Domestic Fair Trade: Doing the Right Thing

Scott Koepke, Iowa City Grocery Manager & Soilmates Garden Education Service Teacher

Fall Catalyst 2011

Until I began working more extensively in the local foods movement, I associated the economic philosophy of Fair Trade exclusively in the context of international imports like coffee, cocoa, spices, and rice. Such products designated as “Fair Trade” focus primarily on paying subsistence farmers (most often organized in cooperatives) mutually agreed upon wages that are protected contractually. In a race to-the-bottom, follow-the-money dynamic that drives compensation in commodities markets, Fair Trade arrangements distinguish themselves by paying people what they deserve, not what some people will do for less. At New Pi, we like supporting Fair Trade companies.

After working on projects with Johnson County Local Food Alliance’s (JCLFA) Farm To School chapter to get locally produced greens into the Iowa City Community School District (ICCSD), and my own efforts here at New Pioneer to find local growers of legumes that are currently only imported, I have begun to view the values of Fair Trade through a more local lens.

Let me briefly describe those two experiences to illustrate what I mean.

The ICCSD can purchase salad greens for only a dollar per pound from California. Local growers need at least three dollars just to break even. United Natural Foods, Inc. (UNFI), New Pioneer’s primary dry goods distributor, can purchase black beans and many other bulk products for less than a dollar per pound. Local farmers simply cannot compete with those cost structures.

Why? Economists often refer to “economies of efficient scale, driven by inexpensive labor,” or in other words, being able to produce high volume with low payroll. Such an explanation may be simplistic, but it holds a lot of truth.

It also assumes a lot. It assumes a model whereby we have an endless supply of cheap food, a very tenuous assumption. Iowa’s agricultural leaders need to focus on diversifying production of actual food for human consumption. While politicians wring their hands about unemployment, food production can be the answer for job creation.

Domestic Fair Trade lobbies for more creative off sets and margin adjustments in the budget process. Large-scale and multinational companies have what are referred to as “deep pockets.” Such players have an opportunity (I’d even go so far as to say social responsibility) to walk the talk and reach out to potential local vegetable farmers, for instance, on a much larger scale.

Asking that people pay a bit more (perhaps only initially) to support their local economy need not deteriorate into a debate about “elitism.” When growers are able to negotiate a fair compensation package for their product, it’s anything but elitist. It’s basic respect.

When budgets are created, spending priorities determine whether line-by-line tradeoffs can free up revenue. For example, a high profit margin on one product can allow a low profit margin on another. Committing to local producers will make prices more aff ordable over time.

Beyond “Fair Trade” is a relatively new certification protocol called “Fair Labor.” New Pi’s manufacturer of sunflower and tahini nut butters is a Fair Labor business. In addition to wages, Fair Labor focuses on health, education, and transportation services as measures of commercial ethics. This company is setting a new model for fair exchanges and I’m proud to purchase from them.

October is Fair Trade month. In celebrating the 40th Anniversary of New Pioneer Food Co-op, a leader in supporting local producers, let’s look ahead to the next forty, where we hope that grocers of all sizes will aggressively begin to reverse the 90% imported food statistic. Following
inertia in this area is inexcusable.

Public policy (i.e., subsidy and crop insurance reform) isn’t our savior. Ultimately it will take consumer and citizen/taxpayer pressure: people like us demanding that the local food service industry does the hard budget work of buying directly from its own neighbors. It’s simply the right thing to do.

Further resources:
Domestic Fair Trade Association: TheDFTA.org
EqualExchange.coop
Rural Advancement Foundation International: RAFIusa.org