Paul Rice's Uplifting Fair Trade Story (2)
In the first half of my review of Paul Rice’s book, I mentioned how the Fair Trade certifying nonprofit, Fair Trade USA (or Fair Trade Certified), he founded in 1998 was originally a branch of the global FT label, FLO (today called FairTrade International). But he gradually became dissatisfied with their unwillingness to certify anything but small farms organized as cooperatives for coffee or cocoa, which eventually led to their breakup with FLO in 2011.
The moment of truth came in 2008 during a visit to one of his closest farmer friends in the mountains of Nicaragua. He was glad to hear his oldest son was now working with him, but was shocked to discover that his sixteen-year-old son Armando had to find work at a larger farm nearby. Their coffee farm was too small to support two sons in this business. Yes, they benefited from their Fair Trade premiums, but that only went so far. Most of the youth in that area were like Armando, only making about $3 a day, which meant they would never escape the poverty their families had always known. Rice suddenly felt the weight of it all:
“I had hoped that the kinds of Fair Trade programs we’d implemented in the region would be a bigger help to the next generation of coffee kids. The long-term goal of Fair Trade is to help break the chains of generational poverty so that farmers and their children can, over time, build a better life. Sadly, I knew there wasn’t much we could do to help someone in Armando’s position. . . We had, in essence, created a divide between farmers and farmworkers. Ironically, the latter group arguably needed our help the most. Farmworkers were both cash and land poor. . . They were truly the most marginalized members of rural society” (101).
In their first decade, Fair Trade USA had certified nearly half a billion pounds of coffee, passed on $125 million in Fair Trade premiums to their producer communities; and on the market side, some 200,000 retail stores sold products bearing the Fair Trade Certified label. Paul Rice himself had been awarded several prestigious international awards, including the Skoll Foundation’s Award for Social Entrepreneurship, which included $1 million in prize money. Yet Rice was still disappointed. Even though they now certified fresh produce, flowers, cocoa, tea, sugar and some fruit, coffee was by far their biggest product but represented less than five percent of the US market. As I intimated in the first half of this post, Rice’s vision was much broader than all this:
“My vision for Fair Trade has always been to transform capitalism. I never subscribed to the ‘small is beautiful’ mentality, and I never wanted to remain a market niche. I’ve always seen the potential to grow our model and have a meaningful impact on global poverty. For me, it’s always about the mission, about reaching as many people and improving as many lives as possible. I want to transform how companies do business in such a way that they can no longer take the well-being of farmers and workers in the supply chain for granted. I want the world’s consumers to think about who produces the goods they buy on a daily basis and help ensure they are compensated fairly for their hard work. I want to help empower producers and communities around the world, improving their lives and giving them hope for their future” (103-4).
Meanwhile, he was talking with a host of “trusted friends, partners, and board members” about what was now seemed “an insurmountable gap between Fair Trade USA and FLO.” One of those friends (and mentor, he adds) was John Mackey, co-founder of Whole Foods. While on a hike in a redwood forest not far from San Francisco, Rice described the pushback he encountered for “opening up the standards to include more types of producers.” John, in turn, shared how he too had been frustrated with the Fair Trade movement’s reticence to move beyond certifying small farms and cooperatives. He said at one point, “Fair Trade should be for everybody. Fair Trade is a universal set of standards for labor and the environment and some economic mechanisms to ensure that the trade between the different parties is fair. If any given corporation is willing to play by those rules, then why shouldn’t they be allowed?” (106).
For Rice, the 2011 split with FLO was worthwhile, despite the stress and complications. For one thing, both sides of the divide continued to expand, and they all were committed to the basic tenets of Fair Trade. “Competition is a good thing,” he mused. “No single organization should have a monopoly on Fair Trade and sourcing.” And now, he was freer to move ahead. With his officers and board members, he set a goal for the next five years “to create $500 million in cumulative financial impact for producers”—almost tripling the figure for their first ten years. Specifically, they would . . .
- “create new standards for larger farms that helped make sure that their workers had better conditions, wages, and premiums.” This also allowed them to “encompass more of the industry’s existing supply chains and product formulations” (107).
- “offer certification to small farmers who weren’t part of cooperatives but were selling to processors, traders, and other aggregators.”
- continue adapting their standards “to fit other industries, like seafood, apparel, and produce, where the dynamics are quite different from coffee, tea, and chocolate.” This might motivate consumers to look for new ways of supporting the Fair Trade label by buying “Fair Trade salmon, yogurt, furniture, and blue jeans.”
What about “sustainable apparel”?
The transition from Fair Trade farm produce to Fair Trade factory products was a tough one at first. By the end of the 2010s much progress has been made, but in the apparel industry specifically, only one percent of what Americans buy is Fair Trade compliant. Rice asked his “dear friend and colleague Heather Franzese” who had engineered this transition for Fair Trade USA from 2009 to 2012 (and now oversees “responsible sourcing for a large US retailer) how they pulled it off.
Franzese recalled their early motivations, “We had the success of the model in food commodities and wanted to be able to expand impact and enable a Fair Trade lifestyle. Apart from food, what else is a daily necessity? Everyone wears clothing. We wanted to make it possible for people to live their values beyond just what they eat” (130).
Already in 2009, Franzese knew that apparel companies had bowed at least to some extent to the pressure exerted by the 1990s anti-sweatshop movement. Still, the public demand for cheap garments was almost irresistible and “Fast Fashion” brands (think of Zara and H&M) “perpetuated an environment where many workers were paid far below most definitions of a living wage and in some countries worked in unsafe, substandard conditions.” [The latter issue was dramatically brought home by the 2013 collapse of the Rana Plaza, an 8-story building housing five garment factories, a bank, and some retail stores: over 1,100 people died and thousands were wounded. Factory owners knew the building was unsafe, yet forced their employees to continue working there].
There is also an agricultural stage in the apparel industry. Even before factory workers stitch and sew the clothes we buy, farm workers grew the cotton. That is where the Fair Trade experience came in handy: as with food commodities like coffee and tea, producers could be organized and given opportunities to decide how to spend their social premiums. Therefore, Franzese was given the green light to partner with a supplier for prAna in India, the Chetna Coalition, a cooperative of 9,000 small-scale farmers that grows 100 percent organic cotton. Within a year, “prAna was selling its first Fair Trade Certified cotton product, a women’s T-shirt called Soul T.”
The next step was to certify the factory in Liberia that manufactured the Soul T—the Liberian Women’s Sewing Project, “founded by the extraordinary social entrepreneur Chid Liberty.” These thirty or so women were now earning 30 percent more than the average Liberian worker, even before their Fair Trade premium. Franzese explained what this meant to these women and their kin:
“After thirteen years of civil war and in a country with 80 percent unemployment, the impact was huge. Not only did they support their extended families on this income, but when I talked with to these women about how they wanted to use the money, invariably they mentioned literacy classes, computer training, childcare, and health clinics—things that benefitted the broader community. The fact that consumers could buy a prAna T-shirt that directly contributed to the future of these women and their community was a giant step forward for the people of Liberia” (131).
Unfortunately, in 2024 due to its financial struggles in the wake of the Covid epidemic, prAna had to stop using the Fair Trade Certified label. Margins are very tight in the garment industry and they could no longer afford the Fair Trade premiums. But prAna’s pioneering efforts had a domino effect on the wider industry.
The first step came when Scott Kerslake was invited to speak at a large leadership summit sponsored by the Seattle-based outdoor company REI. There, while wearing prAna’s first Fair Tade men’s T-shirt, Kerslake appealed to the crowd of around 500 people to consider starting their own Fair Trade products. The response was mixed, but REI people received it enthusiastically. Rice quipped, “Today, REI is a major supporter of Fair Trade and other sustainability initiatives” (133).
Several years after Franzese had moved on, she was replaced with another brilliant leader, Maya Spaull Johnsen (who kept the job until her tragic death in 2022). Under her watch, Patagonia came on board, and after them, many others. Patagonia, says Rice, “was a natural fit” for Fair Trade USA. Already in 1985, its visionary CEO Yvon Chouinard was donating 10 percent of Patagonia’s profits to environmental projects. Those commitments only grew over time. Since by 1996 he was giving away 1 percent of his total sales, he started a new nonprofit he named One Percent for the Planet, which aimed to launch other businesses on the same path.
Though it was a champion for protecting the Earth, Patagonia was still lacking in social sustainability. True, its people were already “passionate about the social side,” but as their vice president for social and environmental responsibility Cara Chacon put it, “we didn’t really have a credible, customer-facing way to show our commitment to workers in the supply chain.” Then she added,
“We found that partner in Fair Trade USA where their program enabled us to expand our work in social responsibility by adding the financial premium to workers, as well as show our customers that commitment through the certification label that is attached to the product you buy. Adding that element was a game changer for us, both in evolving our impact and messaging. It added balance to the environmental and branding work we were doing” (134).
Did the Fair Trade label help Patagonia’s bottom line? Yes, answered Cara Chacon, and though it’s hard to quantify exactly, it certainly contributed to their brand’s attractiveness: “We were already receiving a lot of accolades for our environmental initiatives, but after Fair Trade we could see an even greater amplification of goodwill and press toward the brand.”
“Will Capitalism Bend Toward Sustainability?”
That is the central question Paul Rice’s book seeks to answer. He has a whole chapter on “bringing home” Fair Trade—that is, noteworthy Fair Trade momentum in the US in the produce industry, among seasonal farm workers, and among American farmers who have been hard hit in recent years (and more harshly than ever during the second Trump administration due to tariffs and the Iran War). What is certain, consumers are increasingly looking for ethical sourcing and sustainability involving both people and planet. That's encouraging, says Rice, but businesses should take the initiative.
Rice’s main concern in the book, then, is to motivate businesses to lead the way toward a more sustainable world. As his friend Peter Handy, CEO of Bristol Seafood, once told him, “Businesses, irrespective of the label and the Fair Trade brand, will find themselves to be more successful and more profitable over the long term by behaving in a way consistent with Fair Trade certification” (291). Admittedly, governments have a crucial role “in shaping the future of global capitalism.” The European Union, for instance, has enacted a number of regulations to increase sustainability. Clearly, public policy at many levels does make a huge difference.
And yet, perhaps because he personally interacts with so many CEOs and has witnessed so many of them implement bold changes towards ethical sourcing and “conscious capitalism,” Rice remains bullish on the power of business to do good. Guillaume Le Cunff, CEO of Nespresso, believes that sustainability should be seen through the lens of “shared value,” and thereby “converts responsibility into opportunity.” Instead of just complying with new regulations, businesses should find ways to create value for all their stakeholders. So do good “for everyone in your supply chain,” he advised Paul Rice.
Finally, I was amazed to read how many Fair Trade products Walmart had consciously incorporated in its stores over the years. Doug McMillon, the CEO of the world’s largest retailer said this in a 2020 speech:
“We are experiencing, firsthand, the strength of ‘shared value’ or a multi-stakeholder approach to business. We have become convinced that if a company takes the long-term view, addressing the needs of customers, associates, suppliers, communities and the planet, more value is created for everyone, including shareholders. It’s an ‘and’ approach. Yes, we have experienced short-term trade-offs, such as when we raised wages significantly several years ago and saw our stock price decline sharply in response to the news. But those short-term trade-offs fade away over the longer term as we make high-quality decisions to build a stronger business for all of our stakeholders” (293).
You and I are consumers, and we too have an important role to play. Look up Fair Trade products you can buy locally; order others online. We too can help in making our world fairer, and in protecting vulnerable people and a wounded planet.