The Challenges of Certification for Fair Trade Crafts

Introduction
There is increasing consumer demand for products in mainstream stores and supermarkets that are produced without exploiting workers, children and the environment. This is consistent with the principles of fair trade (FT), and is essentially a requirement to know about the supply chain from field or workshop to retail point of sale, and trust that the products are produced in compliance with ethical standards.

Wouldn’t it be great if we could take a product to an in-store bar-code scanner and not only get information as to price and availability, but also who made it, under what conditions, how much was paid to the producers and how was it transported to the store There would be information on wages, living conditions, mark-ups and carbon footprints – real visibility in to the supply chain.

As we are increasingly interdependent on our small planet, we must take responsibility for addressing these concerns and assuring sustainable, fair and ethical trading systems.

There are several initiatives that give varying degrees of independent third party assurance about green, sustainable, organic, fair trade and other ethical product dimensions. Ethical consumers place a value on these labels, and in most cases are prepared to pay a premium price for the ethical assurance given. However there remains confusion about the number of ethical dimensions and the credibility of the endorsing organizations.

Fair Trade Craft Developments
The dominant certification and labeling organization in the world is the Fairtrade Labeling Organization (FLO) headquartered in Bonn, Germany, having 24 member operations in various countries. The US affiliate has recently changed its name from TransFair to Fair Trade USA, and is based in Oakland, California. FLO started by certifying coffee, then tea and chocolate, still the dominant commodities that are certified. However there is now an extensive list of commodities that are certified including cotton, wine, rice, flowers, honey, cocoa, sugar and many more. They are considering a move to certifying crafts, and to some extent have started with soccer balls and cotton.  FLO certifies through its FLOCERT subsidiary the commodity product itself and its supply chain.

However, certification of hand-crafted crafts under a single inflexible commodity standard is impossible due to the large number of craft product types (50,000+) and their dizzying array of source materials. Unlike homogenous commodity cash and food crops like coffee, sugar and cacao, no finished craft or producing community are alike.  Another complaint about FLO is that it is expensive, and the smaller commodity producers as well as craft producers cannot afford the cost of certification for the right to use a label.

The World Fair Trade Organization (WFTO, formerly known as IFAT) has been investing in a craft certification, monitoring and labeling scheme now called the WFTO Fair Trade System. At their conference in Mombasa, Kenya in May 2011, it was decided to explore the possibility of using the WFTO membership and monitoring system as a way of certifying compliance with FT Principles. There is a trial system underway with over 60 participants, and a handful of craft companies are certified to use an interim craft label. However it is not clear what will happen due to financial problems with the funding of the scheme. There is however an emphasis on making the process cost effective and affordable.

Other craft certification initiatives include the “Fair for Life” scheme developed by the Swiss certifier IMO. IMO started with organic and commodities certification, and launched “Fair for Life” in 2006 as a brand neutral, independent certification system for social accountability and fair trade. They have certified a growing number of food and personal care brands in the U.S., as well as some brands of fair trade coffee who replaced their Fair Trade USA certification with Fair for Life certification.  IMO’s approach has the flexibility to certify very different crafts and producer contexts, but with rigor such that consumers can trust fair trade criteria are met.  However cost of IMO certification remains an issue.

Another organization emerging as a fair trade craft certifier is EcoCert, based in France. They were founded in 1991, and began in the organic sectors for food. They developed in 2010 an EFT (EcoCert Fair Trade) Standard to guarantee organic and FT products. Ecocert has established a network of 23 offices around the world supporting operations in 80 different countries.

There are other certification initiatives in the US, including the Rainforest Alliance which does not certify crafts. The certification picture is fragmented and confused.

Why Is Third Party Certification and Labeling Important
Third party certification and label seals are important in the Fair Trade movement in order to assure compliance with the appropriate set of ethical standards. This is important to expand the buying public’s interest and awareness of FT products, in order to improve the livelihoods of Fair Trade farmers and artisans. In the end the issue is one of consumer trust that a “Fair Trade” labeled product is indeed produced in a manner that meets fair trade criteria, versus an empty feel-good “fairwash” claim.

Third-party certification provides transparency to the complete supply chain(s) of a certified product, addressing important issues like fair prices and wages, good working conditions, lower carbon footprint for transport, and sustainable resources.

Obstacles to Fair Trade Certification and Labels for Crafts
The fair trade craft sector is very complex and encompasses a wide range of raw materials and supply chains, including ceramics, stone, furniture, jewelry, baskets, textiles, apparel, toys and musical instruments.  There are real challenges in certifying the whole of the supply chain, especially at the producer raw material and sub-contractor stages.

It is also necessary to certify the Fair Trade Organization (FTO) itself that trades in fair trade crafts, that they have systems in place that verify that the crafts they buy and sell are indeed fair trade, as it is prohibitive in some cases for an outside third party certifier to verify all the individual product lines. Some FTOs have as many as 4000+ separate product lines. The WFTO certification trials are dealing with and documenting these issues, which include:
Serious concerns about the costs of certification and the label
Complexity of the assessment system
Dealing with subcontractors, especially larger materials suppliers who will not collaborate with the FTO for certification
Marketing costs of establishing the new label.

Many of the larger Fair Trade retail chains essentially do their own due diligence on the issue of fair trade. They visit the producers to verify the application of FT principles. The largest FT-only retailer in the US is Ten Thousand Villages, with around 75 owned stores, and a network of 390 retail locations selling their products. Their sales are estimated at around $25 million. Their mission reflected in their buying policies is to support poor and disadvantaged craftsman and their families.

The second largest FT buyer is SERRV International. They are a wholesaler primarily to churches and organizations staging their own festivals and events, with estimated annual sales of $13 million. There are also a number of retailers and wholesalers in the $1 – $5 million revenue range, such as Global Crafts, Global Exchange and Handmade Expressions, most of whom are members of the US Fair Trade Federation.

In Europe there are over 4000 WorldShops, as the FT retail outlets are called. They are largely opposed to independent third party certification and labeling. Their Retail Brand name then becomes the label that “guarantees” that the product is Fair Trade. However this system is fraught with difficulties – the retailer is not an independent player, the inspections can be casual, and there are many differences in the interpretation of FT Principles.

Differences in Fair Trade Awareness Between US and EU/UK
There are significant differences today in the level of fair trade awareness and activities between the US and Europe. Fair trade really took off in the 1980s in Europe, where awareness of FT is now very high. This is especially true in the United Kingdom, where retailers like Marks and Spencers, and food producers like Cadburys (chocolate) and Tate & Lyle (sugar) have publicly signed on to the FLO-based certification system. Cadburys and Tate & Lyle have declared that they will be 100% fair trade in the near future.

The Fair Trade Towns movement also started in Garstang, in the north of England, and there are now 462 FT towns that endorse and publicize fair trade products. By contrast there are only around 25 in the USA, but the movement is growing in momentum, and the number includes San Francisco, Boston and Chicago.

The key difference between the US and UK/Europe was the timing of the launch of fair trade. In many European countries there are wide networks of FT retailers (over 4000 EU outlets) and very high levels of market share for FT products. Oxfam in the UK was founded in 1958 as Oxford Famine Relief, and they opened the first World Store for fair trade products in 1969. For example 60% of the bananas sold in Switzerland are FT, and almost 50% of the coffee in the UK is FT. Products like flowers, rice, and honey are widely available in the mainstream retail stores.

In the US, the competing ethical concepts of Organic – Green – Sustainable – Ethical etc. were all established before the concept of “fair trade”. Thus in terms of mindshare, there is more confusion and less understanding about fair trade than in Europe. Fair trade as a concept has a struggle in the US market, and consequently is less developed.

The level of expenditures on fair trade items is estimated to be around $1 billion in both the US and the UK, so per capita four times more in the UK. More than 80% of the total is accounted for by food and commodities, leaving crafts as the “poor relation” with a fragmentation of revenues across the various producer organizations. (Typically only 10-20% of the retail price gets back to the farmer/artisan.) FT revenues continue to grow strongly, with around 20-25% annual growth in FT sales, although there have been adverse impacts from the global recession (but not in online sales).
    
The Way Forward for FT Craft
Certification
The case for a FT Craft certification system is simple and compelling.  In order to increase awareness and purchases of craft products, there needs to be a credible certification and labeling system that consumers trust.

It might be that WFTO will get its act together, and manage to establish a certification, monitoring and labeling system, but that is not clear. It might be that FLO and its US operator, Fair Trade USA will develop a system that will accommodate crafts. It might be that one of the new European based certifiers like IMO or EcoCert will become a significant craft certifier in the US market.

Conclusions
For many in the US FT movement the relative underdevelopment of fair trade and the lack of a craft certification and labeling system is very disappointing. The lack of a craft label, even in Europe, has undoubtedly stifled the level of sales.

It is hoped that there will be new and successful craft certification initiatives that achieve the same success as the FLO label for commodities –or perhaps even a craft certification scheme under FLO that uses the same FLO label. Awareness, understanding and most importantly sales volume of FT crafts could then rise significantly in the US, thus providing much needed income and employment to poor and disadvantaged artisans and farmers.