Fair trade is a small segment of the overall market, but it used to be really niche. Certification and labeling began with coffee in the Netherlands in the late 1980s. It has since grown and now allows fair-trade products to get to mainstream retailers.
Several national labeling initiatives joined together in the 1990s to create the Fairtrade Labelling Organization (FLO). The creation of a Fairtrade label resulted in remarkable growth in the demand for certified coffee and, later, bananas and other products. Global sales of Fairtrade coffee in particular is going mainstream. Starbucks sold a fifth of all Fairtrade coffee in the United States in 2010 and Dunkin Donuts uses Fairtrade coffee in all of its espresso drinks. Still, the total value of all Fairtrade certified products sold in 2011 was just $7 billion, a drop in the bucket of global commodity trade.
Nonetheless, some advocates are concerned that fair trade has gone too mainstream and is losing its meaning. The US fair-trade initiative, in contrast, has split from the international organization in belief that fair trade is not mainstream enough.
Expanding the market does pose challenges. Will farmers continue to value certification as commodity prices continue to boom? Do the certifying organizations have the capacity to monitor a larger market? Can support and subsidies to producers be sustained? This paper is an introduction to fair-trade markets, trends, and challenges, and the issues mentioned above. Future papers will detail the implications of the Fair Trade USA defection and what we know about the impact on producers.
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