Fair Trade Dairy at One Year: Labor Abuses, Low Standards, and Misleading Labels

It’s been a year since Fair Trade USA’s “fair trade dairy” label started appearing on tubs of Chobani yogurt. And it’s been over two years since the plan to develop the standard was announced, in early summer 2019. In that time, Fair World Project has repeatedly expressed concerns about the fair trade dairy program, based on over a decade of work as a watchdog of ethical labels.

Unfortunately, our warnings about the risks of developing a program without the involvement of farmworker organizers, as well as our specific critiques of the standards are being born out by what we are hearing from frontline organizers.

In May 2021, Fair World Project published the report Label before Labor: Fair Trade USA’s Dairy Label Fails Workers . Since then, that subheading has become an even grimmer reality. The report was published when Chobani yogurt bearing a fair trade label was available on store shelves but before the final standards were released in July of 2021. This article will review the updates made to the standard after the release of the report, and will also document what we know about the implementation of the standard.

The Label Before Labor report focused on 3 key areas of Fair Trade USA’s dairy label, as well as reviewing current research pointing to what would make for a more effective standard. Those areas of focus were:

• Inadequate standards development process
• Standards that are not fit for purpose
• Lack of enforcement mechanisms

This article will review updates in those three areas, with a focus on implementation included under the topic of enforcement mechanisms.

Fair Trade Dairy Standards Process Out of Touch with Research and Workers

The development of Fair Trade USA’s dairy program was decried in a statement by 30+ labor, food justice, and human rights groups, including Fair World Project, calling it “a sham process” and “an exercise that doesn’t reflect the needs and values of workers.” The “ Summary of Feedback and Response” published by Fair Trade USA after the release of the final standard confirms that assessment. The majority of the feedback summarized comes from farm owners and industry. Much of that feedback focuses on the costs involved in improving wages and working conditions.

The absence of organized farmworker voices and their advocates is clear. The summary of worker perspectives is “Overall, the dairy workers that we spoke to reported feeling happy and satisfied with their current work and living situation at their respective farms.” That assessment is dangerously out of touch with current research on farmworkers both in New York State and nationally, and the voices of worker advocates. Instead, it points to the ways that Fair Trade USA’s program continues to fail to address the power imbalances between farm managers and workers.

Finally, the Label before Labor report details concerns regarding stakeholder participation and how Fair Trade USA’s process was at odds with the best practices laid out by ISEAL, the global governance body for standards-setting. Still more concerning is that while the process was explicitly a pilot of standards for the dairy industry, the resulting standard was issued as an amendment to the Agricultural Production Standard that will be applied to all farms in the U.S. That’s vastly different in scope from what was announced. It seems reasonable to assume that far more people would have wanted to weigh in on the definition of fair work and “worker wellbeing” in the United States had it been clear that was what was at stake.

Fair Trade USA’s Standards Fail to Fill Regulatory Gaps

Redefining what is “fair” to match U.S. law that is grounded in injustice certainly doesn’t sound like it’s in line with fair trade principles.

Unsurprisingly, a standard development process that does not include workers is skewed against them, yielding a standard that fails to adequately address key labor and human rights issues.

Ethical certifications have long claimed to fill a regulatory gap that exists between local law and best practices or international norms. And there are large gaps in U.S. labor law, especially as it applies to farmworkers. In the United States, farmworkers are exempt from:

• Aspects of the Fair Labor Standards Act (FLSA), including overtime pay and child labor protections;
• National Labor Relations Act (NLRA), which forbids employers from firing a worker for joining, organizing, or supporting a labor union.
• Farms employing 10 or fewer workers are exempt from enforcement actions by the Occupational Health and Safety Administration (OSHA).
• Further, the U.S. has ratified just two of the eight core International Labor Organization (ILO) conventions, abstaining from committing to issues including the Right to Organise and Collective Bargaining, Forced Labor, Equal Pay, and Minimum Wages, as well as conventions on working hours.¹

Yet Fair Trade USA’s standards development process did little to bridge these gaps. Instead, the result of the dairy pilot has actually weakened the standards for workers on U.S. farms below the bar set for international production.  The stated reason? To “streamline” their standards and have them match “the unique legal definitions and operating context in the United States.” It’s worth noting the conditions that gave rise to that context in the United States.  Farmworker exemptions from standard labor law date back to a New Deal-era compromise with Southern legislators which was, in the words of one researcher, ” well-known to be a race-neutral cover for maintaining the domination of white supremacy in the South and excluding Black workers from labor law’s protection.” Redefining what is “fair” to match U.S. law that is grounded in injustice certainly doesn’t sound like it’s in line with fair trade principles.

Fair Trade USA’s Standards Continue Racist Double Standard for Farmworker Work Hours and Pay

One clear example of this is the issue of working hours. Like most fair trade certifications, Fair Trade USA had previously followed the ILO conventions on hours of work in their standards, limiting the regular workweek to 48 hours. In the revised standards for the United States, Fair Trade USA made major changes to their work week, as detailed in the side-by-side comparison in the box (emphasis added).

Overtime rules also got a significant overhaul. Thus farmworkers in the U.S. have both a higher cap for working hours and much more liberal guidance for how often their hours can exceed that cap (three months per year, or much of a harvest season, vs. four non-consecutive weeks).

In addition to appealing to “the unique legal definitions and operating context in the United States,” the feedback document from the standards development process highlights that workers *want* to work long hours. Such a  statement speaks to just how far removed from farmworker organizing the Fair Trade USA standards development process has been, as was also pointed out by researchers cited in a recent article in Jacobin Magazine.

Failing to address that power dynamic between worker and employers means that workers’ voices are not meaningfully included, as researcher Margaret Gray has written of elsewhere on farmworker pay equity. Without the voices of organized workers and worker advocates in the process, the results are skewed against workers.

Standards Fail to Address Root Causes of Low Wages

Ultimately, people work in order to get paid. If wages are low, people will want more hours to make ends meet. Yet by framing the issue of working hours as whether or not workers want to work long hours, Fair Trade USA’s “Summary of Feedback and Response” sidesteps that fundamental reality. While the section on working hours is long, the section on living wages is comparatively short. It notes that, “Dairy pilot participants also expressed support for living wage in concept but were concerned with their ability to close the gap without support from their buyer.” This is a reasonable concern. Dairy farmers are subject to low and volatile prices. Meanwhile, end buyers like Chobani stand to benefit from “fair trade” marketing. Yet instead of leveraging that brand benefit, Fair Trade USA opts not to include any requirement for brands to support farmworkers’ progress towards living wages. Fair World Project has previously criticized Fair Trade USA for placing all their emphasis on “awareness” of living wages without including timebound requirements for progress, and this standard continues that trend.²

This is not just a procedural issue. Instead, it undermines a key area where Fair Trade USA’s program falls short.  Academic researcher Elizabeth Bennett has noted that the strongest thing that voluntary sustainability standards such as Fair Trade USA can do to improve workers’ livelihoods is to require living wages and support the worker organizing that allows them to negotiate Collective Bargaining Agreements (CBAs) for better wages.

Worker Leadership + Brand Participation Supports Fair Livelihoods

It is worth noting that solutions to this living wage gap for farmworkers exist. In fact, they are currently being implemented in the dairy industry by the worker-driven Milk with Dignity program. The Label Before Labor report provides an in-depth comparison of this program with Fair Trade USA’s dairy label, so this will exclusively focus on wages.

Under the Milk with Dignity program, buyers are required to pay premium funds to support farms in complying with their binding Code of Conduct. The Code requires that workers on participating farms are paid at least the prevailing local minimum wage. This is significant given that farmworkers are exempt from many state minimum wages (and on smaller farms, from federal minimum wage requirements as well). Premium funds from brands are required to be used to get workers’ earnings to the locally benchmarked Rural Livable Wage. The Milk with Dignity Code of Conduct clearly spells out how they calculate the wage adjustment to incorporate health insurance and employer-provided housing. According to Milk with Dignity calculations, about 50% of Vermont dairy workers outside the Program make below the minimum wage. Meanwhile, workers on participating farms have seen wages rise so that most are now earning living wages.

Fair livelihoods for farmworkers are placed at the center of the standard, with a clearly articulated plan to transfer money from the brand at the top of the supply chain, who has most money and power, to the worker at the end of the chain. Instead of pitting farmworker against farmer in an effort to make ends meet, or laying the responsibility for making the food system profitable upon farmworkers’ shoulders, this addresses the root causes of the issue.

Fair Trade USA Going Against Trend of Farmworker Overtime, Rights and Dignity

Lastly, it is worth noting that the changes to the work week in Fair Trade USA’s updated Agricultural Production Standard (A.P.S.) for the United States are going against the current trend of farmworker organizing. There is growing recognition that the exclusion of farmworkers from getting the same overtime pay as other workers is rooted in racism and injustice . California and Washington State have recently been joined by New York State, Colorado, and Oregon in requiring overtime pay for farmworkers. While timelines for implementation vary, as do thresholds for hours worked, the trend is clear. By increasing the standard work week, Fair Trade USA chooses a side against those working for worker justice and fair livelihoods – as well as stepping out of line with international guidelines and recommendations from researchers.

Implementation of Fair Trade Dairy in Chobani’s Supply Chains

The Label Before Labor report detailed several key issues with Fair Trade USA’s dairy program based on an analysis of the standards. Several key issues highlighted included the explicit addition of at-will employment to the standard, that is, the right to fire workers for no cause, reinforcing a condition that labor advocates have pointed to as an obstacle to workers’ organizing. The report also underlined the limited scope of “know-your-rights” training requirements, lack of accessibility for reporting issues, and the standard’s reliance on annual audits to protect workers’ rights. This section of the report concludes:

Unfortunately, nearly one year after Chobani’s yogurt with Fair Trade USA’s “fair trade dairy” label appeared on the shelves, what we’re hearing from organizers underlines just how important it is to center workers—and the dire consequences that can come from implementing a program without their organizing.

Workers Don’t Know What “Fair Trade” is

Fair World Project remains in contact with organizers at the Workers Central of Central New York (WCCNY), who organize with farmworkers, including those on farms selling to Chobani and participating in the fair trade dairy program. These updates draw on conversations with those organizers, and many of the key points are also captured on our For a Better World podcast.

Chobani announced the pilot project with participating farms nearly three years ago and has been selling yogurt as “fair trade” for nearly a year. Yet what we hear from worker organizers is that overwhelmingly, workers on participating farms don’t know what “fair trade” is. That’s not just a semantic problem. If workers don’t know what fair trade is, it’s almost impossible for them to meaningfully claim the protections they are supposedly entitled to, or to meaningfully comment on what is happening in their workplaces.

Fair Trade Committees: Misrepresented and Disempowering

In episode 7 of For a Better World podcast, WCCNY organizer Crispin Hernandez explains “workers are told they are supposed to form a ‘fair trade committee.’ But the workers don’t know how to and they don’t give them this information to form a committee.” These “committees” are a critical aspect of many fair trade programs. In their standards, Fair Trade USA describes their purpose:

The fair trade committees are key to Fair Trade USA’s claims to “empower” workers. But reports from the dairy barns of New York don’t sound very empowering. Instead, worker organizers report that not only do workers not know what they’re supposed to be doing with their new mandate, the process is being run by Chobani and/or by farm managers. Once again, Fair Trade USA is putting marketing before substance. In a recent article, Fair Trade USA’s Producer Services Manager Jamie Padilla describes the Fair Trade Committees, saying, “The members are democratically elected by all workers. It’s a huge responsibility and, honestly, one of the most empowering things I’ve seen.” This statement misrepresents both the experience of worker organizers in Chobani’s supply chain and the actual process on paper in Fair Trade USA’s standards.

Module One of Fair Trade USA’s Agricultural Production Standard describes the formation of the Fair Trade Committee (FTC in the illustration), how members are to be chosen as well as a timeline for the activities.

In this example, Premium Participants would be farmworkers on participating farms, and could also include farm managers and small and mid-sized traders or facility managers who help to get the product to the Certificate Holder (Dairy Farmers of America or Cayuga Marketing, in this case). These participants are supposed to “understand fair trade,”  elect their own representatives, and have conducted and communicated a needs assessment on a clear timeline: “Before Fair Trade Premium is spent, or Year One at the latest.” That work has barely begun.

“Sign This Paper and You Can Get Money”

It remains unclear whether premium funds have been spent yet. Another troubling revelation in an interview for our For a Better World podcast describes funds going to workers (emphasis added):

The deal stated there “sign this paper and you can get money” does not sound democratic or empowering. Instead, it sounds rather coercive. More investigation is needed to understand how widespread such arrangements are. Yet overall, this anecdote underlines the risks of creating a Fair Trade Committee in the absence of worker-led organizing. Without clear structures for participatory democratic decision-making, premium allocations, especially direct payments to workers, fail to empower workers and can instead be used to prop up existing power structures, as has been previously noted by researchers.³

Dire Consequences of Fair Trade without Organized Workers

Research, including MSI Integrity’s definitive report Not Fit for Purpose, has pointed to just how essential it is that workers are involved in both the development and implementation of standards intended to benefit them.  Fair World Project’s ” Reference Guide to Fair Trade and Labor Justice Programs” has previously summarized that topic as “Formal Participation of the Intended Beneficiary.” The formal language may obscure the urgency, and the dire consequences that can result from this omission. But without the involvement – and leadership – of organized workers, programs repeatedly fail to protect workers’ rights, including their most basic safety needs.

Conversations with organizers in Chobani’s supply chains and efforts to learn where workers are participating in fair trade programs underline just how opaque these supply chains are, even to the people who labor in them. This fall, a person known to WCCNY to be working on a farm selling to Chobani and participating in the fair trade program was seriously injured. The account of his injury is captured in episode 7 of For a Better World podcast. The grim injury and its aftermath highlight the insurmountable challenges of trying to navigate Fair Trade USA’s standards as a tool for supporting someone in urgent need. Without clear guidance coming through fair trade programming, the next obvious place to turn would be the Fair Trade USA website.  In the Label Before Labor report, we highlighted how Fair Trade USA’s website is focused on the needs of consumers and businesses. Now, that lack of focus on worker accessibility comes into focus not just as a hypothetical failing, but as a grim reality. The site remains solely in English, the “Report an Issue” option is not even available from a mobile device (when viewing the page on desktop, it’s buried at the bottom). Ultimately, the takeaway is that the fair trade dairy program is not making these opaque supply chains any more transparent or accessible to the people who work in them.

Fear of Retaliation Remains Under Fair Trade Dairy Program

The “empowerment” that’s sold on fair trade packaging does not extend to the workplaces. Instead, the power dynamics that keep workers silent continue.

Fear of reprisal is a thread that has run throughout discussion of the fair trade dairy program. A definitive piece of research on conditions where the fair trade program was piloted is the report Milked: Immigrant Dairy Farmworkers in New York State, authored by the Workers’ Center of Central New York and the Workers’ Justice Center of New York. The report details an environment that is dangerous (two-thirds of workers surveyed had been injured on the job) and one where fear of retaliation is high.

Fear of reprisal—including the very real possibility of deportation—prevents people from raising concerns about pay, conditions, or even getting care for a serious injury.

Now, nearly one year after the launch of the fair trade dairy program, we continue to hear from organizers that those fears continue. Without the participation of organized workers or the robust engagement of worker advocates, there is little to combat that fear of reprisal. Workers have not spoken out publicly about the fair trade program – or the continued issues on participating farms—not only because they do not know about the fair trade program, but because the fair trade program has failed to change their realities. The “empowerment” that’s sold on fair trade packaging does not extend to the workplaces. Instead, the power dynamics that keep workers silent continue.

Fair Trade Dairy Fails Farmers Too

One critique was over-estimated in the Labor before Label report: the participation of small-scale farms. Small-scale dairy farmers have been hard hit by low prices, corporate consolidation, and U.S. policy that has overall been geared towards pushing them to “get big or get out.” Farmers are increasingly losing their farms and livelihoods–it would seem like these smallest farmers would be the logical target of a fair trade program for dairy.
Thus, when assessing the standards, as well as the average sizes of dairy farms in New York state and the size of their workforces among those surveyed for the Milked report, our assumption had been that there would be more small farms involved. The Label before Labor report detailed the many exemptions for farms with fewer than 6 employees– including the fact that many of the safety and basic trainings and workers’ rights standards in Fair Trade USA’s standard are marked as “Best Practice” not mandatory requirements for such farms. Instead, as we have learned the names of farms participating in the fair trade program, they are milking 2000-3000+ cows – much larger farms than initially expected, with workforces who should in fact be covered by the standards. While it’s good news that fewer workers will fall through the non-mandatory “Best Practice” loophole in theory, in practice, workers still don’t know what fair trade is.

Fair Trade Partner Dairy Farmers of America has Long Record of Unfair Business Practices

There’s a bigger issue at stake here as well. These large-scale dairies are part of the problem with the industrial food system. From small-scale farmers to workers to the climate crisis, this model has been linked to harm and, quite literally, un fair trade. The latter is not just a theoretical assertion. One of the “fair trade partners” listed on Fair Trade USA’s website for dairy is the mega-cooperative Dairy Farmers of America (DFA). While the traditional fair trade story has focused on small-scale farmers and their cooperatives as an engine of economic growth and fair livelihoods, Dairy Farmers of America has been cited and even sued multiple times for acting against their farmer-members’ interests. Over the years they have settled multiple lawsuits charging price fixing, as well as one that is currently ongoing . They’ve also been subject to charges of conspiring with other agribusinesses to drive down prices to farmers as well as using their market power to retaliate against any members who speak out.

Both dairy farmers and analysts alike have specifically pointed to DFA’s business practices as a key factor driving small-scale farmers out of the dairy business. In Episode 5 of For a Better World podcast, Claire Kelloway of Open Markets Institute sums up the issue:

Kelloway’s assessment takes a high-level perspective, naming the “democracy issue,” and questioning how the fair trade dairy standard addresses the issues with DFA. Fair Trade USA’s Agricultural Production Standard does not address key issues named in previous farmer suits: the concept of price fixing is wholly absent from the standards. The section on pricing (Objectives 5.2.2 – 5.2.3)⁴ is not scaled to an organization that controls one-third of the United States’ milk supply and is involved at all steps of processing and distribution.⁵ In this way, the diagnosis as a “democracy issue” is prescient. The key issue at play is, just as it is with workers, a failure to address the power imbalances at stake in the supply chain.

Conclusion

Fair Trade USA rolled out their “fair trade dairy” label in concert with Chobani in spring 2021 – amid a long campaign for Chobani to negotiate directly with the farmworkers in their supply chains.  The weaknesses in the standards highlighted in the Label before Labor report are having grimly predictable consequences as they are implemented.

Fair Trade USA’s standards development process was decried from the start as “an exercise that doesn’t reflect the needs and values of workers.” The resulting process gathered feedback that focuses on farm owner and brand input, and is dangerously out of step with the findings of researchers and farmworker advocates. Fair Trade USA’s new amendment to their Agricultural Production Standard for farms in the United States increases working hours. That’s a move that mirrors the United States’ long exemption for farmworkers from many workplace protections, an exemption grounded in racist discrimination–hardly the grounds for a standard that dubs itself “fair.”

Fair Trade USA’s standards don’t live up to the language of fairness that they sell. Further, the implementation of the dairy program is failing at even the most basic steps: too many farmworkers do not even know that their workplace is participating in a fair trade program. Further, we have heard troubling stories of what sound like coercive practices (signing a paper that says you agree with Chobani to get a bonus); bad living conditions, including bed bugs and cockroaches; and consistent fear of retaliation.

Frequently when Fair World Project critiques an ethical standard or program, the response is “But isn’t it better than nothing?” That’s not a choice that needs to be made here. Multiple other choices exist, and the workers in Chobani’s supply chains have made clear their demands – they are calling on Chobani to negotiate with them and have repeatedly made clear that a fair trade label does not address their calls for justice. Further, it’s worth noting that before partnering with Fair Trade USA to pilot the fair trade dairy label, Chobani met with members of the worker-driven human rights program Milk with Dignity. Per Milk with Dignity participants, “…instead of joining [the Milk with Dignity program], the company [Chobani] decided it was easier to put a label on their product.” It’s clearly not easy to partner with Fair Trade USA to pilot a label not developed for the dairy industry. Instead, the “easy” here speaks to the worker-driven, enforceable standards and binding contracts of the Milk with Dignity program–a far cry from the marketing-driven Fair Trade USA dairy label.

Options exist to meaningfully address the concentration of power in the dairy industry that is hurting both workers *and* farmers. But instead, Fair Trade USA has put their seal of approval on the very model that is driving the crisis in dairy – without meaningful mechanisms to address the power imbalances.

Having a fair trade dairy label that neither supports workers’ own demands for justice nor provides meaningful protections is not better than nothing. A fair trade label papers over the exploitative status quo with a thin veneer of “empowering” marketing. As more and more people become aware of the working conditions of the people who work in the fields and barns, they want to support something better. Instead, they’re being misled.

¹ ILO conventions represent the global consensus around fair labor. Conventions are not legally binding in themselves; countries who ratify them then pass laws to make them enforceable within their own countries. For a full list of ILO conventions that the U.S. has not ratified, see this list. The U.S. has declined to ratify these conventions because they are incompatible with existing U.S. labor law, including the exemptions for farmworkers cited above, and concerns that they may conflict with the ability of the private sector to profit from prison labor, as detailed in this policy brief from the U.S. Council for International Business.

² In the Feedback and Summary document, the response on living wage continues, “Fair Trade USA also plans to continue to create resources for supporting conversations between Certificate Holders and buyers to support living wage improvement, and in the future consider requirements to be included in the Trade Standard for buyers.” Such consideration would be welcome – and represent a shift from all Fair Trade USA’s current standards.

³ Sarah Besky has covered this issue in her research into fair trade tea plantations in India, https://www.sarahbesky.com/uploads/3/4/6/0/34604216/awr.pdf. Further, a study sponsored by Fairtrade International into premium usage found direct payments to workers covered by their Hired Labor standard to be a less effective use of premium funds https://hal.archives-ouvertes.fr/hal-02048855/document. This study also highlights the importance of the decision-making process in premium fund allocation to achieving stated goals around “empowerment.”  See: Allison Marie Loconto, Laura Silva-Castaneda, Nadine Arnold, Alejandra Jimenez. Participatory Analysis of the Use and Impact of the Fairtrade Premium. [Technical Report] Inconnu. 2019. ffhal02048855

⁴ Fair Trade USA’s Agricultural Production Standard  Objective 5.2.2: “The Certificate Holder has a written contract in place with all farmers and facility owners included in the scope of the Certificate regarding how prices will be paid and calculated and how conflicts will be resolved. The contract is followed.” Objectives 5.2.2a-c spell out what must be included in a contract between farmers and their cooperative as well as a definition of market prices—but says nothing about the larger issue, if the cooperative is large enough and fully integrated enough to have massive influence over those market prices.  https://www.fairtradecertified.org/sites/default/files/standards/documents/FTUSA_STD_APSUSAmendment_EN_1.0.0_0.pdf

⁵ Dairy Farmers of America is categorized as a “Producer” on Fair Trade USA’s website, thus their certification falls under the Agricultural Production Standard. While many coffee cooperatives are also tagged as “Traders,” Dairy Farmers of America is not, thus implying that they are not held to the separate Trade Standard. The Trade Standard includes some more relevant standards, although still falls short of clear pathways to remedy or enforcement. Traders only engage in fair and transparent trading practices.

Standard 2.5.1.a reads “There is no indication that traders engage in unfair trading practices that clearly damage the capacity for producers to compete or the capacity of producers to comply with Fair Trade USA production standards,” with the further clarification that “Unfair trading practices are ‘practices that grossly deviate from good commercial conduct and are contrary to good faith and fair dealing’ and are unilaterally imposed by one trading partner on another.”