Rainforest Alliance is Not Fair Trade

Rainforest Alliance certification is not fair trade. Or Fairtrade. We’re having this conversation because Nestlé just announced that they are dropping Fairtrade International certification for their UK KitKat bars. Those KitKat bars have been Fairtrade certified for a decade following efforts of fair trade campaigners in the UK. Now, Nestlé announced that they are replacing that Fairtrade certification with Rainforest Alliance’s little green frog seal. It’s not the same thing.

Send a message to Nestlé: Support Small-Scale Farmers, Don’t Cut Pay & Premiums

Nestlé’s decision means the loss of almost $2.5 million in annual fair trade premiums to co-ops representing 27,000 small-scale farmers in Côte d’Ivoire, Fiji and Malawi. Nestlé’s fair trade purchases were tiny in terms of their global business. But a statement from the Ivorian Fair Trade Network quantifies what that loss means for the small-scale farmers who are their members:

“We have seen how the Fairtrade minimum price, premium and safety net have benefited producers during this health crisis. These revenues have enabled us to act quickly against Covid-19 to protect our health, support our communities and deal with a food disaster in some cases.

That Nestlé chose this period of global crisis to break the relationship between KitKat and Fairtrade is hard to hear for the producers who produce cocoa that brings so much pleasure and joy to others. The decision to stop buying cocoa and sugar on Fairtrade terms means fewer schools, water pumps, health centres and the end of many other essential services.”

While it’s possible that some of Nestlé’s future purchases may be from these same farmers, they would be through Nestlé’s own Cocoa Plan initiative, or with Rainforest Alliance certification. That means no fair trade premium, and no guaranteed minimum price for their cocoa. That is a big deal. The average cocoa farmer in West Africa lives well below what is defined as the extreme poverty line, earning an average of less than a dollar per day. That’s less than it takes to buy a KitKat bar. More relevant to those farmers, it is less than half of what might be a living income.
While Nestlé has suggested that they will give some additional money to farmers to cover switching certifications, it is a short-term fix. And the terms of the deal make it sound more like a charitable contribution than paying farmers fairly for their crop.

We are backing the impacted farmer organizations’ calls for Nestlé to reconsider their decision and stick with Fairtrade certification. Send a message of support.

Nestlé’s Switch to Rainforest Alliance is Part of a Troubling Trend

Nestlé is switching to Rainforest Alliance to “harmonise our certification for sustainable sourcing internationally,” in the words of Simon Billington, global technical manager for Nestle Confectionery. Nestlé’s other certified cocoa is also certified by Rainforest Alliance. One of the most boycotted companies internationally,  Nestlé has never been a good match for fair trade principles, as plenty of advocates pointed out a decade ago.

Yet moving from Fairtrade certification to Rainforest Alliance is part of a troubling trend among corporations. Demand for ethical products, and for certified ethical products, has grown over the past two decades. However, instead of fundamentally changing their sourcing practices to align with advocates’ demands, in far too many cases, corporations have opted to find certifiers who will sign off on their supply chains with little alteration to their practices. The result has been a race to the bottom for lower, more corporate-friendly standards.

Rainforest Alliance and Fairtrade Compared

A comparison of their standards show just how much they differ. The table below is based on the International Guide to Fair Trade Labels and the analysis of a global group of advocates and academics.

In addition to having lower standards, Rainforest Alliance has notoriously weak enforcement. Every year, new cases surface of forced labor, child labor, and other exploitation on farms that claim to be certified to their “ethical” standards. From coffee to cocoa to tea, Rainforest Alliance, now Rainforest/Utz after a merger, has a terrible track record.

The differences between Rainforest Alliance/Utz and Fairtrade continue to grow more stark. Over a year and a half ago, Fairtrade International announced an increase in their minimum price for cocoa. They are also piloting a plan to pay cocoa farmers not just a minimum price, but one that is actually based on the cost of production and a fair livelihood. Meanwhile, Rainforest Alliance has shied away from including a minimum price requirement for cocoa, or for setting a fixed premium per ton sold, even as they speak of “reimagining certification and trying to take it to a higher level.”

But without a commitment to a livable minimum price, this is just rebranding poverty and exploitation as “ethical” and putting a label on it.

Nestlé was Never Fair Trade

A decade ago, Nestlé made a token commitment to fair trade certification for a fraction of their chocolate product line. Since then, they’ve profited off those sales, and off some degree of goodwill for their tarnished brand. But their decision to drop Fairtrade’s label highlights the core weaknesses of voluntary certification.

Nestle is one of the most boycotted companies in the world. The list of their human rights violations stretches for pages—and that doesn’t even touch their theft of water or the infamous baby formula boycott. The fact that they are even eligible for fair trade certification speaks to the difference between fair trade labeling and the more transformative vision of a movement for fair trade as part a larger just economy. (Note that Nestlé’s UK KitKats would not be eligible for all fair trade certifications – see our Reference Guide for which labels prohibit this kind of corporate “fairwashing.”)

Certifiers in a Race to the Bottom

The switch from Fairtrade International’s label to that of Rainforest Alliance highlights the “voluntary” part of voluntary certification. If a standard raises the bar for compliance, or another standard makes it easier to get a label, it’s easy enough for companies to make the shift.  That’s not just a hypothetical situation, and Nestlé is not the only company doing it. Over the years, more and more companies have chosen to move to labels with lower standards, or to drop third-party certification entirely and go with their own labels for sustainability claims. Starbucks’ C.A.F.E. Practices and Mondelez’ Cocoa Life plan are just a few such programs. Two of the key differences: These programs have no minimum prices, and they do not have producer ownership of the standards or the system built into the model. Instead, they allow companies to continue to maintain all control and power—just now with an ethical veneer.

We now see in ethical labeling the same forces at play as we see in the rest of our economy: a race to the bottom for the cheapest and most profitable.

When it comes to market share, Rainforest Alliance is winning. They certify 32% of the world’s cocoa supply, compared to Fairtrade International’s 5%. But this is not just a question of market share. The ones who are losing in all this are the cocoa farmers. Cocoa farmers remain in poverty. And, regardless of the certification, their incomes are not rising fast. Across the board, cocoa farmers remain far from a living income.

There are a few reasons for that—in just about every case, cocoa prices are too low. Fairtrade International’s minimum cocoa price falls short of a true living income. And even Fairtrade International’s calculation for a living income likely fall short of what it would actually take for cocoa farmers to truly thrive. Attempts to raise the bar are held back by fear of losing “market share,” that is, the participation of the biggest buyers.

Another factor holding back fair trade certified farmer incomes is sales. 67% of cocoa from fair trade certified cocoa farming organizations is not sold on fair trade terms.  They may have gone through the work of getting certified, but the buyers are not there to pay the prices.

Poverty is a Problem of Power

Finally, cocoa farmers are not just poor because of a few years of low prices. The entire chocolate industry is based on colonial models of enslaving people and extracting unpaid labor. This model needs to change. And the sort of real change and transformation that is needed will never come from the top of corporate social responsibility departments. That change must come from centering the leadership of those most impacted: small-scale farmers and their organizations.

Fair trade is not a perfect mechanism, but at its heart, there is a vision for empowering those small-scale farmer organizations to make change by addressing who gets to set the terms of development and who controls the money. In their statement on Nestlé’s move, the Ivorian Fair Trade Network spells out what that control means to them: “…Only Fairtrade provides a minimum price and a fixed premium, non-negotiable, which is paid 100% to producers, to decide for ourselves how this premium is used for the improvement of our living conditions and the development of our communities.

Fairtrade is essential for us because it allows us to participate in the development of our communities independently. A non-Fairtrade trade relationship means regression and continued poverty.”

Voluntary Certification is Not Enough

Clearly it is high time that we move beyond hoping that big corporations will be moved to compete to be more ethical rather than simply to pay their shareholders more. Multinationals have demonstrated time and again that their profits are what comes first. And ultimately, we need stronger regulation. Without good laws, we are stuck in a race to the bottom—and in an endless cycle of exploitation and abuse rebranded as “ethical.”

There are companies who are working to pay farmers fairly, and to build alternative models of trade – it is important to support them. And still to acknowledge that they too are forced to compete in this race to the bottom fueled by the multinational chocolate companies. Check our list of truly fair trade (not Nestle-owned) chocolate companies for options to support.

There is a lot more work to be done to halt this endless race to the bottom. But for today, take the step of backing the Ivorian Fair Trade Network’s message to Nestlé: Don’t Cut our Pay in a Pandemic