How Fair Trade Works

doling out for free, folks. We're like, we're in like like five twenty maybe, Yeah, I thought there might be more than that. Um, you're doing okay, I'm great, good? How are you okay? Like my back hurts a little bit, and Yumi is convinced that it's a kidney infection onset, so she's like, you need to drink a lot of apple cider, vinegar and baking soda diluted in water and cranbery juice. That's what I'm doing. And water. Yeah, that went too, But I've got stuff diluted in water, so

that counts. But it's um kind of rough. You know, I don't know that your coffee counts? Is water? No, it does actually, you know that the whole you should drink eight eight ounce glasses of water a day. You can factor in coffee. Yeah, and it's totally made up, Like there's no one's ever said that you really should do that. It just kind of came on as like

an early meme, I guess. And there's never There's not any evidence that an adult human living in a temperate climate of average health couldn't survive without any additional water on a daily basis, because we get it from things like food and other stuff. I think the idea is that you benefit from drinking water. Again, there's not necessarily any scientific evidence. That pretty much made up. I'm not so sure. I'm telling you look it up back to you, Okay,

all right, we'll have a look up off. Okay. Um, But that's not what this is about, Chuck, Nor is it about my possibly um impending kidney infects in hospitalization. It is about the idea that everyone around the world deserves to make a decent, sustainable living wage, agreed, or should at the very least get a should see the fruits of their labor in a fair way. Yeah, this kind of flies in the face of something called um capitalism.

The free market system a little bit, because in the free market system, one of the big things you have is pretty much every man for himself. Now, everyone in a free market system, a completely theoretical, unfettered free market system, has the opportunity to enjoy the fruit of his or her labors, has the opportunity to make a decent, livable wage.

But one could also argue that the bounce of power has tipped so far in favor of a consolidated, internationally connected few that at that's just not a real possibilitynymore, that theory that theoretical version is now an impossibility, right, I think, hey, Mountain, that might be a good time to recommend to people to go listen to our previous podcast, Is the free market really free? Oh? Yeah, that's a good one. Wasn't that the name of that one? That

was a good one. That was a good one. Um. So, because this balance of power has tipped so far post pretty much post World War two is when it happened. There are there are some people out there who have come up with the idea that maybe we should go an extra mile and make sure that the people who are actually making all the things we enjoy, For example, coffee, wine, soccer balls. People who bananas, bananas, it's a big one.

People who actually make these things get a an income that is like something that anyone who is on the receiving end of these bananas and coffee would recognize as a livable amount of money in return for what they're doing us. That's right. This is not a call for communism. This is a call for fair pay via something called

fair trade. And um, the idea is that uh, you and I and whoever else wants to support this kind of cause might not mind going into their local and we're gonna use coffee a lot, because that's one of the big daddies. Yeah, that's might not mind going into their their coffee shop or their grocery store wherever you hunt down your coffee and paying a little bit more

for your coffee. It's got that fair trade stamp on their knowing that ultimately the worker who picked those beans is going to be cared for in a you know, humane fair way. It's gonna get a decent amount of

money for their for their product. Um, and you you kind of hit something on the head when you said, seeing that fair trade label, there's a really big distinction between a product that carries a certified fair trade label, yeah, and something that's marketed as fairly treated that means nothing. It means absolutely nothing like that that they might as

well say, like the contents inside are orange and green maybe. Yeah, it's the whole mislabeling, misleading, misleading labeling of things, which is just like the organic deal certified organic versus these you know, this crap food that will say like contains naturally uh natural ingredients or things like that. Emily has to fight spedal all the time with her company because she's one of the people that tries to only use

you know, fair trade ingredients and certified organic. And she gets angry every day when she sees products body products that slap something on their label like naturally good and people think that means it's all natural or all natural. That doesn't mean that it's organic or all natural. It's

it needs to be regulated more in it. And it's so that's such a cynical thing to exploit, Yeah, like thing that really meant something at one point in time for dollars, you know, to to market something that doesn't mean anything, it's actually not good for you, and marketing it as good for you while using and already established UM consumer trusted label or phrasing. It's just that's said. It's one of it's one of the wrong things in the world. But let's just say that that's why a

fair trade people, fair trade groups have UM. They jealously guard their h there UM labels. Yeah, so that when you do see them, you can't trust what's going on. And they'll you know, companies at mislabeled or mislead with their labels also make their labels look like the other labels even and the font and the color is just like it's so underhanded, it's really awful. So let's talk

about the background of this alright. It started in the nineteen fifties with something called Alternative Trade Organizations a t o S, not the Fraternity a t S. They were doing beer bonds and you know other things. Uh, I couldn't say what I was gonna say. I think everybody knows. Uh. They were humanitarian groups that started this, and basically they wanted to alleviate poverty in developing nations by cutting out middlemen between small producers in the north Northern hemisphere and

small businesses in the southern hemisphere. More profits directly going to workers who picked the bean again with coffee, and then I guess over time they found that this this process could work. But you really do need middlemen, right So yeah, not always, but depending on where you are in the process or right, but if you're using the existing I guess trade routes and system of trade that's been established globally in the world, um, you there are middlemen.

Like you. You have a coffee grower in Ethiopia, he can't get that to you. You know in New England, you do need a middlement. What they figured out with fair trade is that you can certify the people in between to make sure that the money is getting to

the producer. And rather than cutting out the middleman to increase the income of the of the original producer in the developing country, you go to the consumer on the consuming and and say, hey, you mind paying a little more for this and in return, we will guarantee you that this the person you who made this coffee that you're enjoying, gets that money. That extra money, like you are basically essentially sending it to this guy, and we're the ones who are going to make sure that happens

and We're gonna do so through this labeling. That's right. Uh In is actually when the labeling itself was born with a Dutch ato called uh soladara dad. Is that not right? Solidad as you see, we got yet another like email about our pronunciation. We try people, that's part of the charm of the show. Some people don't like it. I unders in um so solidaridad from uh from the Dutch region of the world, from Amsterdam, from the Netherlands,

from Holland, from all those places. They said, you know what, we should label these things, help people out when they're shopping, get them in the main street markets without compromising. You know, the trust that consumer has in these products. And that is basically where fair trade was born. And we do have one stat here in two thousand one, not super recent, but just to show you and how people pay for coffee. Coffee fluctuates in price. It's like you know, any commodity.

So uh in two thousand one the price stepped really low and the coffee growers were receiving only about forty five cents per pound for coffee, but fair trade coffee buyers paid a dollar twenty one per pound that year to ensure that these people, despite the fluctuations, were able

to keep the lights on for their business. Essentially, because every fair trade organization sets a minimum price, a minimum fair price that their their producers are gonna get no matter what, no matter what the market does, no matter what. And I believe if the market goes up, they get they get the higher of the two, but at the very least they're getting that minimum price for their product. So what is an f l O. This is sort of how it starts or how the process itself starts,

or you want to talk about that. Yeah, alright, the fair Trade Labeling Organization. So that's that's one of them. There's there's a number of labeling organizations, like there's Transfer USA, there's a European European Fair Trade Association, right, And apparently I guess the f l O is like the the agency that oversees the agencies. That's the impression that I have.

But basically say that you want to um, say that you you are a coffee roaster, and again we're going with coffee because that's the big one, and you say, hey, I really want to get in on this fair trade action for whatever reason. It doesn't matter if you want to increase your own sales or whatever. It doesn't matter.

You can't exploit this process, right, No, but that's the thing, like, like the coffee roaster can be like, you know, everybody's into this fair trade thing, and I think I can sell a lot more if I go through this process, So let me do it. And they contact the FLO or a labeling organization. They say, great, we will sell you a license for ten thou pounds of fair trade

coffee beans. So it's a contract for a set amount. Now, what they could do is set the coffee roaster up with an already certified fair trade UM producer and supply chain. Or they can go in and say we can go ahead and certify your existing supply chain and producer. And that's what they do. The the coffee roaster pays for that license, sends the f l O out, They go through the supply chain make sure that all this money is going back to the producer who is expected to

get it right. Yeah, And they actually send people, human people visit farms to ensure that all their business practices and their farmers are adhering to these procedures. And not only that, they also add a dash of like sustainability, like they're that they're not using like horrible environmental techniques

for stuff. And but yes, basically to make sure that this producer isn't just like a you know, dull disguised as like some some dude, you know, like they're going to do some detective work and once they figure out that everything's legit and it falls into the fair trade standards, which we'll talk about later, then that's certified, the license is exercised, and that ten thousand pounds is delivered and that guy can put that on the ten thousand pounds. Yeah,

and it's not always just a one time visit. They can also follow up with periodic inspections to ensure that, you know, that you keep up with that kind of governance and you didn't just like pull a fast one on them and you know, get out your house in order for one day, you know. While and there there's the licenses. Usually there's like there's a contract involved, like so the middlemen who are involved have to participate in

these standards. And one of the standards is you have to sign like at least a six month contract usually, which is actually kind of a lot for these producers because a middleman can be like, oh, this guy's selling it for way cheaper. I'm going over to him. You know, this producer is guaranteed six months of going to this middleman and um and getting the money from them. Well yeah, and like you said, six months doesn't sound like much, but I get the feeling that it was just like

it's the wild West out there. Yeah, you know, like you can drop someone from day to day. Yeah. Well they can be like, well, this guy's selling for a penny lesson you force this guy down, and now this guy is down to two cents, So you go to another guy and be like, this guy's down to two cents. You can just play as many small farmers as you want against off against one another and and drive prices down as low as you want. That. Fair trade prevents

that from happening by forcing middleman to to sign a contract. Yeah, so that's one of the tenants. Um. Another is direct trade between the producers and buyers. So they try to eliminate the middleman when they can. In Central America they call the middleman coyote. Yeah, I mean, I thought that was interesting. Um. So in order to do this, they encourage these farmers to get together and form co ops export co ops band together. You know you've got a

little more power. Um. So something that that he points out here too is that the exporter, if it's a plantation, the fair trade standard requires that national laws governing the minimum wage UH and regulations covering the conditions be upheld and the workers rights are all upheld as well. So that's when you're not I guess forming a co op no um, but fair trade tends to encourage co ops

democratically run co ops. Um. But yeah, they're they're they're they're not necessarily completely opposed to the idea of certifying something that's run as a plant takes rather than a co op, as long as the workers are treated well. And one of the other things they do, like if there is a if they do run into a plantation system and the workers are fine, everything's good, they attach

what's called the social premium. So if you are, say, there's a chocolate importer called Double Chocolate, the U B B l E. I think it's in the UK, and they they sell fair trade and chocolate, and they on their site they were saying that they pay an extra um I think two hundred dollars a ton of cocoa per ton of cocoa. And that's just a social premium that's on top of whatever the market prices or whatever

the minimum fair trade prices, whatever is higher. In addition that they pay an extra two hundred bucks right off the top for a ton of cocoa. And that is that doesn't necessarily go right back to the um the producer. It goes back to the producer's community, and it is used for things like scholarships, water projects, and notation projects like schools whatever. Um. But it's that social premium is an addition to raising the individual's income, it raises the

well being of the entire community. Yeah. Well with the idea too that that's just gonna be good for everyone's business ultimately. Well, yeah, that's the thing. That's that's where it's kind of it turns capitalism in on it on itself. Like the idea that you can democratize through capitalism is a huge like neo con idea. Yeah, and I mean it's true, like it does work. Um, but they're saying, but we need to do that through a certain measure

of Marxism, right. It's kind of kind of funny. Yeah. Uh. And the final tenant, which you already sort of mentioned, was the minimum prices for farmers. The idea what they want here is obviously to make sure that the price that the farmer gets is more than the cost of production, because you know, everyone's out to make a dollar here

and there. Um. And so they actually take a survey um to make sure that the you know, the price is right on the money, and it covers things like the cost of living, um, cost of production, and even the cost of complying with the fair trade standards. So they roll that in there as part of their accounting as well. Yeah, and we should say also, um, it is the to purchase a license for fair trade and stuff.

It's on the ultimate I guess distributor, the coffee roaster in the case of coffee, UM, or the chocolate producer in the case of cocoa, purchases whatever. Um. And before I think until two thousand and four, like it was free if you were the actual person producing like the raw material the good like the coffee or the cocoa. But then the flo said, you know what, we need to charge you guys a little bit too. So I think that further encourages co ops because a small farmer

in in. You know, Ethiopia can't necessarily afford whatever it costs to be in the system. Okay, that makes sense. And let's let's take a second here, chuck um to remind people exactly what the disparity is between the people who eat the chocolate and the people who produced the cocoa. So, say you were living in Teamore or Lesti in Southeast Africa in two thousand five, guess how much you're annual income would be expected to be. Well, what am I doing in my growing You're just a president of it.

You're doing whatever you want, but you're you're an average. I have a petticab. Okay, you have a petticab since you live in Teamre or Lestie. I think I'm saying that right, lest one of the two man, I hope I'm saying that right. You made four d in two thousand five for the whole year and two in Malawi. You made five six dollars in Somalia's six hundred dollars in Congo six seventy five for a year. A year, three hundred and sixty five days of labor, or a

large portion of three sixty five days. Take Christmas off in the petticab by the all right, three hundred and sixty four days of labor got you four hundred bucks, and teamore or lesti um on the high end in Naritria, you made up whopping nine in seventeen dollars. In the United States and two thousand five average US citizen spends

a hundred and fourteen dollars a day spends. Yeah, so that's that's the concept of fair trade is like, you have this extra couple of dollars, pay it for this, and we will make sure that that guy in Eritrea gets it, and he's going to benefit, and in fact, the whole world will benefit because there's that whole democratic peace theory where like supposedly there's a correlation between democratization and a decrease in war and belligerence between nations. So

who knows, it could just be beneficial for everybody. Yeah, and this isn't welfare. This isn't uh give taking from the rich and giving texting the rich and giving it to the poor who you know can't get off their butts and go work. These are people working very hard

at their job that you are ultimately benefiting from. When you take that step of coffee that you're enjoying, and it's it's like we did it in our own country when we started enacting, like saying hey, kids shouldn't work in factories and they should make eight cents a week. We did it here in the fair trade label ensures that wherever your product is coming from around the world, that the same thing is going to be you know, happening. Yeah,

it's it's intervention exploitation. But they're still critics. Yeah, there are definitely critics and criticisms um in with fair trade, and I mean they're legitimate too. Yeah, I mean not a lot of criticisms about people saying, hey, you shouldn't do this and take care of workers. Probably there's probably a handful of people out there that think that it's more the um but generally, yeah, it's a criticism of fair trade in the fair trade organizations, not of the

people who are actually, you know, producing this stuff. Yeah, basically saying you're ignoring the basic tenets of supply and demand in a way because you're you're attaching an inflated price above the market value without doing anything else right, and because it's difficult to kind of get these things

to market more difficult than than a regular thing. There's been a real focus on things like coffee or bananas, so in these areas where you can grow coffee and can grow bananas, since fair Trade is saying, hey, if you grow this stuff and you do it the way we want you to, you'll get four times what you know you're getting paid. Without us, more people are gonna flock from cotton to coffee, and there's gonna be an oversupply and that's ultimately going to drive prices down for everybody. Right.

Another criticism is that fair trade generally UM addresses these co ops that we were talking about, and maybe if you were just a single farmer, that's like, I don't want to be in a co op, but I still want to be fair trade. It's a little more difficult, and UM these co ops just like anything else, when you get more than two people together in a room,

there is a possibility for greeting corruption. So some of these co ops have been attacked for mismanaging fair trade proceeds, and UH supporters say, you know what, we can only do what we can. We're trying our best. We're not saying we're going to solve the world's poverty problems. But what we are saying is that we can ensure that these farmers and these co ops and these workers are

getting paid at fair wage enough to live on. Uh when you eat your delicious or drink your delicious roasted coffeesh And I guess I the one that makes the most sense to me is the encouraging oversupply on the market and driving down prices for other people and everybody in general. Yeah, but um, yeah, and it really that that could be very easily solved by just focusing on other products as well. Yeah. Right now, they say about eight hundred thousand farmers are benefiting from fair trade right

now worldwide. That was a Yeah, that's an o eight stant So I bet it's over a million now because it's growing baby. Yeah. I mean that's another thing too, is that the sectors are growing to like, uh, in the early two thousand's, fair trade coffee grew like within a couple of years. So, I mean, like it's a good way to go if you're a poverty stricken coffee farmer. And it depends on where you are what kind of

products are available. It's not like every everything you find in your grocery store will have a fair trade option. Um yeah, but it's kind of been presented and marketing a real like laid back hippie granola away and it's like like, hey, we'll put it out there and tell people about it and if they want it, that's awesome.

There's been no like the they If you took the same kind of marketing uh that's applied to the stuff that's not produced fairly, and applied it to fairly traded stuff, I'm quite sure you could generate a lot more interest and have people clamoring for like I want fairly traded beef for whatever. People are gonna want that stuff. They just don't know that they want it yet necessarily, and I think that they're I think that the NGOs who are doing fair trade could do more. Who diversify If

I'm wrong, correct me someone who's in the field. You got anything else that's fair trade? Hey? Speaking of NGOs, our favorite co ed cooperative for education. They are who took us down to Guatemala and we got to see their handiwork in person, and it is good work. Yeah. They seek to break the cycle of poverty using education and they've got a great model. Like you said, we've seen it firsthand, we believe in it, and so we are making a call out here. We're plugging for them

because they have uh, well, they're in need. Okay. They are looking to triple the number of students they serve over the next three years, so they're gonna need the help with some stuff you should know, listeners. All right, so we got some details for you, folks, the who of this. We're talking fifty four Indigenous Mayan middle school students right right right, These students are getting help literally,

like firsthand help. Yeah. They're getting help through scholarships that cover tuition, school fees and a youth development program that foster's community service and leadership among the students. Right. There are two scholarship levels. There's the Diploma sponsor, which is seventy bucks a month, and there's an honorable sponsor, which is thirty five bucks a month. Those are some cute names.

That's very cute. So when all this is going down, is, uh, they want fifty four students sponsored by the end of the year. Is there anything greater, Josh than finding a sponsor for every single student? No, And we can do it. I mean, we have a lot of listeners, and we have a lot of listeners with big hearts. Actually there is one thing greater. They could cover these students and have a waiting lis for next year. Oh that'd be even better. Yeah, okay, So this is how you do this, guys.

You can go to the website www. Dot Cooperative for Education dot org. You can sign up to sponsor a child today. Simply click on the donate now button in the top right hand at the corner that's right. And you know what, a lot of our listeners have gotten involved over the years with co ED and gotten a lot out of it in return as humans as humans. Yeah, it's a genuinely great organization that we've seen, like you said, firsthand. Um, so we would encourage all of you to go help.

So that's um Cooperative for Education dot org. You can become either a very acutely named diploma sponsor at seventy bucks a month or an honorable sponsor at thirty five bucks a month. And uh, if you do that, if you sign up for it, let us know because we want to thank you on the air. Sure cool, it's great idea, So go co it, go co a. Thanks friends, So okay, Chuck. Hold on, let's let's take a message break. Huh and then listener mail are really good one this week?

Oh now it's time for listener mail, says Jerry. Yeah, I'm gonna call this, uh grief. We got a lot of really great responses on the Grief podcast. A lot of people reached out more like had just had people pass away in their family and listen to the podcast that week and helped them out. And uh, we always like hearing those things. So this is from John. Guys would like to thank you for your Grief podcast that helped me with a grieving process for my best friend

and brother, Mike. In his death. He was driving in Northern Alberta UH in mid December when he lost control of his car after crossing railroad tracks, got hit by an oncoming car and died on impact. Our family flew there from Vancouver and only had a few hours to spend. Because of some white mishaps, we couldn't even bring his ashes back with us. Mailing his ashes was not recommended to the end of the Christmas season, so we are

planning on having a funeral for him without ashes. Luckily, the company he was to work for he was a heavy equipment mechanic and the student at the time, um he Uh. They heard of the news and their head safety guy personally delivered his ashes to our home. We then flew to Manila on Christmas Day and right back in Canada on New Year's I haven't felt the usual symptoms of grief yet, but I'm sure I'll break down and start bawling on the sea bus or something, which

would be super awkward. Uh. The first month was definitely the hardest. The moment I always the moment I heard the news has been burnt in my mind. That in a single flower in front of his dorm room from one of the students. The tears really started flowing after I saw that, guys and I saw life in a completely different way. The little things really do count anyway. Mike was most likely listening to podcast at the time. That's what he does when he buys groceries, and he

was on the way to the grocery store. Your voices, in fact, may have been the last he heard. Who knows. Uh. There was a frozen pineapple in the crash site, and I know that was his because he loved that stuff. But that said, just in case, he's listening to the podcast in another life, could you please do one on pineapples and that would be for Mike and John. We will certainly look into pineapples my friend and cool. Yeah, I think we should. Yeah, hang in there, dude, it's

very tough. I can't imagine going through something like that, but I'm glad we could help in some small, tiny, tiny way. Yeah, and thanks for letting us know about that. We appreciate it. Um. Wow, that was you selected, maybe the best one. Yeah, and we got some good emails about Greek too. Yeah, thanks to everyone who's senting those

in and like people or their souls sometimes it's very touching. Yeah, we hope we make you feel better if you want to tell us a story about how we made your family feel a little bit better or you or whatever, as long as we didn't make you feel worse, although we should probably hear about that too. You can tweet to us at s Y s K podcast. You can join us on Facebook dot com slash stuff you Should Know.

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