What is the criticism of the Fairtrade system?

In another article we have already dealt with the meaning of the most common sustainability seals . In this we want to focus on just one certification system: the Fairtrade seal. The beautiful idea of ​​two Dutchmen, who wanted to guarantee Mexican coffee producers fair prices in the 1980s, has now become what is probably the best-known seal on the market for fair trade and a globally active system. Fair prices for the disadvantaged players in the world market are certainly not to be faulted. However, criticism of the Fairtrade system has repeatedly been voiced in recent years. So what's with the negative reporting? And why is fair trade perhaps not as good as many think?

What does fair trade stand for?

Before we start the article, let's briefly review the principles and goals of Fairtrade.
And on the important distinction between fair trade and fair trade : Fair trade means the seal, i.e. the certification system, which this article is about. It is a registered trademark and is intended to guarantee compliance with certain fair trade criteria. Fair trade is often used independently and means - literally translated - fairly traded. But there are many different labels for products, one example is Gepa fair+.

And now to the goals and principles of Fairtrade:

The ultimate goal of Fairtrade was and is to enable more justice in international trade . This is to be achieved through trading partnerships based on dialogue, transparency and respect. In principle, Fairtrade products must therefore be fully traceable and Fairtrade raw materials must be stored and processed separately from non-Fairtrade raw materials. There are also numerous social (e.g. ban on child and forced labor or the promotion of trade union organization), ecological (e.g. ban on clearing forest for new arable land and use of dangerous pesticides) and economic (e.g. payment of minimum wages) criteria .
The foundation for the Fairtrade seal was laid in the 1980s. Two Dutch friends, both living in Mexico, were looking for a way to guarantee the local coffee farmers fair prices. The prizes should enable them to lead a dignified life and promote environmental protection. In 1988 they founded the Max Havelaar label, which became a model for numerous national organizations. These organizations then joined together in 2002 under the Fairtrade seal.
The original idea of ​​guaranteeing fair payment is still reflected today in the Fairtrade minimum price . This means that the producers are paid at least enough for their products to cover the average production costs for sustainable production. There is also a so-called social bonus at Fairtrade, which all producers receive in addition to the minimum price. It should flow into local social projects and improve the overall situation of the respective region, not just the Fairtrade producers.

How does the Fairtrade system work?

In order to understand and classify the criticism of Fairtrade, it definitely makes sense to take a look at the Fairtrade certification processes beforehand. So how exactly does the system work?

Important Fairtrade control bodies

Different organizations come together under the name Fairtrade. Specifically, these are: the Fairtrade Labeling Organizations International eV, FLOCERT GmbH, Fairtrade producer networks and national Fairtrade organizations.
In Germany, the association TransFair eV is the backbone of the seal. It consists of 30 member organizations from different sectors of society that lobby against trade injustices and for fair trade. They also negotiate license agreements with partners whose product range meets the criteria mentioned above.
Then there is the Fairtrade Labeling Organizations International (FLO) , the international umbrella organization of national labeling organizations such as TransFair eV. The FLO are responsible for the development and harmonization of fair trade standards. Your global certification company FLOCERT awards the label to products that meet the criteria.
Another entity in the Fairtrade system is the World Fair Trade Organization (WFTO) . Your task is the organization and networking of around 400 important fair trade organizations worldwide. They represent the supply chain of producers and retailers and award the label to entire companies, not just individual products that meet the criteria.

How does Fairtrade certification work?

So how exactly does the Fairtarde certification work in practice?
Since 2002, the aforementioned FLOCERT has been taking care of the Fairtrade certification processes. If producers or a cooperative want to label their product with the official Fairtrade seal, they apply for membership in a Fairtrade association. To do this, they have to fill out a questionnaire and commit themselves to the Fairtrade principles. In addition, FLOCERT can request special documents. In turn, Fairtrade may provide certain suggestions for improvement, with a deadline for the applicant to comply. Finally, the locally responsible sub-organization of FLOCERT comes by for the first check. This check is then repeated at regular intervals after the certificate has been issued, but not necessarily annually.
Membership and application for Fairtrade certification are not free . In fact, the cost of Fairtrade certification is actually quite high. The costs are tiered, depending on the size of the company, the number of employees and the number of employees involved per unit produced. Nevertheless, even small producers often lose more than 2,000 euros after the complete certification process.

What is the criticism voiced against Fairtrade?

At first glance, the Fairtrade system appears to be a fundamentally well-organized and reliable system. But, as already indicated, there is now a lot of criticism of the Fairtrade seal. And this is not unjustified. So what are the problems of the system?

Small producers and cooperatives are disadvantaged by the system

As mentioned above, Fairtrade certification is anything but cheap. The high prices represent an immense barrier to entry into the Fairtrade system, especially for smallholders. Many small producers unwittingly already comply with Fairtrade growing conditions. Because they simply cannot afford expensive fertilizers, they often grow their products using traditional and usually more sustainable methods. However, they are unable to afford the costs of certification, which means in plain language: Only producers who are already relatively well off economically have the means to afford the certification at all.
Small farmers who only produce low crop yields are sometimes not included in the system at all. The argument behind this is that with their low production volumes, they cannot meet the needs of the market. Farmers who are already certified or those who are aiming for certification are therefore more likely to rely on conventional and high-yielding varieties in order to keep crop yields constant. The incentive to diversify the harvest is zero, goodbye to biodiversity.
A study by the University of Hohenheim also showed that small certified producers often live below the poverty line. Because the relatively high prices that are paid to them still do not compensate for the high costs associated with certification.

Accurate monitoring of compliance with the Fairtrade principles is virtually impossible

And even if the system itself appears trustworthy, it is virtually impossible to actually monitor compliance with the criteria. For example, various reports criticize the prevailing practice of many farmers of circumventing the minimum wage regulation or selling normal products as Fairtrade products without certification. The criticism is that the system unwittingly provides incentives to trick and cheat.
Also, receiving the label does not mean that all Fairtrade criteria have been met from the start. FLOCERT often awards the label together with suggestions for improvement, for which the respective producers are then recommended a deadline that can be several years away. Producers sometimes receive the label even if their products have not yet been produced in compliance with the Fairtrade criteria.

Where it says Fairtrade, it doesn't always contain 100% Fairtrade

A frequently voiced criticism of the Fairtrade system is that the Fairtrade seal may appear on so-called mixed products, i.e. products with several ingredients, if only 20% of the processed ingredients come from Fairtrade cultivation . In addition, some manufacturers do not even comply with this limit and print the mark on their products when the fair trade content is even lower. With "Fairtrade" mixed products, it definitely makes sense to take a close look at the ingredients and the percentage of fairtrade ingredients.
A similar problem arises from the not uncommon practice of volume balancing. Fair and non-fair traded products are mixed together before the products are further processed and some of them are then advertised as fair. While such products must be labeled, there are no guidelines as to how clearly. This means that the note "With quantity equalization" is usually tiny on the back of the products.

Conclusion: To what extent can Fairtrade be trusted?

The current practice of Fairtrade can be best summed up like this: Well meant is not always well done . Ultimately, while the Fairtrade mark is now the best known on the market and has built a reputation internationally, that is also its weakness. Because the more branched an organization is, the more steps are interposed, the more difficult it is to keep track of the big picture.
But as we already wrote in the previous article : According to the results of a study by the Swiss State Secretariat for Economic Affairs, seals, including that of Fairtrade, improve the situation of producers on average. With them, prices and yields rise. But even if the cultivation and living conditions of local farmers improve, the prevailing practice encourages fraud and can thus result in consumers being misled. The criticism of the Fairtrade system is therefore justified!
If you basically want to improve the situation of the producers and you can overlook the fact that the content of your products may not be quite fair trade after all, you are at least not completely on the wrong track with the Fairtrade seal. Nevertheless, we always recommend, especially with "well-traveled" products such as chocolate, to take a closer look and not just rely on seals. In the countries of origin of cocoa, it is simply the case that legal regulations to protect workers are rare or not sufficiently enforced. The preservation of biodiversity and the protection of the environment are often of secondary importance when cultivating cash crops such as cocoa.

How do I know that my chocolate is really fair and sustainable?

So if you really want fair and sustainable chocolate, you can't avoid doing a little research yourself. In our opinion, the key to an all-round fair and direct trading cycle lies only in bean-to-bar production . So if the manufacturers can make you understand every step of the chocolate production - from cocoa cultivation to the bar - and report on the prices and wages paid, that's a very good sign.
We admit that this is definitely more complex than simply buying chocolate with the Fairtrade seal in the supermarket. However, if you really want fair and sustainable chocolate and you find it too time-consuming to do your own research, take a look at our Theyo shop . You can simply hand over the task of researching and checking the chocolate manufacturers to us. We selected the chocolate that we sell according to clear selection criteria and tried with great effort to check it in detail. These are: Fair payment (far above Fairtrade standards), sustainable forms of cultivation (mostly far above organic standards and usually in a permaculture environment without deforestation of rainforests) and - ideally - production in the country of origin of the cocoa.
If you are more interested in the topic of seals, you might also like our articles " The meaning of the most common sustainability seals " and " What does the B Corp seal stand for "!