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WAGING PEACE WITH OUR DOLLARS:
FAIR TRADE AND COOPERATIVES

By John W. Lawrence

In a 2002 Oxfam report entitled “Mugged: Poverty in Your Cup of Coffee,” the authors present the horrifying details of the current “coffee crisis.” Coffee prices have plunged to historic lows destroying the livelihood of 25 million coffee producers around the world. The low prices are the result of three events: the end of managed markets in 1989, a great increase in production particularly in Vietnam and Brazil, and little increase in demand in Western markets. Seventy percent of coffee is grown by peasant farmers. These farms are now selling their coffee below production costs. Farms get about 6% of the final retail price of a bag sold in a store and less than 1% of the price of a cup of coffee in a coffee bar. Meanwhile, the four largest coffee roasters, Kraft, Nestle, Proctor & Gamble and Sara Lee, which control approximately 50% of the market, enjoy estimated profit margins between 15% and 30% annually.

This example typifies the violence inherent in unregulated global markets. Workers, communities, and entire countries are forced to compete against each other to the point of literally undermining their means of existence. On the other hand, a few transnational corporations (TNC’s) dominate most markets, setting the rules and not following them. Market competition for workers is arguably the most effective social control technique of the global elite in the twenty first century.

Fair Trade and Cooperatives: A Moral Alternative

The fair trade movement is playing a critical role in challenging the corporate managed international trade system. It is not only advocating for changes in the structure of the current system but creating a moral alternative. Nonprofit religiously based organizations such as Ten Thousand Villages (Mennonite) and SERRV International (Church of the Brethren) introduced fair trade in arts and crafts in the USA following World War II. Equal Exchange, a for-profit worker cooperative, was the first company in the USA to sell a fair trade commodity, coffee, in the mid 1980’s. In the 1990’s, the Fair Trade Federation (FTF), an association of fair trade organizations in the USA, was founded to serve as a “clearinghouse for information on fair trade and provide resources and networking opportunities for its members.”

The FTF defines fair trade by seven principles and practices: fair wages, cooperative workplaces, consumer education, environmental sustainability, financial and technical support, respect for cultural identity, and public accountability. In addition, gender equality is highly valued. According to anthropologist Kimberly Grimes, author of Artisans and Cooperatives, 80% of artisan fair trade producers are women-run cooperatives and gender equity in pay is required. Fair trade has been an economic life raft for many communities because they pay producers two to five times more than what they get on the corporate-dominated market. In addition, fair trade has also fostered democratic organization and production.

FTF’s 2003 Annual Report on Fair Trade Trends (the 2004 report has not been published yet) reported that fair trade is booming! Total sales in North America increased by 44% to $180 million in 2002. The primary fair trade products are coffee (29%) handicrafts (24.5%) and jewelry (11.5%). According to Rodney North of Equal Exchange, other commodities such as tea and cocoa are being introduced to the market. The product with the greatest increase in sales was coffee (54%) followed by tea (44%). FTF has a list of fair trade wholesalers, retailers and producers at its website. TransFair USA, a nonprofit created in the mid-nineties, has played a unique role in facilitating the introduction of fair trade commodities to the market. TransFair USA audits producers and certifies that the producer meets fair trade standards of production.

More than 300 companies now offer Fair Trade Certified coffee including corporations such as Safeway, Starbucks, and Dunkin’ Donuts. According to the Oxfam report, initially the large TNC roasters objected to the term “fair trade” because it implies that the status quo trade relationships are unfair. Now the large roasters have introduced their own brands of Fair Trade Certified coffee, although they have not marketed them aggressively.

The prospect for further growth of the fair trade market is good. The European market is eight times the size of the USA market. The key is educating consumers and developing relationships between producers and consumers based on empathy, solidarity, and equality.

Fair trade has served as a refuge from global market violence for tens of thousands of people in the countries of the Southern hemisphere. Moreover, it has created a global market for democratically produced goods. However, fair trade accounts for only .01% of world trade. Reform of the current corporate-managed global trading system is still desperately needed. The fair trade movement demonstrates that a more just trading system is not only a possibility; it is a working reality.

Some Internet Fair Trade Links

Equal Exchange (www.equalexchange.com)
Fair Trade Federation (www.fairtradefederation.com)
Fair Trade Resource Network (www.fairtraderesource.org)
Global Exchange (www.globalexchange.org)
The European Fair Trade Association (www.eftafairtrade.org)
The International Fair Trade Association (www.ifat.org)
Ten Thousand Villages (www.tenthousandvillages.com)
SERRV International (www.serrv.org)
TransFair USA (www.transfairusa.org)

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