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Case Study Instruction – See the attachment

Your third case study is Case 13 from Collins: Corporate Social Responsibility (pp449-457)

Write a 2-3 page paper on a short case study or selected topics that were explained in the chapter. Each assignment should be at least 2 pages long (font size 12, double-spaced). You must use scholarly sources: the textbook is required plus at least two (2) additional scholarly sources to support your answer. Be sure to cite and reference according to APA format.

Case 13
Corporate Social Responsibility and the Fair-Trade Movement: How Fair Is Fair Trade?

AUTHOR BIOGRAPHIES

Pamela J. Rands holds an MBA from Western Illinois University with a focus in finance. She is the coauthor of numerous encyclopedia articles and was the research assistant for the second edition of the book, Affluenza: The All-Consuming Epidemic. Her research interests include corporate social responsibility and personal responsibility for social action.

Gordon P. Rands is a professor of management and former department chair at Western Illinois University, is a past chair of the Organizations and the Natural Environment division of the Academy of Management, and is a past president of the International Association for Business and Society. His research interests focus on environmental sustainability, corporate social performance, and various institutions’ responsibilities for solving social problems.

OVERVIEW

Fair trade is a concept that generally aims to help producers in developing countries receive a fair price for their products, thus reducing poverty; it also usually implies ethical treatment of workers and support of environmentally sustainable practices. The fair-trade movement has increasingly captured the hearts and purse strings of consumers in developed nations who are seeking to “do the right thing.” But does purchasing products with a fair-trade label actually produce the good they think it will?

THE FAIR-TRADE DILEMMA

Crystal Kepple, general manager of the Macomb [IL] Food Co-op, sighed and leaned back in her chair as she worked on completing the co-op’s next food order from United Natural Foods, Inc. (UNFI). What quantities of various fair-trade products should she order for the small consumer-owned co-op?

Fair-trade chocolate, tea, and coffee from Equal Exchange—itself a worker-owned cooperative based in Massachusetts—were all popular with co-op shoppers. So was Runa, a “clean energy” drink made from leaves of the guayusa tree, a species of holly native to the Amazon rainforest.1 Crystal and many Macomb Co-op shoppers shared the fair-trade ideals of environmental sustainability and economic justice. But she had begun to wonder about traceability. Could she guarantee to customers that all the ingredients in the products the Co-op sold had been produced in an environmentally sound manner and that the workers who grew and harvested the plants really were receiving better wages for their efforts than those who provided non–fair-trade ingredients?

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Furthermore, the chairman of the co-op’s board of directors, himself an ardent fan of fair trade, had just mentioned some articles he found online that questioned whether fair trade was having the desirable effects its proponents claimed, and posited that the movement might even be leaving workers worse off. “No time to figure this all out now,” Crystal thought, as she turned back to the computer, “but I have to before next month’s order.” With that, she reordered the same quantity of fair-trade products as last month, but no new ones.

ORIGINS OF FAIR TRADE

According to Professor Colleen Haight,

Like many economic and political movements, the fair-trade movement arose to address the perceived failure of the market and remedy important social issues. As the name implies, fair trade has sought not only to protect farmers but also to correct the legacy of the colonial mercantilist system and the kind of crony capitalism where large businesses obtain special privileges from local governments, preventing small businesses from competing and flourishing.2

Fair-trade principles often involve worker cooperatives: democratically controlled organizations that serve their members, who are the producers of the goods in question.

Although the fair-trade specifics may differ from one definition to another, it is useful to consider fair trade in the context of three beliefs:

•    Producers have the power to express unity with consumers.

•    World trade practices that currently exist promote the unequal distribution of wealth between nations.

•    Buying products from producers in developing countries at a fair price is a more efficient way of promoting sustainable development than traditional charity and aid.3

From a historical perspective, in the 19th century, arguments that capitalism and colonialism were unfair to laborers were widespread, and particularly emphasized by religious groups such as the Quakers. Much of this early attention, beginning in the 1800s, was focused on labor within domestic markets; concern about the wages earned by workers growing and producing imported goods began primarily after World War II.4 Members of the Mennonite community along with Oxfam, a British-based nongovernmental organization (NGO), began to buy goods directly from craftspeople in poor nations rather than through middlemen and to sell them in European and North American outlets, which were originally called Oxfam-Worldshops. This resulted in craftspeople being paid higher prices than they customarily received from brokers. Even though sales were relatively low, volunteer staffers enabled the Worldshops to hang on. The fair-trade movement really began to grow, however, when the focus shifted from handicrafts to foods such as coffee.

The fair-trade coffee movement began in 1985 with a Dutch priest, Frans van der Hoff, who was serving in a parish in Oaxaca, Mexico. He became familiar with the problems small coffee growers faced and sought a way to help them. For coffee, as with all agricultural commodities, most of the profits accrue to processors, brokers, and shippers, rather than to growers. Even when world coffee prices were high, growers often benefited little from those higher prices. Back in the Netherlands, van der Hoff became acquainted with Nicco Roozen. Together, they conceived the notion of buying coffee directly from Mexican producer cooperatives at a price premium and selling it in the Netherlands.5 The cooperatives could use the additional funds to purchase equipment and facilities that benefited all members of the cooperative, as well as the community at large. Roozen and van der Hoff created a label named after a fictional character from an anti-colonialist 19th-century Dutch novel, Max Havelaar, and the brand became popular.6

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At about the same time, tensions between the U.S. government and the Sandinista-led Nicaraguan government led to import restrictions on products from Nicaraguan coffee farms. Many of these farms had recently come under the control of worker cooperatives after the Sandinista government expropriated land from owners and redistributed it to workers. The import restrictions led a few U.S. coffee-shop owners,7 as well as a newly formed Equal Exchange, a workers’ cooperative broker, to purchase Nicaraguan coffee beans from Canada and donate a certain amount per pound to the Nicaraguan workers.

Economic conditions for coffee growers deteriorated greatly following the end of the Cold War. The United States dropped import restrictions on coffee grown in places such as Cuba, which had helped keep Latin American coffee prices high, to reduce the appeal of communism in the region. This drop was accompanied by a collapse in the International Coffee Agreement that had served to restrict production.8 In the early 1990s, various fair-trade brands emerged in different nations, each adhering to somewhat different standards. In 1997, the Fairtrade Labeling Organization (FLO)—now known as Fairtrade International, although it still uses the FLO acronym—was created to unite the various national organizations and bring about some harmony in fair-trade standards and certification procedures, as well as to introduce a unifying fair-trade symbol for marketing purposes.9

STANDARDS AND CERTIFICATION

At the heart of the fair-trade movement are two concepts: that small producers deserve higher prices than they typically receive for their goods and that producers who meet high ethical standards in environmental or labor practices should receive a price that compensates for the additional expenses they may incur. Standards exist for both “smallholders” (independent farmers who often affiliate in producer cooperatives) and for large producers who employ workers. Higher prices for living up to these standards can be delivered either by eliminating the middleman and buying directly from the producer, or by paying a price premium to a broker that is then passed on to the producer—a more common approach. A “ fairtrade minimum price” is set each year by the FLO; for coffee, that minimum is $0.20 per pound above the price for commodity coffee. If commodity coffee prices rise, so does the fairtrade minimum price. The intent is to ensure that producers can cover their production costs, even if there is an oversupply and prices fall. In addition, a $0.20 per pound “ fairtrade premium” is paid to the producer cooperative. The farmers in a cooperative, or all of the workers on a plantation, democratically determine the ways this premium is spent. The fair-trade goal is that it be spent in ways that improve the social or economic conditions of the small farmers or the workers—improving education, health care, or farm and processing facilities.10

With the potential to receive higher prices, however, comes an incentive for producers to cheat by engaging in suboptimal practices while claiming to follow more stringent ones. As a result, fair-trade organizations have developed certification procedures designed to ensure that the agreed-upon practices are in fact being followed. Fairtrade Labelling Organization Certification (FLOCERT), formerly a part of the FLO but now a subsidiary entity, hires and trains auditors who visit and audit producers or brokers who have applied to be certified as following fair-trade standards. After an initial successful audit, parties are visited at least twice more in a 3-year period for follow-up audits to ensure that they are still meeting the standards.11 These auditors are usually based in the regions in which they work. Costs of the certification are borne by the party seeking certification. So long as its producers or brokers are certified, a brand can display the fair-trade symbol on its product.

ORGANIZATIONS AND PRODUCTS

As the concept of fair trade began to be understood, multiple brands began to appear, not only for coffee, but for tea, sugar, spices, and cocoa as well. Issues other than economic justice also began to be targeted.

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FIGURE 1  FAIR TRADE USA LOGO

Source: Retrieved from http://www.ethicalcoffee.net/fair.html.

When varieties of coffee that could thrive in full sunlight began to be grown widely, some brands began to pay a premium for shade-grown coffee. Coffee trees grow sporadically in the understory of rainforests. Paying a premium for beans from these trees would promote leaving rainforests in place rather than cutting them down and replacing them with coffee plantation monocultures. Although more economically efficient, monoculture plantations offer far less habitat for insects, birds, and other wildlife, and thus contribute to global biodiversity loss.

Concern about the use of child labor in making rugs, soccer balls, shoes, and sports apparel, which grew during the 1990s, eventually led to publicity about the use of child labor—and even slave labor—on cocoa plantations in West Africa. This alarm and concern sparked growth in the market for fair-trade chocolate products.

As consumer awareness and acceptance of fair trade has grown, the kinds and number of fair-trade products available have expanded significantly, as have the number of organizations involved in the fair-trade movement around the globe. Over 350 organizations are members of the World Fair Trade Organization, an association that promotes fair trade through policy development, advocacy, monitoring, and awareness raising.12 Fair Trade USA, another major certifier of fair-trade goods (see Figure 1), lists 16 categories of fair-trade products, including apparel, home goods, body care products, and sports balls and 13 categories of foods and beverages.13 Fairtrade International lists over 4,500 certified fair-trade products available in the United Kingdom (see Figure 2).

CONSUMER AWARENESS AND RESPONSE

For many years, fair-trade products were much better known in Europe than in the United States, but that changed after the founding of TransFair USA, which was renamed Fair Trade USA in 2010. In 2005, only 9 percent of American households were aware of the fair-trade concept; by 2011, this figure had grown to 50 percent. Since the beginning of the 21st century, sales of organic foods in the United States have boomed. In 2005, organic food sales totaled $13.8 billion, or 2.5 percent of U.S. grocery sales.14 Market share had nearly tripled by 2015, when $39.7 billion worth of organic food, along with an additional $3.6 billion in organic non-foods such as clothing made with organically grown cotton, were sold in the United States.15 This growth in organic sales occurred in tandem with the increased number of retailers such as Whole Foods, Wild Oats, and Trader Joe’s that emphasized organic and other sustainably grown foods. In addition, more mainstream food retailers such as Walmart, Kroger, Target, Aldi, and Costco have increased their organic food offerings and sales. The past decade has also seen a resurgence in the number of food cooperatives nationwide. The number of such stores, typically smaller than regular grocery stores and owned by consumers in local communities, has grown significantly, with the Macomb Food Co-op and 90 other new stores opening since 2006.16 As consumers have increased their consumption of organic foods based on environmental or health concerns, they have been exposed more and more to fair-trade foods at many of these outlets.

Sales of fair-trade products grew by an average of over 40 percent annually between 1999 and 2008, and by over 63 percent in 2011. In 2015, 260 million pounds of fair-trade food were imported into the United States, up from 51 million pounds in 2010.17 The attractiveness of the fair-trade concept to consumers was demonstrated by a field experiment that found that merely attaching a fair-trade label to two highly popular brands of coffee increased their sales by over 10 percent.18

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FIGURE 2  FAIRTRADE INTERNATIONAL LOGO

Source: Retrieved from http://www.ethicalcoffee.net/fair.html.

STARBUCKS AND FAIR-TRADE COFFEE

Growing consumer awareness of, and interest in, fair-trade products, especially coffee, has resulted in pressure being brought to bear on large companies to increase their sourcing of fair-trade products. One of the most notable companies to come under such pressure is Seattle-based Starbucks. Smaller, generally independent coffee shops had begun selling coffee brewed from fair-trade–sourced beans in the 1990s. In 1999, Global Exchange, an international human rights NGO, approached Starbucks and asked it to begin carrying fair-trade coffee.19 The company expressed concerns that the coffee might be of low quality and so did not agree to the request. As a result, the NGO organized small protests outside Seattle-area Starbucks shops. In early 2000, an investigative report documenting low wages and child labor on certain Guatemalan coffee plantations, including some suppliers of Starbucks, aired on a San Francisco television station. Global Exchange subsequently petitioned the company at its annual meeting to offer certified fair-trade coffee, and that week Starbucks announced a one-time purchase of 75,000 pounds of coffee that it said were fair trade, but not certified as such. Global Exchange organized additional demonstrations and a letter-writing campaign, and in April of that year, Starbucks announced an agreement to purchase coffee certified as fair-trade by TransFair USA for all its shops. However, Starbucks announced that this would be available only in whole-bean form for consumers to purchase, grind, and brew at home.20

Pressure on Starbucks to increase its fair-trade coffee purchases continued, and by 2011, 8 percent of its coffee purchases were certified as fair trade.21 That percentage, however, has since dropped to 3 percent.22 In 2008, Starbucks announced a goal that by 2015, 100 percent of its coffee would be “ethically sourced,” either from a fair-trade supplier or in conformance with its own set of principles, the Coffee and Farmer Equity (C.A.F.E.) Practices. These were developed in partnership with the NGO called Conservation International and provide guidelines in four areas: product quality, social responsibility, environmental leadership, and economic accountability and transparency.23

Fair-trade advocates are often skeptical of the stringency of initiatives developed by companies or by industry organizations. Often, when competing standards exist, those developed by advocacy groups are much stronger than those developed by industry. An example of this is found in the forest products industry, in which the multiple stakeholder-based Forest Stewardship Council (FSC)’s certification competes with the Sustainable Forestry Initiative (SFI) standards developed by the forest products industry. Many observers believe that the FSC standards require much stronger environmental protections than do the SFI standards, partly because of more rigorous auditing procedures.24 Julia Caves, an ecologist who examined Starbucks’ standards, suggested that although they are not the most environmentally stringent coffee-growing standards, they are fairly strong and compare favorably with those developed by another NGO, the Rainforest Alliance.25 She also observed that the C.A.F.E. Practices are actually stronger on environmental grounds than are those of most fair-trade initiatives.

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By 2011, Starbucks said that 86 percent of all its coffee purchased was bought in conjunction with either C.A.F.E. practices or fair-trade practices.26 In April 2015, Starbucks announced that 99 percent of its coffee purchases were ethically sourced.27 Starbucks’ coffee purchase claims are verified by SCS Global Services, an independent third-party certifier of environmental claims.28

In addition to purchasing ethically sourced coffee, Starbucks has committed to supporting coffee farmers with both grants and research information. To that end, it opened a farmer support center in 2004 in Costa Rica, where it employs agronomists and coffee quality experts who work with coffee growers. It also engaged in research with the Costa Rican Coffee Institute (Instituto del Café de Costa Rica, or ICAFE) on how to improve growing practices of specialty coffee beans. This research resulted in five new coffee hybrids, and in 2015 Starbucks donated thousands of the hybrid seedlings to ICAFE for field testing in different parts of Costa Rica.29

Starbucks has since opened farmer support centers in Rwanda, Tanzania, Columbia, and China, and in 2013 purchased a coffee plantation in Costa Rica that it has developed as a Global Agronomy Research and Development Center.30 Starbucks also committed to providing loans totaling $20 million to small coffee farmers. In 2015, it met that goal and pledged an additional $30 million in small-farmer loans. These loans are answering needs created by the effects of climate change and an epidemic of coffee rust and are provided via nonprofit microfinance institutions such as Root Capital. Craig Russell, Executive Vice President of Global Coffee for Starbucks at that time, commented that the loans mean “farmers have the ability to make strategic investments in their infrastructure, offering the stability they need to manage ongoing complexities so there is a future for them and the industry.”31 The original $20 million in loans helped over 40,000 families affiliated with 62 different coffee-producer cooperatives.32

While pressures to purchase independently certified fair-trade coffee led Starbucks to eventually emphasize a somewhat different path to addressing the socioeconomic and environmental challenges facing the coffee industry, controversies and criticisms began to emerge regarding fair-trade itself. One of these controversies involved a split within one of the major fair-trade organizations.

THE FAIR TRADE USA CONTROVERSY

TransFair USA was founded in 1998 by the Institute for Agricultural Trade Policy, which saw a need for an organization to set standards, issue certifications, and label fair-trade products in the United States. Paul Rice, an American who had previously served as the director of PRODECOOP,33 a Nicaraguan coffee-growing cooperative that sold coffee to Equal Exchange,34 was hired as the organization’s first executive director. For over a decade, TransFair USA led efforts to bring the fair-trade message and fair-trade products to American consumers as the U.S. affiliate of FLO. As noted previously, consumption of fair-trade products in the United States grew dramatically during this period.

In September 2011, however, the American organization (which had changed its name to Fair Trade USA in 2010) announced that it was resigning its membership in FLO. In January 2012, Rice described why Fair Trade USA had made this decision.35 Rice noted that FLO generally worked with farmers who participated in producer cooperatives, but that Fair Trade USA believed that

Fair Trade has to work for all kinds of producers to make a meaningful dent in global poverty. In its current form, Fair Trade principles are applied inconsistently. For some product categories, like coffee, Fair Trade certification is limited to cooperatives, while in other categories, like bananas and tea, workers on large farms can become certified. Fair Trade USA resigned our membership from FLO in order to eliminate these inconsistencies, which exclude so many from the benefits of Fair Trade. Beginning in coffee, we are adapting Fair Trade standards for both workers on large farms and independent small holders. Through this more inclusive model, Fair Trade USA can reach over 4 million farm workers who are currently excluded from the system.36

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Fair Trade USA’s action was met with criticism by many in the fair-trade movement because it was seen as threatening the producer cooperatives that had been at the heart of the fair-trade model. Rodney North of Equal Exchange argued, “Fair trade is designed to change commerce. We shouldn’t be changing fair trade to accommodate commerce.”37 Equal Exchange subsequently initiated a petition drive asking fair-trade brands and consumers to reject Fair Trade USA’s vision and only purchase products from farmer cooperatives. Frans van der Hoff, the priest who cofounded the Max Havelaar brand, is also among the critics of efforts to certify coffee from larger estates. But his cofounder, Nicco Roozen, agreed with Rice that large growers should be able to be certified as fair-trade producers if they improve the conditions of their workers and meet other fair-trade standards.38

Some observers felt that Fair Trade USA’s resignation from FLO also may have occurred for monetary reasons, as the U.S. organization paid about 20 percent of its revenues to FLO for its labeling and certifying services. Critics of Fair Trade USA have since argued that, although the organization said one of its goals was to bring small farmers outside of cooperatives under the fair-trade umbrella, there is little evidence that this has happened.39 To them, it appears that the organization’s efforts have been aimed primarily at certifying the products of more traditional large farms as fair trade.

CRITICISMS OF THE FAIR-TRADE MOVEMENT

In addition to the internal divisions, external criticism of fair trade has surfaced and increased. Some of these criticisms could probably be addressed through greater transparency (one of the main criticisms is lack of transparency), but others seem inherent in the fair-trade model itself. There appear to be four broad areas of criticism.

First, critics have charged that fair-trade organizations are not transparent enough and do not disclose enough information to allow for thorough understanding of their activities. Economist Bruce Wydick argues that the information provided by Fair Trade USA regarding the effects of fair trade on farmers and their families is “vague at best,” and consists of little more than explaining the logic of the model and listing the numbers of families associated with producer cooperatives. His assessment is, “All of this is well-intentioned and sounds wonderful. The problem is that it doesn’t work well.”40 Haight states the logical result of this lack of transparency: It makes it difficult to assess whether some of the other criticisms leveled at fair trade are valid or not.41

A second broad criticism is that fair trade actually does not address the problems of the most disadvantaged producers.42 First, African farmers are generally the poorest in the world, but less than 10 percent of fair-trade coffee is grown in Africa, even though the most favored coffee variety, Arabica, originated in Ethiopia. Second, regardless of region, fair trade tends to help those who are most skilled in both growing coffee and managing certification requirements, rather than those at the bottom of the economic ladder.43 Lastly, the most disadvantaged members of the growing community are not the small farmers, but the migrant laborers who are not, and cannot be, members of producer cooperatives. Despite Fair Trade USA’s stated goal of benefitting this group, there is little evidence of any impact.

A third area of criticism is that an unacceptably small portion of the price differential (20 cent Fairtrade Premium and potential 20 cent Fairtrade Minimum Price buffer as noted earlier) actually reaches and benefits the growers and their families.44 This stems partly from the cost of certification requirements—around 3 cents per pound in the case of coffee.45 But it also reflects the fact that the fair-trade price premium is paid to cooperatives, not farmers. Although proponents point out that this money can be spent on things such as health care and education that directly benefit the farmers’ families, it appears that the bulk of the funds is actually spent on improving the buildings and equipment owned by the cooperatives, and increasing the salaries of their staff members. Such expenditures may result in long-term benefits for the farmers, but it is also quite possible that a different allocation would result in greater benefits.

A fourth area of criticism leveled at fair trade is the most complex and troublesome because it suggests that a key aspect of the model, the pricing mechanism, may inherently produce undesirable consequences for both consumers and producers.

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Critics charge that, when prices are high, fair-trade pricing mechanisms encourage farmers to sell their lowest quality beans to fair-trade brands to get the fair-trade minimum and premium. Meanwhile, the best quality beans go to other buyers who are paying the highest market prices. In the process, the argument goes, fair-trade consumers are buying consistently lower quality products.46

Conversely, when prices are low due to oversupply, the higher fair-trade minimum price encourages more growers to seek fair-trade certification to sell to fair-trade buyers. The fair-trade market “pot” is consequently divided into more smaller shares. Existing fair-trade producers reap fewer financial rewards. As the costs associated with certification are spread across a lower sales volume per fair-trade producer, it becomes more difficult to actually recoup the certification costs. In these ways, the producers can end up receiving little actual additional income.47

Wydick argues that one of the best ways of raising producers’ incomes is to encourage a decrease in production,48 but fair trade encourages existing and even new farmers to increase production. This may particularly be the case among the most marginal producers. He concludes by stating that in a survey of 16 development economists, fair trade was rated as the next to lowest of 10 strategies for lifting people out of poverty. Thus, fair trade actually may not be accomplishing the goal it touts itself as achieving. Wydick argues that directly addressing root causes of poverty such as poor education, underdeveloped infrastructure, poor health, inadequate entrepreneurial skills, and poor governance skills would accomplish the stated goals of fair trade better than does paying price premiums. He suggests that addressing these root causes would moreover improve individuals’ abilities and choices, rather than shifting them back toward growing a crop that is often overproduced and thus is a poor means of exiting poverty.49 Wydick concludes, “The most damaging aspect of the fair-trade coffee system may be that it misleads well-meaning coffee consumers into believing that by buying fair-trade coffee they are doing something meaningful and helpful for the poor, while the best evidence suggests that other types of programs are far more effective.”50

Direct trade, in which buyers establish long-term contracts directly with producers, offering a higher price and requiring higher quality, has been suggested by some as a more efficient approach for achieving the goals of fair trade. Nestlé,51 Starbucks, Peet’s Coffee, and Allegro (the house brand of Whole Foods) are among the coffee brands that claim to have increased direct purchasing.52 Equal Exchange, a major provider of fair-trade coffee, tea, chocolate, sugar, and dried fruits and nuts to food cooperatives, uses a direct trade model, and purchases only from producer cooperatives (see Figure 3). Equal Exchange lists and describes its 40 producer-cooperative partners on its website.53

In response to the still low, minimum fair-trade price, some producer cooperatives are banding together, taking the initiative to completely avoid the middleman by marketing their products directly to wholesalers and retailers in the United States and other developed nations.54

FAIR-TRADE ORGANIZATIONS RESPOND

In a rejoinder to Haight’s article, Paul Rice of Fair Trade USA argues that fair trade provides substantial benefits to farmers through their cooperatives. He emphasizes that decisions on how to spend the fair-trade premium funds paid to a cooperative are made democratically by all members of the cooperative. He also suggests that the quality of fair-trade coffee is in fact not lower, claiming that many fair-trade producers invest some of their earnings in coffee quality improvement.

In early 2017, the president of Equal Exchange, Rink Dickinson, criticized the entire fair-trade movement, including both Fair Trade USA and Fairtrade International, for the emphasis they place on certification, charging that this benefits the staff of the fair-trade organizations more than it does the producers of the food.55 Equal Exchange emphasizes building relationships and working directly with producer cooperatives and does not require certifications from fair-trade labeling organizations. As a result, its products state that they are fairly traded, but do not carry a standard fair-trade label.

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FIGURE 3  RELIGIOUS ORGANIZATIONS, AMONG OTHERS, PARTICIPATE IN EQUAL EXCHANGE

Source: United Church of Christ—Equal Exchange Coffee Project, www.ucc.org/justice/issues/coffee-project Retrieved from http://slideplayer.com/slide/5889807/19/images/59/Where+to+Buy+Fairly+Traded+Coffee.jpg.

As more consumers than ever before are aware and accepting of fair-trade logic, it is ironic that those both outside and inside the movement are questioning its benefits. What effect will these criticisms have on the purchasing decisions of retail buyers such as Crystal Kepple, and consumers who shop at their stores? The answer remains to be seen.

Critical Thinking Questions

1.   What is fair trade, and what are the basic principles underlying it? Had you ever heard of fair trade before reading this case? Have you ever purchased a fair-trade product?

2.   Should fair-trade brands limit their purchases to goods from producer cooperatives such as Equal Exchange and FLO advocate, or should a wider range of producers be eligible for certification as fair-trade producers, as advocated by Fair Trade USA? Why?

3.   Do you think that there is a meaningful difference between a company (a) meeting external fair-trade certification standards, or (b) internally developing its own standards and having its claims externally verified by a third party, as Starbucks has done? If you believe there is a meaningful difference, which approach do you prefer and why?

4.   What are the central points of disagreement within the fair-trade movement, as illustrated by Fair Trade USA and Nicco Roozen on one side, and Fairtrade International and Frans van der Hoff on the other side? Which side do you agree with, and why? How does Equal Exchange differ from both these perspectives?

5.   What are the four general areas of criticisms about fair trade? Do you agree or disagree with all or some of them? Which of the criticisms do you feel are most important, and why? If you were Crystal Kepple of the Macomb Food Co-op, what action would you take regarding selling fair-trade products given these criticisms and counterarguments?

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