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Journal of Rural Studies 21 (2005) 419431 www.elsevier.com/locate/jrurstud

Quality certication, regulation and power in fair trade$

Marie-Christine Renard
noma Chapingo, Carretera Mexico-Texcoco, Km 38,5 CP 56230 Edo de Mexico, Me xico Universidad Auto

Abstract This article examines governance changes and shifting power relations within the fair-labelling network. These shifts are framed analytically by reference to broader changes in the agrofoods sector tied to the increasingly key role played by quality relations and standards in the production and marketing of food. The author argues that evident trends such as a growing complexity of fair-labelling markets, the centralization of its regulating bodies, and the normalization of certication processes have altered power relations to the detriment of small producers. In addition, and at the same time, this fair market niche has become more desirable to dominant market actors leading to a combination of factors that has triggered a broad debate within fair trade with respect to the denition and mission of the fair-trade network. r 2005 Elsevier Ltd. All rights reserved.
Keywords: Certication of quality; Fair trade; Fair labelling; Regulation; Power in agrofood

1. Introduction This article examines power shifts and changes to governance forms within the fair-trade label network, and situates these changes with respect to processes of market growth and diversication, institutional centralization, and the normalization of certication norms in accordance with transnational standards. By examining these shifts, I hope to extend my previous analysis (Renard, 2003) addressing key fair-trade issues including the legitimacy of quality denitions and control over market access. This work is based on a general analysis of new organizational forms within the agrofoods sector, where quality and standards are key elements. As agricultural production has become subject to economic liberalization, new regulatory forms have appeared with a focus on health, food, and environment (Watts and Goodman, 1997). As shown by researchers working from diverse perspectives such as conventions theory and neoinstitutional economics, these new regulatory models turn on diverse notions of quality and practices through which said
$ The author would like to thank Tad Mutersbaugh, Dan Klooster and Pete Taylor for their excellent translation. E-mail address: mcrenard@gmail.com.

qualities become qualied, standardized and certied. These practices constitute, in effect, mechanisms of market entry and exclusion, converting them into a source of power for those who control them. This emphasis on quality within the agrofoods sphere comes also in response to evolving forms of consumption, in which product demand is tied to shared, socially construed values (such as environmental conservation, food safety, or regional character). This diversication of quality products opens the door to new quality-based niche market strategies, mounted by producers in cooperation with social activists, that offer an alternative to the domination of the market by large agrofoods industrialists (Renard, 1999a, b) and also require recognized labels and certication frameworks. Another key element contributing to this dynamic may be found in the state of anxiety triggered by recurring food crises in societies of the global North (Friedberg, 2004). The most important response to these food scandals has been the construction of norms and standards (Guthman, 2004) and institutions for applying and verifying these standards.1

1 As in the Belgian case where a new food agency, AFSCA, was created after an instance in which chicken was found contaminated with dioxins.

0743-0167/$ - see front matter r 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.jrurstud.2005.09.002

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For some authors (Mutersbaugh, this issue), the states retreat from many economic spheres provides one of the reasons for the rise of these new regulatory forms, sometimes private, sometimes public, which may also be viewed as neoliberal since they owe their existence to consumer preference rather than public intervention (Guthman, 2004). In either case these quality control frameworks constitute a space in which connections between state and economy are becoming recongured as the former has been pressured to intervene in the supervision and regulation of agrofood supply chains. Debate generated by food scandals and biotechnical manipulation in the form of genetically modied organisms (GMOs) have reached every social sphere, and consumer concern with respect to food origin and quality has become an inescapable political and social fact. As rule-making over GMOs in various countries shows, consumers and NGOs have aligned to press governments to legislate new food protections against the wishes of powerful actors such as biotechnology transnational corporations (Wilkinson, 2002).2 New regulation protocols have been extended to cover entire food sectors such as organic products, denomination of origin, and GMOs, to cite the bestknown, particularly in EU countries and the EU economic zone. In a separate regulatory development, a series of transnational agencies and norms (such as ISO) govern organizations that certify these qualities in a profusion of certication of certication (or accreditation) in accordance with global standards (Mutersbaugh, this issue). Quality-based production strategies have been taken up by hegemons in the food sector, with large distributors in the lead. Seeking a connection with consumers, and championing themselves as consumer protectors (Valceschini and Nicolas, 1995; Busch, 2004), these lead corporations have looked to establish a quality image by setting a series of (internal) norms covering aspects from packaging to product content. Conscious of the need to maintain a positive image or at least avoid negative publicity, and confronted by the success of quality-specic niche-market products, large corporations have, as we will see below, integrated entire quality-product lines and developed their own quality labels or attempted to appropriate existing labels. In many EU countries, traceability protocols are being developed in conjunction with NGOs to gain information about foodstuff movement and thereby regenerate consumer condence in the agrofood system. Within this traceability context, private, thirdparty-certied standards weigh heavily upon providers who must comply or forfeit market access. Such is the case of large corporate programs such as the Starbucks cafes privileged provider program in which providers must meet a series of Starbucks internal norms.
2 This statement may not be over-generalized. In other countries, such as Mexico, the legislation has been criticized for failing to include norms with respect to labelling and for overly favoring transnational agrofoods corporations.

This article takes as a starting point the supposition that the distribution of power in the agrofoods chain is increasingly associated with denitions of what constitutes a good quality product or good production and/or marketing practice. The assignation of quality in product, production and/or marketing terms implies by extension a setting up of rules of market-access and, also, of market exclusion (Valceschini and Nicolas, 1995). As quality denitions increasingly shape market access, the quality economy likewise becomes a site of negotiation and power (Sylvander, 1997; Renard, 1999a, p. 75). Following this logic, an ability to assign value (and valorize) via the legitimization of particular quality denitions necessarily requires processes of certication. Herein arises the importance of studying the mechanisms, social relations, and institutions that organize and control both quality criteria and certication mechanisms associated with multiple dimensions of quality. In the second and third sections, I will make use of a principally Frenchquality-economy literature3 to review the implications of rm and producer strategies centered on certication of agrofood quality labels. Here my interest is to indicate how these strategies are supported by economic and juridical aspects of standards and certication institutions and highlight the power that they exert over the development of niche markets. Then, in the forth section, I will apply this framework to fair-labelling networks. Beginning in a civic initiative that was self-governing and self-certifying, this network subsequently centralized these functions in an institution accredited under international norms, obligating it to make use of third-party certication. The growing sophistication of fair-trade networks and the reorganization of its quality-management institutions also altered its relationship to fair-labelling producers (that are its reason for existence), opening the current debate over the denition and mission of fair-trade networks. This present conjuncture coincides with new rm strategies of dominant agrofood companies that, attracted by the success of the fair-trade concept, are attempting to capitalize on fair trade by multiplying quality labels and exploiting producers needs for increased sales. Through these means these rms hope to establish a direct relation with consumers, evade recognized fair-trade certifying institutions and impose their own versions of fair trade. I will illustrate these policies through an analysis of three cases; the French distributor Carrefours marketing practices, UtzKapehs new responsible quality label, and Starbucks standards dilution strategy (Mutersbaugh, this issue). This analysis will focus on fair-trade coffee, which continues to be the most important fair-labeled product both in terms of sales volume (80%) and number of countries involved. The case study material is based upon interviews with members of national fair-trade organizations in Europe, the US and Mexico, with administrators
3 conomie de la qualite edited , Its founding text, Agro-alimentaire: une e by Valceshini and Nicolas, appeared in 1995.

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of the Fair Trade Labelling Organization (FLO) and with advisors to Mexican fair-trade coffee producer organizations. 2. Quality takes center in the agrofood scene In a context of agrofood market saturation, marketing strategies centered on quality, product differentiation, and market segmentation allow rms to evade price-based competition between identical products while also responding to the increasingly differentiated demand structure associated with a postFordist global economy (Valceschini and Nicolas, 1995). These strategies consist in adding value to products to achieve an above-market price that economists refer to as a differential rent. Market segmentation and product differentiation mobilize varied and interlaced forms of quality such as service quality, nutritional quality, sanitation, and others to coordinate the efforts of producers, agroindustries, distributors, and consumers (Marsden, 1992; Sylvander, 1995; Thevenot, 1992; Renard, 1999a, b). New consumption models arise with respect to socially constructed and shared values (such as environmental conservation and social justice to name but two) and, in response, rms develop product differentiation strategies in response to these new quality concerns. In the context of global markets, large rms and corporations enjoy a clear comparative advantage as a result of their scale economies, capacity to innovate and develop new products, and millions in advertising budgets. By contrast, these respective strategies are relatively inaccessible to small and medium-sized agrofoods companies and agricultural cooperatives. The latter must, as a result, seek alternative strategies and market niches for products whose qualities are appropriate to these smaller rms and cooperative institutions (Sanz and Mac as, this issue). Quality, in this sense, does not refer only to intrinsic food characteristics such as physical qualities including nutritional content, hygiene, and organoleptic taste qualities, but also to cultural and ethical qualities (Renard, 1999a, pp. 7172; Carimentrand and Ballet, 2004). In this sense, quality may also be enhanced through the incorporation of social values into products, which also adds to their economic value. Quality may, in this sense, be dened as a products capacity to satisfy explicit or potential consumer needs, a denition that places greater emphasis on the demand than the product per se (Valceschini and Nicolas, 1995). Initially this social-quality strategy was limited to small and cooperative producers who used it as a strategy of resistance to the efforts of large agroindustiral players against whom they could not compete directly. Through the creation of market niches (such as organic agriculture, protected geographic indicators, fair trade), these small producers were able to earn rents. This value-added strategy, based on notions of environmental value and local identity, was successful in its bid to reinsert these values into global markets. Gaining a foothold in these

social-quality market niches provided small producers with the possibility of challenging dynamics of market access and exclusion that worked to their disadvantage (Renard, 1999a, pp. 4445). At present, however, rm strategies based on addition of social values has tended to become mainstream for two interconnected reasons. On the one hand, consumers have become increasingly wary of foods produced under the reigning agronomic model based upon intensive production due to multiple agrofoods scandals in recent years.4 On the other, public policies pushed by consumers and NGOs in response to food scares have created new demands for social-value products (Wilkinson, 2002), for example in the case of organic agriculture. Food crises have in this manner driven establishment of new norms and standards, and mechanisms through which to certify these standards, in a bid to reestablish consumer condence with respect to the agrofood chain (Sylvander, 1995; Friedberg, 2004; Guthman, 2004). Quality, then, is not a condition inherent in a product. It must be constructed and then promoted in order to become a collective comparative advantage. A particular quality has to achieve market recognition, which in turn requires an organization to champion it. In sum, the construction of market niches revolving around specic quality denitions is a collective process that seeks consumer recognition through quality labels and (public and/or private) certication practices: the valorization of quality within a market is produced via certication processes. 3. Certication: a space of negotiation and power When quality rests on intangible elements that consumers cannot verify themselves, such as respect for the environment or equity in transactions, then the valorization of quality depends on the condence consumers give to it and, therefore, on the information that reaches them and the condence they have in the truth of that information (Carimentrand and Ballet, 2004). Elements such as information, legitimacy, and condence therefore are tied to the use of distinctive quality signs. Quality becomes objectied and symbolized by various signs (quality seals and labels), which form the basis of both consumer recognition and market valorization (Valceschini and Nicolas, 1995). Labels synthesize information for the consumer who has neither time nor knowledge to study the characteristics of every article offered on big retailer shelves, permitting her to reduce time allocated to distinguishing between products (Carimentrand and Ballet, 2004). For consumers, such signs and seals establish the reputation of the product and guarantee the incorporation of social values. These signs, therefore, have to be clear, intelligible, believable, and carry an unequivocal signicance shared between the diverse actors that integrate the agrofood chain. For these reasons, quality seals represent a
4 Standout incidents include mad cow disease (bovine spongiform encephalopathy), dioxin-contaminated chicken, and adulterated olive oil.

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key economic and political element due to the importance of social relations in play. Understood in this way, quality signs may be understood as constituted in collective action and as products of negotiation over conditions under which they may be granted and used, subject to requirements of clarity, intelligibility and reliability mentioned above. At the same time, a quality sign requires the production of norms and standards that dene its legitimacy, on the one hand, and the control over its use, on the other hand. In other words, it implies acting at two levels. On the rst level, it acts upon the market offer through the construction of quality, which requires the instrumentation of the necessary coordination between the actors involved. On the second level, it acts on demand through the creation of signs of recognition and information necessary to the consumer (Valceschini and Nicolas, 1995). This implies a process of normalization, that is to say, an elaboration of criteria (standards) and certication mechanisms sufcient to guarantee that the product complies with announced characteristics. These diverse functions associated with labels require a public or private regulatory organization that produces legitimate quality criteria (Watts and Goodman, 1997), guarantees the coordination between actors in the network (Sylvander, 1995), functions as a referee in cases of conict over uses of the quality signs, establishes control mechanisms and applies positive or negative sanctions to diverse actors in the chain depending upon their compliance with norms. This organization fullls economic functions by establishing barriers to entry to the market niche and by establishing processes of economic cooperation between actors around quality. It fullls legal functions by protecting the rent from differentiation by impeding the undue use of the distinctive quality sign and by acting as a referee between the agents involved in the agrofood chain. It also fullls institutional functions by being the quality guarantor and, when it is a private entity, serving as an intermediary with public powers (Sanz and Mac as, this issue). In sum, the regulating organization manages access to the market and the distribution of differentiation rents, thereby undoubtedly providing a source of power for whoever undertakes those functions. In this way we arrive at the question of who denes quality and how it is dened, how norms and criteria are set, and who assesses whether products conform to these norms. Many of these functions fall under the perview of certication systems, which may be private, semi-public, or public, voluntary or obligatory (Sanz and Mac as, this issue; Mutersbaugh, this issue). In the case of strategies to achieve collective comparative advantages via market niches, certication systems were initially established by and for producers and/or activists in order to gain access to the market, to guarantee product quality to consumers through symbolic seals of quality, and to protect the seals from fraud. This is what happened in the case of organic agriculture, whose principal certifying organs, OCIA and Naturland

emerged from the organization of organic farmers in Northern countries (Gonzalez and Nigh, this issue; Guthman, 2004). It is also the case with fair trade, created by activists, nongovernmental organizations, and coffee-farmer cooperatives with the aim of providing cooperatives with better prices (Renard, 1999a, b, 2003), as well as with the Denominations of Origin movement, whose regulating councils grew out of cooperation between public agencies and local promoters of traditional qualities of products related to a specic region (e.g., terroir or local products).5 These organizations were self-regulated because they established their own norms and criteria and they were self-certied because they had control over the processes of inspection (Carimentrand and Ballet, 2004). Inspections were performed by peers, accompanied by technical advisors and volunteers or activists (Gonzalez and Nigh, this issue). The founders of these networks integrated ideological principles such as the relationship with nature or the ethical issues of market exchange, together with common interests such as the protection of local production systems or of specic groups of producers. The denition of rules and norms and the establishment of controls and penalties (including exclusion from the network) for those who have not complied has encouraged the organization producer groups (and sometimes intermediaries as well) and promoted the creation of the necessary institutions for the process of assigning quality (Muchnik, 2004). In other words, by standardizing the conditions of quality and by putting rules on access to the `re, market niche, certication modies the lie 6 one of its rst effects being that producers organize in order to be able to comply with the quality criteria. However, the success of quality-centered market niches in terms of growth in size and volume, consequent complexity, and multiplication of products needing standards and certication has led to an institutionalization that includes professionalization of inspections and certications and establishment of specialized bureaucratic institutions. This institutionalization has also been prompted by the appearance of parallel seals and the danger of fraud, which has attracted the attention of those public agencies that provide legal coverage for quality denitions and guarantee their veracity to consumers. This, for example, has been the case for EU regulations and codes written for organic agriculture and Protected Denominations of Origin. In some countries, food product certication is shaped by public policy.7 Norms have been
5 For a non-foodstuffs case, see pieces by Taylor (this issue) and Klooster (this issue). 6 `re (Malassis, 1979) is used in the same sense as The term lie commodity-chain. 7 For example, in France the French standardization agency (ANFOR) was charged with standardization prior to certication. Under ANFOR norms, certication requires third-party intervention. In addition, an EU norm, EN 45011, sets four criteria for third-party certication including professional independence, competence, efciency, and condentiality (Carimentrand and Ballet, 2004), which make private certication subject

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established to guarantee the independence of certiers from certied parties, such as use of third-party, professional inspections instead of peer inspections. At the same time, certifying organizations have become themselves subject to certication, that is to say their accreditation depends on compliance with regulatory frameworks and international agencies that ensure that their inspectors are trained and skilled (Mutersbaugh, this issue). All of this subjects certied-product producers to a proliferation of rules and verication procedures, which represents a considerable administrative and nancial burden. As producers seek recognition from public agencies either to protect distinctive quality labels or in compliance with obligatory state regulations, new rules norms, and conditions are introduced to comply with ofcial demands, and these in turn lead to additional modications of the `re. Public agencies, as a result, may take a role in lie supervising and controlling the legitimacy of quality criteria. For example, the 1993 French establishment of an obligatory government-supervised organic certication scheme contributed to the wholesale restructuring of the sector, causing the collapse of networks that revolved around private qualifying organizations in order to give way to the coordination around a seal owned by the ministry of agriculture (Sylvander, 1997). In the private sphere, retail chains have begun to adopt quality- and certication-based strategies previously developed by alternative agrofood networks. This is of concern to small producers, for a notable structural tendency of agrofood chains has been the growth and concentration of big distributors (supermarkets and hypermarkets) such that they become a chains dominant pole. Their size and concentration gives them so much negotiating power that they can impose their purchase conditions on producers and manufacturers (Busch, 2004). The proliferation of quality seals and certifying organizations has coincided with big retailers appropriation of the quality-label strategy, and self-presentation to consumers as protectors food quality (Valceschini and Nicolas, 1995). The standardization of quality represents several other advantages for large distributors. It assures better management of their supply through imposition of norms on suppliers. In addition, it gives them an aura of responsibility in the eyes of their clients even though the costs of certication generally fall on their suppliers (Busch, 2004). Even though the retailers have often dened quality standards, they prefer that a different organization take the role as certier of those standards, which absolves them of responsibility in case of a problem. For producers and their intermediaries, placing products on the shelves of super- and hypermarket chains becomes very attractive due to the high sales volume. Nevertheless,
(footnote continued) to state regulation. However, in many countries there are no regulations concerning certication and, as a result, any company may take up unregulated certication activities (Busch, 2004).

this entails risks for producer groups. It subjects them to the quality demands of these corporations at the same time that they risk losing control over their own denitions of quality. It can also weaken producers organizations and affect coordination between actors in the quality network. The unequal power relationships may favor a dynamic in which increased sales volume translates into lowered product prices, thereby eliminating the benets of the strategy of quality construction from a producer-group standpoint. Multiple factors, then, are at play in the processes of qualifying and certifying agrofood. In the next section, we will analyze these elements in the case of fair trade.

4. Fair-trade labelling: from Max Havelaar to FLO In its early years, alternative trade represented an integrated commodity chain parallel to conventional market channels. Products from Southern countries, mainly artisanry and coffee, products with little industrial content, were sold in Northern cities in special stores managed by non-governmental organizations and staffed by volunteers. Products were sold at prices above those of commercial brands. The consumers who patronized these stores were convinced of the markets inequities and viewed their support as a political gesture (Renard, 1999a, b, 2003). In order to increase sales volumes and in response to a request from a coffee growers association in Mexico, the members of a Dutch association sought to introduce coffee from Southern cooperatives into their countrys markets (Roozen and VanderHoff, 2002, p. 79; Renard, 1999a). Thus emerged the fair-trade model or quality label.8 This label appeared on packages of existing coffee brands owned by established industries which understood the subtleties of local markets and were already well known. The label guaranteed to consumers that the product was sold under equitable conditions. It guaranteed a quality having to do with ethical values: justice, exchange equity, solidarity and opposition to the dominant relations within the conventional market (Renard, 1999a). This quality is a social construction, oriented toward a sector of conscientious consumers willing to pay more if they are guaranteed that a price premium will actually reach producers. Humanitarian motivations prevail over political motivations in the act of consuming fair products. What is ethical is an argument about commercialization. The label contains information on producers,9 establishing a symbolic relationship between Northern consumers and Southern producers who are usually invisible in the market (Whatmore and Thorne, 1997; Raynolds, 2002). This is a type of relational ethics (Carimentrand and Ballet, 2004).
8 quitable o labellise in French, Fair labelling in English; commerce e comercio justo in Spanish. 9 Some authors see the label as a commodity in itself. See Goodman (2004).

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Fair trade grew and diversied. It exists today in 14 countries of Europe, the United States, Canada and Japan, principally under the names and labels of Max Havelaar, TransFair and Fairtrade. After the experience with coffee, the model was extended to other products.10 There are some one hundred different products with the fair-trade quality label, derived from imported raw material such as instant or decaffeinated coffee or made up of products such as chocolate and jams. In 2002, 58,800 metric tons of products with the fair-trade quality label were sold, with an approximate value of $US 300 million (FLO, 2003). The decision to fully enter conventional market channels required dealing with market actors such as industrialists, traders and distributors, in a network where these actors diverse interests coincided. Common interests in fair labelling included rents from diversication into new market niches and the benets from positive images associated with the fair-trade label. Producer interests included selling more at a better price. Consumer interests included the opportunity to engage in solidarity and ethical action.11 The distribution of the product is carried out through this network of actors, and implies a particular set of negotiation arrangements (Eymard-Duvernay, 1995). It is in this sense that we speak of a convergence of diverse interests among the actors that make up the FairLabelling network. The network is not built on a general agreement among promoters on ideological or ethical principles (Renard, 1999a, b, p. 251), but rather on a contractual relationship between these actors and the regulatory institution (Carimentrand and Ballet, 2004). In effect, the organization that developed the fair-labelling norms and certies their fulllment, did not emerge out of collective action on the part of the members of the network. Rather, the origin of both the rules and the idea itself of fair labelling emerged from an attempt to respond to producers needs. In the words of one of fair labellings founders, it is acknowledged that in general, the system has not been very democratic (VanderHoff, 2002, p. 12). From the beginning, fair labelling dened organized small producers as the privileged subject of its activities. Nevertheless, later, it would include plantation workers when, and only when, cooperative production is not relevant, as in the cases of bananas and tea. Most recently, workers of soccer ball factories have been incorporated. In the case of coffee, the label guarantees that the product has been purchased directly from small producers
10 These products include coffee, tea, cacao, honey, sugar, rice, bananas, pineapples, mangos, citrus, apples and oranges, fresh juices, nuts, cotton, roses, vanilla and soccer balls (FLO, 2003). The most highly developed products are coffee and bananas. Quinoa, avocados and wine are in the process of incorporation into the model. 11 Carimentrand and Ballet (2004) add that the relational ethic makes sense within this network and that a short market chain is more efcient than a longer one in which intermediaries abound between producers and consumers.

at a fair price, that is, that it directly remunerates the work of small producrs. The fair price ensures that cooperatives receive a guaranteed minimum price12 plus a price premium to be dedicated to social and community projects. The guaranteed minimum price protects producers share of the rent from differentiation. Buyers, in addition, are obligated to pre-nance harvests and establish long-term commercial relationships. Producers are expected to have democratic organizations, engage in responsible management and administration and comply with commercial commitments. FLO encourages producer organizations to invest the social premium paid by buyers in development programs that benet the community. In the case of plantations, fair labelling requires that workers have decent salaries and the right to participate in unions and it prohibits child labor. It also includes environmental criteria such as avoidance of pesticide and herbicide use that affects the health of workers.13 Generally speaking, fair labelling increasingly supports organic production, which carries a greater price premium and is subject to other certication processes. This leads producer organizations to propose certication processes be simplied and unied. The application of certications norms, controls, premiums and penalties has the power to modify the organization of the commodity chain and its production processes. Coffee growers organizations report that one of the positive benets of belonging to the fair-labelling registry has been that it strengthens the quality of the cultivation and processing of their coffee beans. This has led to a better acceptance in the market and the consolidation of commercial relations with buyers. At the same time, they report making improvements in administrative processes and their commercialization skills (VanderHoff, 2002, p. 19; Aranda and Morales, 2002, p. 16; Perez-Grovas and Cervantes, 2002, p. 14; Mart nez, 2002, p. 15).14 Some coffee cooperatives have been removed from the fair-labelling producer registry because of serious defects in these processes and failure to fulll sales contracts. Although this situation has been the object of criticism, it has led these cooperatives to take mitigating measures aimed at reinstatement to the registry (Murray et al., 2003, p. 20). Buyers have also had to modify their traditional forms of operation, as they are obligated to establish direct relations with the cooperatives (importers are the only intermediaries permitted), to give advances
12 The minimum price was initially established with an UNCTAD study as the basis of calculation. Later, a price premium was added for organic coffee. The minimum price in Mexico and Central America for coffee is US$1.26 per pound of washed arabica coffee and US$1.41 per pound of organic washed arabica coffee. In recent years, the market price of this coffee on conventional markets has been around US$0.60, having reached an historic low of US$0.40. This low price fell far short of covering small producer production costs, estimated at US$0.90. 13 FLO: www.fairtrade.net/sites/. 14 These works are case studies from the One Cup at a Time: Poverty Alleviation and Fair Trade in Latin America project, carried out by the Fair Trade Research Group at Colorado State University.

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and to pay a price above that determined by the market. The specic conditions established for plantations are radically modifying their production processes (Roozen and VanderHoff, 2002, p. 121 and sig.). The quality of fair trade is given value in the market through a process of certication. This requires an institution to (1) produce legitimate norms and criteria of this quality, that is, to decide when coffee can be dened as fair and granted the label. The institution must (2) coordinate the actors involved in the network and must (3) certify the fulllment of norms by producers on the one hand, and by importers and industrialists, on the other. It must also (4), promote the label and thereby promote consumer demand. This role initially fell to foundations (such as Max Havelaar, the rst label) created ad hoc by the models promoters. The role was later taken on by the so-called national initiatives emerging in the countries where the model originated (Max Havelaar, TransFair, Fairtrade among others). The members of these foundations included, in each country, members of NGO and alternative trade sectors, consumer organizations, roasters and representatives of coffee grower cooperatives. The executive role was assumed by a Secretary. International coordination rst occurred among diverse initiatives such as Max Havelaar and Transfair in 1993 when an International Registry Commission was created. This Commission dened buying conditions and criteria for fair coffee and administered the registry of producer organizations (Renard, 1999a, p. 208). The growth of fair labelling, in both sales volume and number of imported products, occurred simultaneously with the development of national initiative ofces and a certain professional specialization among the persons in charge. In order to deal with the sophistication of the market, its products and its criteria, in 1977 fair trade entered a higher stage of institutionalization. The various national initiatives formed FLO, the Fair Labelling Organization, headquartered in Germany. FLO is the coordinating institution charged with making criteria uniform and improving the organization of inspection and certication processes. It also administers the registry of cooperatives belonging to fair labelling. This organization, then, has in its hands the mechanisms of producers access to and exclusion from the fair-trade market. It also manages the use of the quality label, of which it is owner, by industrialists. According to its own documentation, the principal functions of FLO are: (1) to guarantee observance of the criteria of fair labelling by all actors in the network; (2) to administer supply in relation to demand, and to advise producer organizations on development projects. A team of marketing experts is responsible for this task; (3) to give support to producer organizations in order to strengthen their organization and production. The national initiatives (generally based in consumer countries) are members of FLO and are in charge of relations with buyers, industrialists and distributors, in addition to developing internal markets. Decisions within

FLO are taken by a Board of Administration, which delegates its functions to an Executive Board headed by a director. A specic committee is charged with developing standards for different products. Regional assemblies of producers play only a consultative role. As it evolved from an alternative organization to an institutionalized certication system, FLO concentrated spatially and in its decision making. As generations of leadership of the national initiatives changed, to a certain degree it lost its personalized contact with members of the national initiatives and producer cooperatives. These latter have complained about the lack of clarity in the structure of FLO, the manner in which decisions are made, the loss of communication with FLO members and the lack of inuence of the members within the organizational structure (Perez-Grovas and Cervantes, 2002, p. 22; Murray et al., 2003, pp. 2021). In 2003, FLO carried out a restructuring to respond to these complaints. Four representatives of producer organizations now sit on the Board of Administration. Moreover, there are now seven liaison ofcials based producer countries to support the cooperatives (FLO, 2003). Nevertheless, the difculties persist: producer organizations have the impression that fair trades regulatory organization is guided more by commercial considerations than by solidarity, and acts more against them than in support of them.15 Faced with the multiplication of brands of all types and to avoid competition among diverse fair trade labels and resulting consumer confusion, FLO took another step in the institutionalization of fair labelling. It developed a uniform international label for all the initiatives, the Fairtrade Certication Mark (CM). To protect the fair trade label from possible fraud and to obtain ofcial recognition, FLO is looking for accreditation as an independent certication organization under international norms (ISO 65 and EN 45011). Until now, the recognition of the label was produced by the certifying organization; that is, fair labelling self-certied itself. The attempt to obtain ofcial approval is contradictory if we take into account that surveys done in some European countries (Belgium and France) show that consumers have more condence in NGO certied quality labels than in those guaranteed by state agencies or private rms (Carimentrand and Ballet, 2004). Indeed, the progress of fair trade in all markets where it has been launched demonstrates the condence consumers have in the national initiatives. As a result of the international accreditation process, it was necessary to establish a certication unit independent of FLOs administration in order to comply with a third party verication requirement. Verication processes have
15 One example of these controversies is the case of the banana producer cooperative, Banelino from Dominican Republic, which once sold 100% of its production in the fair trade market. After Hurricane Mitch, when small producers could not satisfy demand it was displaced by an importer with fruit plantations included by FLO in the registry of accredited ` producers. Documentary Le Commerce Equitable, series La Planete en Question. RTBF, Belgium, 2005.

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become more strict, as opposed to fair trades previous nature, characterized by personal relations and shared values.16 A secondary effect has been the need to charge producers for the certication process. Unlike organic products, fair trade certications costs have been covered by industrialists through payment for the right to use the quality label. The national initiatives also helped nance the process. Producer organizations do not question the principle of paying the costs of third party certication, if this enhances the credibility of the label. But they do question the lack of transparency with which FLO and FLO-Certication have determined the rates charged.17 5. Fair trade at the crossroads Through the application of rewards and sanctions, the `re, principal labelling institutions control access to the lie or the ability to market a certied product, such that quality indicators act as a barrier to entry (Valceschini and Nicolas, 1995, p. 30). Any market niche strategy attempts to adjust production to concord with demand to preserve a premium price. This logic, for example, underlies geographic indicator labels (apelaciones de origen) and other specied quality labels. However, fair trade has not provided a policy of production reduction, which would run counter to its core politics of providing support to the greatest possible number of producers (Renard, 1999b, p. 498). In fact, the original project was far more ambitious than simple market niche formation: it proposed to use the power of consumers to exert pressure on the dominant market players (in this case giant corporations in the (coffee) agrofoods sector) to obligate them to improve prices and conditions of coffee purchases (Roozen and VanderHoff, 2002, p. 158). Consumer action was thought to constitute a signal, political as well as commercial, favoring a new form of relationship between peoples (Renard, 1999a, p. 191). This new relationship, however, relied on earning and maintaining a market volume that was sufciently high to enable this pressure.18 Simply put, fair-labelling policy does not seek to reduce the amount offered by producers but the opposite. Current niche market mechanisms may have the effect of limiting access to cooperatives with sufcient organizational capacity to maintain consistent quality, to meet the
Personal communication with producer cooperatives. Document from the Latin-American and Caribbean Coordinator of Small Fair Trade Producers (CLAC), prepared for its Regional Assembly, August of 2004. After negotiation with FLO, a rate of 0.45% of the FOB nal value of the product will be charged for two years. After this period, an evaluation of the real cost of certication will be carried out (personal communication with Majomut Cooperative, Chiapas). 18 As explained in their book, they obtained this result more in the case of fair trade bananas, which brought up to 14% of the Swiss market, in part because, not being inside the European Union, imports of this fruit were not subject to the rules of the common market, and may be protably resold in other countries. Transnational companies Chiquita and Dole are reacting and applying certain labor and ecological norms in their plantations (Roozen and VanderHoff, 2002, p. 157).
17 16

demands of international trade, and to conform to democratic administrative principles. Nevertheless, the philosophic stance of fair trade is to offer aid to newly formed producer cooperatives so that they may meet democratic and economic principles and open (new) opportunities for more producers. In the long run, FLO intends that fair trade emerge from the status of an NGO alternative to become an instrument to encourage development-through-commerce. In the next 25 years, their vision is to transform global production and marketing to conform to fair trade principles (FLO, 2003). This contradiction between philosophy and practice, between principles and political economy, has led the fair trade commercial model to a crossroads. Fair trade market expansion, rapid at rst, has become relatively stagnant and, at present, represents an average of 1.2% of national sales in European countries (3% in Holand, 8% in Switzerland). Sales are increasing in a more dynamic manner in the US and Canada where fair trade products are of more recent introduction. Nevertheless, an eventual ceiling similar to that in the EU is anticipated (Murray et al., 2003, p. 15). In short, production is outstripping the growth of demand. Fair trade organizations are unable to adopt control mechanisms appropriate to a niche strategy due to the character and philosophy of the initiative. Without doubt, producers are attracted to the fair trade market by the advantages it offers. Producer cooperatives concur in saying that the major advantage in fair trade is the price offered for their product (at times double market price). In the epoch of the coffee sector crisis,19 this premium price makes the difference between the collapse of the cooperative or its survival. Higher fair trade prices insure the loyalty of producer associates and, as such, organizational integrity (Renard, 1999a, p. 309). Earnings are reinvested in the creation of training initiatives, programs for credit and collective infrastructure development (transport, coffee processing mills) (VanderHoff, 2002; Aranda and Morales, 2002; Perez-Grovas and Cervantes, 2002; Murray et al., 2003, pp. 613). In addition, fair trade network participation brings other important advantages: co-ops develop long-term relationships with importers and roasters, receive pre-nancing to pay their producers up front for coffee (an appreciable advantage in a smallholder sector without access to credit), and acquire market knowledge (Renard, 1999a, p. 274). For these reasons, many producer co-ops wish to sell under fair trade conditions and sell the greatest possible quanitity of coffee.20

19 For more on the coffee crisis, see Renard (1999a, pp. 118126, 2003, p. 93). It is calculated that less than 5% of the nal price of the largest brands of coffee go to the producer, while 33% of the price of fair trade coffee goes to the producer (Roozen and VanderHoff, 2002, p. 99). 20 Other advantages mentioned are the acquisition of knowledge about improving the intrinsic quality of coffee, the development of contacts between participating organizations in the fair trade market, a higher rate of self-condence in achieving good economic results, and the protection

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Unfortunately, the fair trade market is unable to sell all of the coffee that producers offer. Co-ops on the fair-trade register fail to sell, on average, more than 20% of their production to fair trade importers. This unsold coffee must be sold at market price, sometimes as low as one half the fair trade price. Only some of the earliest co-ops to adopt fair trade practices, the best organized, and those that have developed strong trust relations with toasters and importers manage to sell more than half of their harvest to fair trade markets, thereby achieving some protection from market uctuations (Renard, 1999a; VanderHoff, 2002; Perez-Grovas and Cervantes, 2002; Aranda and Morales, 2002). Co-ops that have only recently registered as fair trade producers struggle to sell their coffee in this market niche. Herein arise new proposals and paths that, in exchange for market growth, may risk the benets achieved in terms of higher prices and consumer condence in the fair-trade model, and more profoundly, have led participants to debate the core mission of fair trade. Under conditions of oversupply, one may address the question of sales, looking to increase them, or to supply, seeking reductions. The former may be accomplished by attracting a greater number of consumers through lower prices, advertising campaigns, new products (differentiation), or opening new market areas. Demand reduction may be obtained by increasing barriers to market entry which impedes the entry of new producers into the market niche, an approach that runs counter to the philosophic principles of the fair-trade movement. The governing board of FLO has proposed to increase sales by decreasing the minimum guaranteed price paid to producers, and additionally by differentiating this price by country. This proposal has been rejected by the majority of cooperatives, who have criticized the FLO leadership for an excessive orientation toward marketing in detriment to the central role of producers in the fair-trade project. Toasters in the US and EU have also joined this critique, with an eye to protecting the differentiation rent and argue that lower prices may damage the reputation of fair labelling insofar as it would be difcult to explain why fair prices are lower.21 Producers, from their side, struggle to protect their market access and avoid application of the in and out principle which would reduce their market share as other producers enter as rsttime sellers, and are again aided by toasters that have established long-term commercial relations with producer groups, as required by fair-trade principles. Another point of disagreement revolves around a possible broadening of the fair-trade concept to include plantation agriculture, particularly in coffee where most fair-trade production
(footnote continued) of the environment in the FLO (Murray et al., 2003, 21 Discussion document American and Caribbean (CLAC), August 2004. case of organic coffee, strongly promoted by p. 6 and following). for the Regional Assembly of the Latin Coordinator of Small Fair Trade Producers

originates in small-producer groups. This last discussion is directly tied to the problematic entry of transnational corporations into fair-labeled markets. The effect of this transnational entry would be felt in a strong growth in fairlabeled markets and increased licensing revenues for national fair-labelling initiatives. This is in fact the route presently pursued by TransFair USA which has offered fair-trade licensing to Starbucks and Folgers Coffee (see below). However, in order to meet the supply needs of the large corporations, these fair-trade groups propose to include coffee plantations on the all-important fair-labelling registry. This proposal has encountered strong opposition from co-ops worried that this initiative would lead to (downward) price pressures and reduced market access. What is at stake is the very denition of fair trade: many question the narrowness of its present denition and defend a revaluation to include more workers and producers under a social-justice rubric (Goodman, 2004), while others argue that if these new participants are not admitted then they will simply join up with competing initiatives (see below). To the contrary, other groups criticize the notion of placing market expansion above the ideals on which the initiative was founded, the dilution of the fair-trade message and the possibility that large corporations will appropriate the language and label of fair trade. Meanwhile, some co-ops, in search of markets, and have already reached agreements to sell their coffee via alliances with large distributors. Some co-op leaders suggest that fair trade is at the beginning of a third stage (post-alternative trade and certied label) in which organizations will deal directly with large corporations or supermarkets (VanderHoff, 2002, p. 11). This argument parallels the adoption, by a few large players in the agrofood chain, of a new political stance with respect to fair trade. Although consumer purchases of Max Havelaar or TransFair products are insufcient to create a parallel alternative market, the market niche is large enough to be economically attractive and also provides an opportunity to enter the fair-trade scene while retaining corporate criteria, at times with the help of national fair-trade initiatives. In the following case studies, we will examine three examples showing how the search for greater market volume, when combined with this corporate politics, substantially modies the politics of the fair-trade network. 5.1. Carrefour: a third phase of fair trade or its recapture by the market? Carrefour, the second largest international distributor, is attempting to orient itself with respect to fair trade through various means. On the one hand, it established a 10-year relationship with the Mexican UCIRI cooperative (Union of Istmeno Indigenous Communities) who pioneered the seal of guarantee model, agreeing to purchase organic coffee at a higher price than paid by FLO. This coffee is

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sold in its French stores under the Bio-Mexique label out without the fair trade seal (Renard, 2003, p. 93). Through this agreement, some of the Mexican cooperatives that consolidated their fame through their involvement with fair trade are able to sell a portion of their product that is not absorbed by the fair trade market. Carrefour also sells another UCIRI coffee, processed by the Malongo toaster, that does show the fair trade seal (VanderHoff, 2002, p. 12). Carrefour also has its own brand and organic certication, with a social justice component, which has allowed it to launch its own social label in France. In Belgium, Carrefour follows a different strategy. It has signed an agreement with the alternative trade organization (ATO) Oxfam to sell Oxfam products, some of which are certied fair trade by Max Havelaar (such as coffee) while other products are not. In this manner Carrefour benets from contacts, infrastructure (such as communication, import processing, and product processing) and from the NGO reputation which, in fact, transforms Oxfam into a commodity-chain supplier in exchange for an increase in sales volume (and by extension of its associated producers). Carrefour does not have to reorder logistical arrangements in response to fair trade, only to stock Oxfam products while Oxfam becomes the institution responsible for social-justice quality. The ATO also serves as a channel for a corporation whose commercial practices are far from always ethical and serves also to greenwash Carrefours corporate image. If UCIRI and Oxfam note that Carrefour has not driven down prices,22 the consortium is nonetheless able to expand its market share relative to those of fair trade initiatives (Max Havelaar in this case), showing that it does not need them and can sell social-label coffee without them. In this instance, the danger is that this increased market power will ultimately enable Carrefour to impose its own conditions (Renard, 2003, p. 92). Even if this new structural relation were considered, on balance, a fair trade success story, it is illustrative of the disagreement that exists between FLO and its associated producers. It may also endanger the viability of the initiative by introducing parallel seals that create confusion among consumers (Renard, 2003, p. 94; Carimentrand and Ballet, 2004), by diluting minimum social-justice standards, and above all by leaving the institutions that create and certify legitimate, socially recognized norms external to the product chain. In effect, the fair trade mark protects the integrity of afliated social-justice producers but fails to impede the creation of similar, parallel labels. In fact, FLO has criticized Carrefour-type agreements between cooperatives and distribution consortiums at the margin of fair trade networks, given their recognition that these sorts of direct agreements can undermine the vitality of the fairlabelling certication model (VanderHoff, 2002, p. 12; Murray et al., 2003, p. 23).

5.2. UtzKapeh: the responsible coffee? Four years ago, after the agrofoods scandals that shook the continent in the preceding years, the largest European distributors, among them the Dutch corporation Ahold, Third World group, and their lial Albert Hein, decided to develop a traceability protocol that would provide a product trail and guarantee of origin. This would assure clients of the purity of their products in social and environmental terms. This protocol, named EUREPGAP, began with criteria for fresh fruit and vegetables. The founders of Max Havelaar, disillusioned by the slow pace of advances in the fair trade market and having arrived at the conclusion that the consumer power was not of sufcient force to achieve the changes that they hoped for and that other approaches were necessary (Roozen and VanderHoff, 2002, p. 201), teamed with Ahold to apply this new traceability model in coffee markets. As we have seen, the idea behind this transition from alternative trade to fair labelling was the attempt to increase the volume of coffee sold at the fair trade premium price (Roozen and VanderHoff, 2002, p. 79). Confronted by the reality of coops that sell only 1020% of their product at the fair trade price and must slash prices on the other 8090%, they launched a new label backed by a new institution named UtzKapeh. Its code of conduct for coffee is an adaptation of the EUREPGAP for fruits and vegetables, developed by the Ahold coffee company and a consortium of Guatemalan producers and exporters that is reviewed every two years by the UtzKapeh foundation. Among the shareholders of this group one nds producers, toasters, NGOs, independent certication bodies and others.23 The conduct code includes labor norms (salaries and workplace conditions), environmental conditions, administrative relations, and courts recognition as the EUREPGAP reference code for coffee. Nevertheless, its requirements do not include an obligatory minimum guaranteed price under the argument that these stand in opposition to free market principles.24 Coffee purchase prices are negotiated directly between producers and toasters. This approach has allowed them to link up with Douwe Egberts, the coffee arm of the Sara Lee corporation, that holds close to 70% of the Dutch market and has always opposed Max Havelaar and the principle of a minimum guaranteed price. Other clients include the Atlantic Coffee importing house. On the producer side, they work with Peruvian and Central American cooperatives, also on the registry of FLO producers. These producer groups justify their participation on the grounds that they need greater sales, although the price may be only
http://www.utzkapeh.org. Paying more than the market value is a short-term solution that keeps the situation of oversupply and inefciencies intact, which will in the long term further pressurize coffee prices. [y] We believe that the principle of supply and demand is the best way to provide a better price for a better product for the farmer. http://www.utzkapeh.org (FAQ). UtzKapeh coffee sold at $0.77 per pound when the market price hovered around $0.70.
24 23

22

Personal communication.

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one half of the fair trade price and only slightly higher than the commodity market price. UtzKapeh guarantees a certied responsible coffee.25 This coffee is marketed by a chain of supermarkets that participated in writing the code of conduct, even though they are third parties that must be certied by this same code. In the Low Countries, the renoun of their backers, or the group of NGOs that created Max Havelaar, provides cover for this arrangement. This new seal, sold on the cheap, competes directly with fair labelling although Albert Hein continues to sell Max Havelaar coffee, which has a well-established reputation because it provides a higher prot margin. However, this situation might not be reproduced in the US: surveys show that consumers spend 18 s in front of supermarket coffee racks.26 This does not provide time enough to analyze and compare contents of many different labels, with the result that a social-justice labeled coffee that costs a dollar less may be quite competitive. This initiative represents a real risk to the achievements of fair trade insomuch as it holds a possibility of displacing it with another seal whose code of conduct does not include a minimum guaranteed price. It provides the opportunity for dominant market players to greenwash their image at quite a low cost. 5.3. Starbucks: the total quality concept In the US, TransFair, a FLO member, is betting on growth in the dynamic, fast-growing specialty coffees market segment that includes organic and gourmet coffee. It has honed in on a strategy oriented towards satisfying a consumer demand that combines intrinsic and social qualities.27 Within this sector, thousands of small toasters coexist with a few giants such as the transnational Starbucks company, which has found itself obliged to participate in fair trade as a consequence of NGO pressure (Renard, 2003). In its beginnings, fair trade in the US, as in the EU, was based on small and medium toasters who had contacts with cooperatives on one side and with consumers on the other, like the ATO Equal Exchange (Taylor, 2003, p. 43). In recent years, however, the entry of Starbucks has provided a strong lift to fair-trade sales even though this company buys only 1% of its coffee from fair trade certied producers. Starbucks sells fair-trade coffee once a month, under its promotional rubric coffee of the day in its 7834 sales establishments located around the globe.
25 In reality, UtzKapeh had to change the label of quality on two occasions, because of the same principle of tranparency included in Euregap: they could not label coffee fair since the price paid did not meet the requirement of covering the production cost plus a prot; later they called sustainable, a quality which they were also unable to demonstrate. It remains responsible coffee. Communication from Frans VanderHoff. 26 Data from TransFair, USA. 27 This strategy has been criticized for leaving out producers of nonorganic and inferior quality, lower elevation coffees. The response has been that this is what the market demands. Once again, a focus on producers is dropped in favor of a market orientation.

Critics argue that this minimal percentage allows a greenwashing of the entire supply chain and corporate image as socially responsible (Raynolds, 2002). Starbucks responds that although all of its coffee is not fair-trade certied, it offers all of its suppliers a fair price (US$1.20/ lb. on average), which may be explained by the fact that it buys exclusively from a gourmet coffee market segment with high intrinsic quality. More recently, TransFair USA has signed similar agreements with others giants such as Procter and Gamble, Green Mountain and Dunkin Donuts, leading to a doubling of fair-trade coffee sales in 2003 (to 8.6 million tons). Finding their market niche invaded, the small mills that buy 100% fair-trade coffee are abandoning the TransFair seal, arguing that large corporate buyers purchase a minimum amount of fair-trade coffee with the sole intention of increasing market power and not to help small producers. They presently seek to create another model and seal that will permit them to continue as the legitimate practitioners of fair trade.28 TransFair defends itself by arguing that, to the contrary, Starbucks does not promote fair trade in sufcient measure and that this corporate participation has resulted in increased recognition for the fair-trade label.29 To improve their sales of fair-trade coffee beyond the 1% that Starbucks allows, TransFair plans to enter into the preferred producer program, a combination of Starbucks company and fair trade norms. The experience of Mexican (Chiapas) cooperatives is illustrative of Starbucks practices and its strategy of appropriation of seals and certications. Starbucks has launched a new seal called shade grown (coffee produced under a canopy of shade trees) with an intense public relations campaign in which it announces that consumers who purchase this mark of coffee improve the livelihoods of Mexican and Central American producers (Renard, 2003, p. 93). Starbucks has signed agreements with producer organizations in the region of the Triunfo biological reserve to purchase their coffee via contracts specifying quality norms and, most importantly, which institution will certify the coffee, train the producers and organize them so that they can comply with stated quality norms. This social value is only one of the qualities that interests Starbucks, and not the most important: Starbucks total quality30 puts intrinsic, taste qualities rst and then adds in a bit of ecology and social justice. In comparison with organic or fair trade certications, this Starbucks version constitutes a code of conduct-lite. The certifying organization is an entity called Conservation International (CI) whose sources of nancing include the US Agency for
28 Courier International Magazine No. 705, May 6, 2004, reprinted article of Rogers, Tim in the Christian Science Monitor. 29 Communication in the Regional Assembly of the Latin American and Caribbean Coordinator of Small Fair Trade Producers (CLAC), August 2004. 30 Presentation of Cafe de Conservacion Mexico in the First International Congress on the Development of Coffee Producing Zones, Tapachula, Mexico, October 2004.

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International Development (USAID) and companies Citygroup, Exxon Mobil, ICBG, McDonalds and the same Starbucks. CI provides technical extension to producers, working with professionals from the producing region, to introduce them to coffee organic production, processing and commercialization. Coffee producers receive a good price for the coffee, but in exchange lose control over their internal organizational resources and come under the corporate control of CI. Furthermore, Starbucks obligates producers to sell their coffee through Starbucks-afliated importers which, in this case, turns out to be the largest Mexican coffee marketing corporation, AMSA (of the Omnicafe-Atlantic Coffee group), which engages in decidedly non-equitable commercial practices. A few cooperatives have broken off from Starbucks, denouncing the AMSA practice of misusing the registry of certied-organic producers for AMSAs benet.31 Would TransFair USA be capable, at this point, of stripping Starbucks of its seal if in fact Starbucks practices were shown not to comply with fair trade norms or generally unethical, despite the importance of Starbucks fair trade sales in the US? From the producer cooperative perspective, they do not have condence in the network of commercial organizations with which they have been placed, yet nd it difcult if not impossible to let go of the additional higher-priced coffee sales (VanderHoff, 2002, p. 11; Perez-Grovas and Cervantes, 2002, p. 23; Aranda and Morales, 2002, p. 20). 6. Conclusion Fair trade emerged from an initiative which had Southern producers at its center; it aimed to help them sell directly to Northern markets at prices considered fair. As it grew and became more complex, requiring greater international coordination, the institution responsible for certifying and guaranteeing the label became more centralized and professionalized. Fair-trades success has also created the need to protect the quality label against fraud, guaranteeing conformity to ofcial norms. This process of reorganizing the regulatory organization has been accompanied by changes within the commodity chain, one element of which is that producers have lost power and their place at the center of fair trade. In similar fashion to the organic commodity chain, a contradiction arises when an initiative created to benet producers comes to require them to assume the costs of certication. On the other hand, the need to increase sales to respond to constantly growing supply, and the interests of some dominant market actors in the fair concept and its products, have led to a growing orientation for and toward the market. These factors have led to a certain distance between the institution and the producers as the institution strives to achieve a higher volume of sales. It leads to the questioning
31 Information from Mariscal Angeles, La Jornada newspaper, 26 and 27 April 2004.

of the basic pillar of the initiative, the guaranteed minimum price, currently under discussion within FLO. The interest of the large distributors and some roasters in fair trade opens up new opportunities but brings with it risks. It permits increasing the volume of sales but risks eroding the labels identity. It risks reduction of prices in the medium and long term, when these actors come to control this market niche. Risk also lies in these actors interest in being viewed by consumers as defenders of justice in market exchange (in addition to their defense of the environment, the well being of animals, etc.). There is also risk in the intent to replace FLO and its norms with their own criteria certied by other parties. In the three cases studied here, distributors and industrialists seek the advantages of fair trade without taking on all its costs and obligations, and they attempt to avoid supervision by and negotiation with FLO. Parallel labels are gaining ground, with prices and criteria inferior to those of FLO (and of organic products). The multiplication of quality labels creates confusion among consumers, who lack the time to understand and compare labels in a context of too much information. The seal no longer fullls its goal of being clear, united and reliable. In conclusion, certain questions emerge which are related to the role of new forms of regulation through agrofood certication. If fair trade intends for its concept to be universalized, is it the role of a private organization, although ofcially accredited, to achieve this objective? Is equity in market exchange something to be decided by consumers? Is it incumbent upon fair trade to evaluate and certify production, labor and environmental practices? Does that not imply assuming regulatory functions now exercised by states or labor organizations? We hope these will be topics of future research.

References
Aranda, J., Morales, C., 2002. Poverty alleviation through participation in Fair Trade coffee networks: the case of CEPCO, Oaxaca, Mexico. In: Murray, D., Raynolds, L., Taylor, P. (Eds.), One Cup at a Time: Poverty Alleviation and Fair Trade Coffee in Latin America. The Ford Foundation. Busch, L., 2004. The changing food system: from markets to networks. Conference at the XI Congress of the International Association of Rural Sociology, Trondheim, Norway. Ponencia magistral presentada en el XI Congreso de la Asociacion Internacional de Sociolog a Rural, Trondheim, Noruega. Carimentrand, A., Ballet, J., 2004. Le Commerce Equitable entre ethique de la consommation et signes de qualite. Paper presented at the International Congress Agroindustria Rural y Territorio. Toluca, Mexico. Eymard-Duvernay, F., 1995. La negociation de la qualite. In: Valceshini, E., Nicolas, F. (Eds.), Agro-alimentaire: une economie de la qualite. INRA Economica, pp. 3951. FLO, 2003. A quantum leap in the impact of Fairtrade labelling. FLOs strategic plan 20032008. Friedberg, S., 2004. French Beans and Food Scares: Culture and Commerce in an Anxious Age. Oxford University Press, Oxford. Gonzalez, A., Nigh, R., this issue. Smallholder participation and certication of organic farm products in Mexico.

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Further reading
Courrier International Magazine No. 705, May 6, 2004. Reprinted article of Rogers, Tim in the Christian Science Monitor. Discussion document for the Regional Assembly of the Latin American and Caribbean Coordinator of Small Fair Trade Producers (CLAC), August 2004. ` Documentary Le Commerce Equitable. Series La Planete en Question, RTBF, Belgium, 2005. http://www.utzkapeh.org. Newspaper La Jornada, April 26 and 27, 2004. Paper of Cafe de Conservacion Mexico at the I International Congress on Coffee Producing Regions, Tapachula, Mexico, October 2004.