Why "Fair Trade" Isn't Really Fair

Connecting the chocolate supply chain from my Peace Corps service to your mid-afternoon sugar buzz

Let's face it. It's totally trendy to be conscious about where your food comes from. Americans and Europeans alike are more than willing to pay a little extra for a variety of premium items that morally connect the consumer to the product's origin.

Fair Trade is one of the most recognized certifications today. The logo which can most commonly be found on coffee and chocolate products signifies that a premium has been paid for the ingredients. Although I cannot speak for coffee, in cocoa that premium is critical for farmers. As it stands currently, the supply of cocoa is dwindling.

Cocoa doesn't grow just anywhere. The “cocoa belt”, is the tropical zone that spans 20 degrees north and south of the equator. Most cocoa farmers (I speak for the DR) are older (60+) and today's youth, which make up for nearly half of the population, are uninterested in taking over the family farms for fear being poor like their parents and grandparents. On the other end of the supply chain, chocolate consumption worldwide increases at an incredible rate each year. What does this all mean? Prices on all levels must increase in order to sustain the cocoa industry.

In a recent conference with other (Peace Corps) volunteers who work with cocoa we had the opportunity to speak with the official liaison for Fair Trade (FLO) in the Dominican Republic, Maria Trinidad.

Since the message to the consumer of Fair Trade products is intended to be ethical and the little Fair Trade logo appears on the final product, I wanted to know if Fair Trade required a certain amount (or all) of the ingredients in a chocolate bar (for example) to be Fair Trade sourced. The short answer is no. In fact, Maria went as far as to say that all ingredients in the bar that could be Fair Trade should be. As you may know, this is impossible. Things like sugar and vanilla, absolutely. But that chocolate bar contains quite a few more ingredients that are not Fair Trade. So the logo makes it all the way to the final product even though a very small amount of the ingredients are actually Fair Trade.

That being said, I want to mention that cocoa is a commodity that is purchased by the ton from origin. Large chocolate manufacturers buy thousands of tons of cocoa beans annually and not all of them are Fair Trade certified or from the same source. What is the likelihood of Fair Trade beans staying separate from the non-Fair Trade? In fact, Fair Trade uses a system called 'mass balance' when it comes to the certified final product. This means that for every chocolate bar made intended to be certified Fair Trade, that company must buy the equivalent mass of cocoa under Fair Trade terms. In other words, that's as far as Fair Trade reaches in content control of the final certified product and that in reality that chocolate bar may not contain Fair Trade cocoa beans at all.

Let's talk about the premium that is paid per ton for Fair Trade cocoa beans. In addition to the floor (minimum) price for the beans, Fair Trade pays $400 per ton. That breaks down to $20 per quintal (a quintal is 150 kilos). That money is paid out to the exporting organization at origin to cover administration costs and what's left over (?!) is distributed to the farmers. In short, the benefits are not enough. Not to mention the initial sign-up fee of 550 Euros in addition to the annual fee to stay certified.

Maria says that Fair Trade is the first step for small organizations to begin exporting. They get certified through larger organizations that have the capacity to export with the intent that in time they will be able to use the premiums paid out to export on their own. Here in the Dominican Republic Fair Trade's poster child is CONOCADO, the first organization to be Fair Trade certified in the country. CONOCADO started out as a cooperative for small cocoa producers and has turned into a three part mega company that is anything but small. However, for the last two years, CONOCADO has not distributed benefits to their cocoa farmers. They have lost more than 600 members nationwide since 2012. Basilio Almonte, head agronomist for CONOCADO was also present at the conference. When asked why they have failed to pay benefits to their members, he informed me that the organization had too many internal expenses and has not been able to distribute anything to the cocoa farmers. On a whole other level of opaque, the director of CONOCADO has opened his own private cocoa purchasing business, BIOCAFCAO, putting himself in direct competition with his employer, CONOCADO.

Maria Trinidad, well aware of the situation at the Fair Trade poster child, commented that although the transparency issues at CONOCADO are unfortunate it is the responsibility of the farmers to advocate for themselves and that Fair Trade cannot be involved in internal affairs of the certified exporting organizations.

If you are familiar with my job here in the DR with La Red Guaconejo, you have probably read about Taza Chocolate and their Direct Trade philosophy. Taza works exclusively with organic certified cocoa beans and on top of paying a minimum of $500 per metric ton above the New York International Commodities Exchange (ICE) price, owner Alex Whitmore visits the organization each year in order to ensure long-term personal relationships with the cocoa farmers. In my previous blog post you can read a little bit about Alex's most recent visit to the DR. What's in it for Alex, you may be asking? These relationships and purchasing principles allow Taza to manufacture and deliver a high quality, traceable chocolate bar with an ethical message and a real story to the consumer. The Somerville, MA based company is not exactly comparable to Nestle or Kraft (Mondalez). Most famous for their stone ground Mexican style chocolate disks, Taza has a unique market.

So what's the problem?

Is Fair Trade allowing consumers to believe that a $2 chocolate bar with their logo on it is just as ethical as an artisan chocolate bar that costs four times the price? Or will the trendiness of being “food conscious” or in this case “chocolate conscious” make for a saavy consumer that knows the difference?

That, my friends, is for you all to decide but I whole heartedly encourage you to be more aware of the origin of you next chocolate buzz.