(Felix Marquez/ BLOOMBERG ) - Fernando Celis, coffee producer and organizer of the demonstration, speaks during a protest in Xalapa, Mexico, on Dec. 13, 2011. Farmers say companies in the fair-trade movement are inflating the costs that are subtracted from payments to growers.
In a coffee-scented conference room near Lake Geneva, Ramon Esteve, a sixth-generation commodities trader, sits amid his father’s collection of centuries-old grinders and explains why he’s helping impoverished farmers grow more coffee, cotton and cocoa.
He’s embracing a goal that was first laid out by fair-trade activists so he can secure more sustainable supplies for his company and clients such as Nestle, the world’s largest food company, and Starbucks, the biggest coffee-shop operator.
“For us, it was survival,” said Esteve, 56, chairman of Ecom Agroindustrial, one of the largest coffee traders. “We’re not philanthropists. We’re businessmen.”
Esteve’s blunt acknowledgment shows how a mission-driven movement is transforming into a corporate push for productivity and profit. A cause begun in the 1980s by a Dutch priest and his activist-acolyte to help coffee farmers in the Mexican state of Oaxaca now includes some of the world’s biggest sellers of coffee (Nestle), lingerie (Limited Brands), chocolate (Kraft Foods’ Cadbury unit) and bananas (Wal-Mart), to name a few.
New research has quantified the benefits to the bottom line: In a study released this year, researchers at MIT, Harvard University and the London School of Economics found they could boost bulk coffee sales by 10 percent just by adding a fair-trade label on the packages. Sales of goods approved by Fairtrade International, the world’s largest certifier of such products, soared 27 percent in 2010, to more than $5.7 billion.
The push to increase sales of goods deemed not to have involved child labor and other practices has divided the movement, raised questions of whether going mainstream will undermine the cooperative farmers it was created to help and, most of all, strained the integrity of the certification systems that vouch for the fair-trade stamps that allow companies to charge consumers more.
“The fair-trade movement has profoundly lost its way,” said Aidan McQuade, who advised Cadbury on cocoa buying as director of London-based Anti-Slavery International, a human rights organization founded in 1839. “Its focus on volume — unless they have got all their systems in place to address fundamental issues like ethical trade, child labor and child slavery — is problematic.”
The strains are evident in the work of Fairtrade International, a Bonn-based network of 25 organizations that certifies more than 100 products from cotton to gold around the globe.
Over the years, Fairtrade’s auditors have found breaches of standards in the industry that led to the suspension of certification until corrective action was taken, said Barbara Crowther, spokeswoman for the Fairtrade Foundation.
Children harvesting cocoa
Fairtrade International took a year and a half to commission an independent review after BBC disclosures in March 2010 that children harvested Ghanaian cocoa certified by the group for suppliers to Cadbury and others, McQuade said.
“It has taken longer than we originally planned to get this underway,” Crowther said of the independent review, which she described as “an assessment of Fairtrade’s whole approach to tackling child labor in cocoa in the region.”
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