Fair Trade from the Ground Up: New Markets for Social Justice

3. How Do Producers Spend the Social Premium?

55 A n important feature of Fair Trade is the social premium that buyers of Fair Trade certified products pay to the cooperatives or worker organizations that produced the coffee, tea, bananas, rice, wine, and other products they are importing. For example, the Fair Trade coffee premium is twenty cents per pound. Premiums support socioeconomic development as producer-group members see fit. In many ways, it is the social premium that prevents Fair Trade from being “just another market” for producers to sell in. FLO-Cert, the independent company that certifies Fair Trade products, stipulates: The Fairtrade Premium is a tool for development, supporting the organization to realize their development objectives as laid down in its development plan. In the context of small producers’ organizations it is meant for investment in the social, economic and environmentally-sustainable development of the organization and its members and through them, their families , workers and the surrounding community. It is for the organization and its members to analyse and evaluate the possible options for spending the Fairtrade Premium. Choices should be made and priorities set depending on the specific situation of the organization and the available amount How Do Producers Spend the Social Premium? Chapter 3 April Linton and Marie Murphy Chapter 3 56 of Fairtrade Premium. Decisions on the use of the Fairtrade Premium are taken democratically by the members, following principles of transparency and participation. It is the joint responsibility of the organization and its members to take wise and fair decisions. (2009, 10) This statement encourages but does not require Fair Trade producers to allocate premiums to projects that benefit a community beyond their membership . How much do the social and economic benefits of Fair Trade extend from producers to their local communities? What factors influence producer groups’ premium spending decisions?1 The case studies discussed in chapter 1 tell us a little bit about how Fair Trade producer groups are using the premium, but until now no one has systematically explored this. To do so, we compiled data about producer groups that are actively selling under Fair Trade terms, and then statistically analyzed (1) how and how much they are contributing to projects that benefit the public, and (2) how country- or producer-group specific conditions influence collective decisions to make such contributions. Our cases are Fair Trade plantations, cooperatives, or groups of cooperatives, that is, the entities through which Fair Trade producers trade in global markets. For simplicity’s sake, we call all of them producer groups. To collect our data, we systematically combed the websites of Fairtrade International’s member groups (table 3.1), looking for information about which producers sell through each labeler, and for “producer profiles.” A few producer groups have their own websites; we used information gleaned from them to supplement the profile data, if applicable. Data about five unprofiled Guatemalan coffee cooperatives (used in supplementary analyses only) came directly from our interviews. We already know that some Fair Trade producers are allocating private resources to public goods in ways that fill gaps left by insufficient state infrastructures and development aid. For example, the Peruvian Cooperativa Huadquiña spends its premiums on environmental initiatives. Oromia Cooperative Coffee Farmers’ Union in Ethiopia has built five new schools and upgraded twelve more. They have thirty-six potable water projects and have built eight new clinics with full equipment in areas that had no clinics (Satgar and Williams 2008, 15). The Asociación de parceleros y pequeños productores de bananos (ASOPROBAN) banana cooperative in Colombia Country Organization Year Founded Australia/NewZealand Fairtrade Labeling Australia & New Zealand 2003 Austria Fairtrade Austria 1993 Belgium Max Havelaar Belgium 1991 Canada TransFair Canada 1994 Denmark Max Havelaar Denmark 1995 Estonia Estonian Green Movement—FoE** 2002 Finland Reilun kaupan edistämisyditys ry 1998 France Max Havelaar France 1992 Germany TransFair Germany 1992 Ireland Fairtrade Mark 1995 Italy TransFair Italia 1999 Japan Fairtrade Label Japan 1993 Luxembourg TransFair-Minka Luxembourg 1992 Mexico Comercio Justo México A.C.* 1999 Netherlands Stichting Max Havelaar Netherlands 1988 Norway Fairtrade Max Havelaar Norway 1997 South Africa Fairtrade South Africa* 2005 Spain Asociación para el Sello de Comercio Justo 2005 Sweden Föreningen för Rättvisemärkt 1996 Switzerland Max Havelaar Stiftung Switzerland 1992 UK Fairtrade Foundation 1994 USA Fair Trade USA (formerly TransFair USA)*** 1996 * Associate Members. ** This group makes Fair Trade products available in Estonia but is not a labeler. *** As of...