How Fair Trade Works: ‘Every Purchase Matters’

Author(s): Scott Douglas Jacobsen

Publication (Outlet/Website): The Good Men Project

Publication Date (yyyy/mm/dd): 2025/05/03

Paul Rice is the founder of Fair Trade USA. He discusses the transformative impact of fair trade on global supply chains, environmental sustainability, and consumer empowerment. Drawing from his experience in Nicaragua, where he founded the country’s first fair trade coffee cooperative, Rice highlights how fair trade boosts farmer income, supports education, and fosters transparency. He explains the business case for ethical sourcing—risk mitigation, supply chain resilience, and consumer demand—and addresses the need for independent certification amid rising greenwashing. His new book, Every Purchase Matters, emphasizes that consumers can shape a better world through everyday choices at the checkout.

Scott Douglas Jacobsen: Today, we are here with Paul Rice. He is the founder and former CEO of Fair Trade USA. He established the organization in 1998 after spending over a decade working with smallholder farmers in Nicaragua. Under his leadership, Fair Trade USA has become the leading certifier of Fair Trade products in the United States, partnering with more than 1,700 companies and retailers. Rice is also the author of Every Purchase Matters: How Fair Trade Farmers, Companies, and Consumers Are Changing the World. His work has been recognized with numerous honours. Paul, thank you for joining me today. I appreciate it.

Paul Rice: Scott, thank you so much: Happy to be here.

Jacobsen: So, what is the outline of the evolution of the Fair Trade movement?

Rice: I’m glad you called it a movement, because Fair Trade is not simply a market. It’s a movement, too. Essentially, it is about great products improving lives and protecting the planet. Fair Trade is a rigorous certification system with a comprehensive set of social, labour, and environmental standards for farms and factories around the world. When they meet those standards and pass an independent audit, they get certified.

They can sell their products with the Fair Trade Certified™ label. Our market partners, the companies we work with in North America, agree to pay a premium. That’s the secret sauce of Fair Trade. We’re not asking producers worldwide to be sustainable without a reward. We’ve created a model in which the market rewards more responsible and sustainable practices. Fair Trade is a way for you and me, as consumers, to choose products enabling extraordinary social and environmental impact around the world.

When I started in the Fair Trade movement over 35 years ago, few companies cared about the struggles of farmers and workers in the developing world. Not too many companies thought consumers cared either. So, it was a nascent movement. One of many efforts to engage companies and consumers around more responsible products. Over time, we’ve seen companies embrace Fair Trade and other forms of ethical sourcing, primarily, because consumers are asking for it. There’s a strong business case for Fair Trade. I’m eager to discuss this. Ultimately, if Fair Trade doesn’t work for businesses, it won’t work for farmers.

Jacobsen: What is the business case for Fair Trade? 

Rice: Companies acquire three kinds of value when tapping Fair Trade supply chains or getting suppliers certified Fair Trade.

Number one: there is reputational risk mitigation. Every farmer and worker worldwide has a phone now, so there are no more secrets in the global supply chain. We’ve seen exposés on child labor in the cocoa fields of West Africa, child labour in chocolate, and slave labour in the shrimp industry in Thailand. That has exposed retailers and brands in North America.

One way to address that is to create a more transparent supply chain in which Costco or Whole Foods know where the shrimp, tomatoes, coffee, and chocolate are sourced. Through that supply chain transparency, you can ensure that the producers on the other side of the world are producing in a more sustainable, responsible way, verified through a third-party audit. Reputational risk mitigation is avoiding getting caught in a scandal in the supply chain. That’s value number one.

Value number two: there is supply chain resilience, security, and reliability. If companies ever realized supply chains were intimately linked with success as a business, it was during COVID. We saw supply chain disruptions and companies stocked out of products because supply chains were disrupted. Fair Trade and other expressions of ethical sourcing allow companies to ensure suppliers are getting enough money to stay in business and produce reliably with quality. 

I’ll give you an example. We work with a lot of coffee companies. We don’t work with Folgers, Maxwell House, or lower-quality brands. We work with higher-quality brands who depend on high quality beans. So, how does a company like Starbucks, Green Mountain Coffee,  or Nespresso ensure a reliable supply of high quality coffee beans? If a coffee farmer is starving or struggling to put food on the table. They don’t have the bandwidth or resources to care about quality.

So, it’s in Nespresso’s interest to ensure enough money gets back to that farmer so that the farmer can then be a reliable supplier of high-quality beans. That’s what I mean by supply chain reliability—supply chain security. The brand and the farmer share an interest. Companies securing access to the raw materials drive business. 

Third element: you and me, man. It’s the customer. The data and research is clear. The market in terms of the dramatic sales of sustainable products, too. Consumers are increasingly reading the label. Increasingly, we want to know: Is this product healthy? Is it safe? Also, is it sustainable? Is it environmentally responsible? Is it socially responsible? No one wants to feel as if supporting child labour, deforestation, or other bad stuff through purchases.

So, do no harm is an ethos growing among consumers. There’s more forward-leaning, proactive growth in conscious consumerism. Millennials and Gen Z indices are even higher than those of the Boomers regarding expectations of companies and the companies’ impact on the world. Gen Z and Millennials leave brands that don’t care. Many brand leaders and business leaders see sustainability as a means for stable success in the future.

So, the business case for Fair Trade includes brands and retailers tapping into this growing consumer segment looking for more sustainable products. It’s an opportunity for growth and profitability and brand differentiation. Different companies find different sources of value in Fair Trade. By the way, fair trade is one expression of ethical sourcing. Other examples include organics, Marine Stewardship Council certification, Non-GMO Project certification, and many different ethical sourcing communities.

If you look at the last 10, 20, 30 years of growth in ethical sourcing and Fair Trade, it’s clear that we are moving from niche to norm. More responsible businesses are moving from niche to norm. It gives incredible hope.

Jacobsen: When you talk to business leaders, you can discuss the theory and the praxis of the business case for Fair Trade. What do business leaders say have been their lessons when entering and evolving with the industry?

Rice: Yes, it’s a great question. I work with so many amazing, visionary leaders in the business community, who are testing and experimenting with this new chapter of capitalism: Conscious Capitalism. Michael Porter, a famous Harvard professor, wrote about the theory of shared value. This theory states: Through sustainable business, you can create value different stakeholders share. It’s the heart of Fair Trade.

We’re not asking Whole Foods or Walmart to reduce profits to pay farmers and workers more money. Rather, we’re asking them to participate in a model allowing them to succeed, farmers to earn more, ecosystems to be protected, and consumers to be delighted with a great product. So, I would call them luminaries creating a new chapter of capitalism. I hear directly how Fair Trade is creating more transparent supply chains.

We work with Hershey, a chocolate company. Hershey wanted more transparency about its suppliers in West Africa. They wanted to address issues like child labour in West Africa and respond proactively. One of the problems in West Africa is not schools in many rural communities. So, what will you do if you’re a cocoa farmer with a six-year-old child? When you go to the fields, there’s no school in your village. Are you going to leave your six-year-old home alone all day? No—the kid’s coming with you.

So, one of the first things  our cocoa farmers in West Africa (in the Ivory Coast) started doing was building schools. Hershey, as part of their Fair Trade program, paid a premium back to those villages. Those villages built schoolhouses. In the first two years, we built 30 schoolhouses in those communities. By the way, the communities went to the government and said, “If we build the school, will you pay for the teachers?” It was a cool example of a community finding its ability to negotiate with the government, a public-private partnership model, where the farmers built the schoolhouses.

I’m talking about two-room schoolhouses, simple structures. The government paid for the teachers. We put thousands of kids into schools in those first two years as a concrete way to address the issue and the risk of child labour. So, you see Hershey concretely talking about Fair Trade to enable education and mitigate the industry’s child labour risk.  We have a great program with Fair Trade tomatoes and Walmart. Walmart came to us and said, “We want to ensure that our suppliers are strong and capable. Capable of producing the right quality, delivering reliably, offering the right price, and taking care of the land and their workers.”

They wanted to enter Fair Trade with those goals in mind. My initial response was, “Why do you care? You don’t own those tomato farms. If they fail, you can buy them from another tomato farm.” They said, “It’s true. We find engaging over the long term more efficient and effective to form long-term relationships with our suppliers, because we’re projecting demand into the future. We will have more and more demand for tomatoes and other products. So we want to ensure that the supply will be there and the supply will be loyal to us. So, we care about our growers, because we understand the long-term importance of the supply chain.”

So then, we did this program with Walmart, which at the time represented only 10% of all U.S. Walmart tomato sales. Overnight, they became the largest seller of Fair Trade tomatoes in the world. They were sourced from farms in Mexico, including snacking tomatoes from an amazing company called NatureSweet. With Walmart and the growers, we created a dashboard and started tracking key indicators—worker well-being, how the premium was spent, and farm-level indicators like productivity and worker retention.

We found worker retention—workers going home at the end of the season for their break and then returning to the same farm—jumped to eight times the industry average. Why is that important? Ask any farmer in the U.S. or any country worldwide what their number one concern is today: It’s labour. Gone are the days of an abundant supply of cheap labour. Farmers are worried about not having enough people to harvest crops.

So, if you can retain workers, if you can keep workers coming back year after year, if you can maintain a stable workforce, then you have a competitive advantage. As a business, you have more stability. NatureSweet reported eight times higher worker retention on farms than the industry average. When workers stay, the company has lower recruitment costs. It doesn’t have to spend as much money recruiting labour from around Mexico.

You have lower training costs, i.e., training workers who have never worked with tomatoes. You’ve got to train them to work with tomatoes, right? So your training costs go down, and your productivity goes up because you have a more experienced, skilled workforce—people who have been working in tomatoes for years. There’s value for the supplier and for that farm owner. Walmart has a more secure and reliable supply chain that can deliver the right quality and the right volume year after year.

So, I spoke about the business case of the reliable supply chain. That’s a great example. And I’ll share—in the same program, if I may—the Walmart tomato program: when Walmart put the Fair Trade Certified label on the tomatoes at Walmart, sales jumped 3%. It may not sound like a lot—3% volume growth. To Walmart, it’s a big number. Who knew a Walmart shopper would gravitate toward a Fair Trade Certified product and buy more? It exploded assumptions about who the Fair Trade consumer is. It revealed conscious consumers shop everywhere. They shop at Whole Foods, Costco, and Walmart.

Jacobsen: Now we have the Fairtrade International label, and Fair Trade Certified from Fair Trade USA. However, there have been cases of self-declared claims to ‘Fair Trade.’ So, the Fair Trade logo was used without third-party certification. What can people do, using their judgment, to differentiate between misleading claims and actual Fair Trade practices and labels?

Rice: Yes, it’s a great question. So, there are two Fair Trade labels in North America—two auditing bodies: Fair Trade USA and Fairtrade International. Fair Trade USA certifies about 93% of all Fair Trade products in the U.S. market. This figure fluctuates slightly by year and product category, but Fair Trade USA is the dominant certifier in the U.S. market. Our relationship with the U.S. market goes back 26 years to when I founded the organization in 1998. Fairtrade International is a collection of Fair Trade groups in England, Switzerland, the Netherlands, Germany, and Canada—as well as other countries. It’s primarily a European-based organization.

They have a single Fair Trade label that just says “Fairtrade.” Ours says, “Fair Trade Certified.” So, in Canada and Europe, you’ll see the “Fairtrade” label predominantly. You won’t see much of the Fairtrade International label in the U.S. market. Fairtrade International and Fair Trade USA subscribe to the same ideals—the same general philosophy that business can and must be a force for good and that consumers will step up and reward companies for meeting a standard. We believe in the same mix of social and environmental standards.

What’s different about Fair Trade USA versus Fairtrade International is that Fair Trade USA has tried to expand the number of products, geographies, and types of producers allowed into Fair Trade. So we very much do what Fairtrade International does. We stand on their shoulders. We honour their work and support it.

However, their work tends to be more focused on small farmer cooperatives. Under our vision of Fair Trade for All, which we declared in 2011, Fair Trade USA seeks to go beyond small farmer co-ops. Also, we work with factory workers, fisheries, dairy farms, and apparel. So we’re in several product categories that Fairtrade International isn’t. We also started certifying farms in North America and Europe, whereas Fairtrade International is focused exclusively on the Global South—in Africa, Asia, and Latin America.

So there are a few differences. I would argue that our vision—Fair Trade USA’s vision—is perhaps more inclusive. We believe any producer anywhere in the world, in any product category, should be allowed access to Fair Trade certification. But we stand shoulder to shoulder with Fairtrade International regarding the bigger movement. You referenced false claims. Companies saying they’re Fair Trade when they’re not. That’s a rare occurrence. As you might imagine, we monitor the airwaves. We monitor brands. Some brands say their products are “fairly traded”and don’t carry a label.

It’s not a threat to the movement. When we see a company using that terminology, we reach out to them and say, “Hey, we appreciate what you’re doing. Wouldn’t you love to join the movement and have the credibility that comes with being independently audited?”

Most consumers are skeptical of companies claiming to do good without any oversight. The larger the company, the more skeptical the consumer. We worked with Starbucks for a number of years. Then they dropped Fair Trade and moved toward their in-house program. It’s called C.A.F.E. Practices. On every Starbucks coffee package, it says “Ethically Sourced.” It doesn’t say Fair Trade. The National Consumers League recently brought a class action lawsuit against Starbucks because it found bad labour practices on farms supplying coffee to Starbucks.

Starbucks promotes “Ethically Sourced” coffee, but this claim has not been independently audited or verified. It just brought home the value of having independent oversight—like Fair Trade—to ensure the claim is legitimate. So, it will be interesting to see what Starbucks does with that suit and their in-house program. I don’t lose sleep over the few companies out there who claim to be Fair Trade, but aren’t certified. Greenwashing in the sustainability movement is hazardous. 

Two final thoughts that I’d love to share: The first one—Fair Trade works. Fair Trade improves lives. It protects the environment. I know this, because I lived it. At the tender age of 22, I bought a one-way ticket to Nicaragua. I worked with coffee farmers for 11 years deep in the highlands. While there, I had the chance to start the first Fair Trade coffee co-op in Nicaragua. I started in 1990 and ran it for four years. So, I had a front-row seat on this journey of empowerment. 3,000 families came together to pool their coffee, add value through processing, and then export directly to Fair Trade buyers worldwide.

As a result of that participation in the Fair Trade market, those farmers received more money for coffee, so they could stay on the land, keep their kids in school, and run healthcare programs. We ran reforestation programs. We dug wells and brought clean drinking water into villages for the first time. All of this amazing progress, not thanks to the government or some well-intentioned charitable organization, but thanks to this simple notion of a fair price for a great product. That’s what opened my eyes to the impact of Fair Trade and how transformative it can be in improving the lives of farmers and workers worldwide. I moved back to the States and started Fair Trade USA. I felt a calling, because Fair Trade works.

The second message is why I wrote Every Purchase Matters. The news is full of billionaires and presidents who seemingly have much more power.  My message to everyone else is that you, too, are powerful. You and I can vote with our dollars every day for a better, more socially responsible, and environmentally sustainable world. When we go to the store, we have the chance to vote. We can choose sustainable products because corporate America is listening. When we choose sustainable products, corporate America does more of them. I’ve seen this clearly in the Fair Trade movement over the last thirty years. When consumers buy Fair Trade products, companies come in and do more, and other companies join them.

It’s part of the mainstreaming of ethical sourcing and sustainable products—consumers are voting with their dollars. That’s why my book is a book of hope and a call to action. You don’t have to wait four years to vote for change. You can vote for change today—by going to the store and choosing a product more consistent with your values. 

Jacobsen: Paul, thank you so much for your time today. I appreciate it. 

Rice: Scott, thank you for helping to get the word out and for your journalism. We need journalists right now. We desperately need journalists right now to tell the world what’s happening. And I appreciate the chance to talk to you today.

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