Trade’s failures and a new understanding of how successful forces have been in co-opting this once great movement.

Just Coffee no longer uses the TransFair certification and you won’t find their label on their coffee. That sounded rather amazing to me, but then a look at their site and one sees Starbucks and other major corporations. I try not to be a cynic, but the folks at Just Coffee explained that the trend in Fair Trade has been to draw in the “big fish” like Maxwell House, Nestlé, and Starbucks. To get them in the fair trade movement, the “fair trade” floor price hasn’t moved in two years despite the incredible inflation in fuel prices last year and the world’s worst economic crisis since 1929.

I haven’t been able to verify that the prices have stayed flat partially because I can’t find prices on TransFair’s site. that is the real problem. The lack of transparency will ultimately undermine the Fair Trade movement. Just Coffee’s response has been to withdraw the certification (and save the money spent on it) and try a new tactic: Transparent Trade.

What is Transparent Trade? Well it is the concept that the person who consumes the coffee should be able to easily track the bean back to the seed purchase and see the price paid at every step. It means that financial statements and contracts should be published on -line and accessible to consumers so that they can research how their money circulates.

One of our hosts said that the most common question from peers is if they suffer from the competitive disadvantage of full disclosure. He retorts that Just Coffee sees it as a comparative advantage.

This leads to the essential difference between community development and social transformation. The community development model uses co-operatives to teach people to fish, but doesn’t discuss the overall failure of the society. It helps people play by the rules instead of changing rules that work against them.

Worker cooperatives should be about social transformation. They should strive to change the dominant paradigm of profit-motive that Corporate Social Responsibility as a means to mitigate the worst aspects of capitalism.

Flattening “fair” prices doesn’t grow the movement, it dilutes it.