Co-operatives and Fair Trade

Research Topic Full Title: 
Co-operatives and Fair Trade: What are the Alternatives?
Creator - Author(s) Name and Title(s): 
Deborah Dergousoff, PhD Student
Date: 
Sunday, May 10, 2009
Coverage: 
International

"Ethical purchasing put simply is buying things that are made ethically by companies that act ethically. Ethical can be a subjective term both for companies and consumers, but in its truest sense means without harm to or exploitation of humans, animals or the environment" (Ethical Consumer, UK).

One of the concerns that arises in using a universal system of verification such as that of certified fair trade, is that while it fits well with a mode of Northern economic distribution and consumption patterns on a grand scale, it does not allow local creativity to devise solutions in small, local ways.  Co-operative models not only provide a framework for critiquing issues of fair trade, but also provide a framework for developing locally-based regional alternatives for fair trade in Northern markets. 

A co-operative is an enterprise owned and controlled by its members. Co-operatives are as diverse in their structure as they are in members. Like people, it is impossible to create categories and expect every co-op to fit into only one.

-  Webpage of the British Columbia Institute for Co-operative Studies, 2007

While fair trade principles and standards moderate some of the injustices of conventional international commodity trade, there is an inherent assumption in them that inequitable behavior in market relations can be corrected by paying a fair price to producers for the products they produce.  While 'fair' pricing arguably improves the lot of many producers, and contributes to sustainable relations of trade, recent studies have shown that certified systems of fair trade fall short of addressing the root causes of impoverishment and inequitable power relations (Fridell 2007; Jaffee 2007; Calo & Wise 2005; Milford 2004).  The co-operative model provides a framework for critiquing issues of fair trade and provides an alternative way to organize the Northern market for fair trade in ways that may be more conducive to supporting local and regional social economies.

1. The Co-operative

The International Co-operative AssociationThe International Co-operative Association (ICA) Statement on the Co-operative Identity defines a co-operative as: "an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise...Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity" (MacPherson 1996:1).  The co-operative movement as it is today has its roots in 19th century Europe, where the ethical and moral pragmatism of men and women with a commitment to honesty and a vision for social responsibility inspired a set of co-operative principles that are still used to guide co-operative behavior and decision-making today.  The original principles were the achievement of the Rochdale pioneers, who in 1844 organized co-operatively to resist and provide an alternative to a predominantly dishonest market place in Britain (Birchall 1997).  The original eight principles established by the Rochdale pioneers were subsequently reduced to seven which serve today as guidelines for putting co-operative values into practice.  Figure 1 outlines the values, principles and practices that form the background for co-operative organization today:

Figure 1: Co-operative values, principles and practices

 

Basic Values

 

Ethical Values

 

Principles

 

Practices

self-help

honesty

voluntary and open membership

member recruitment policy; rules of admission; equal opportunities policy

self-responsibility

openness

democratic member control

constitutions; voting rights; role of management

 

democracy

social responsibility

member economic participation

economic performance; rewards to members; how capital is raised

equality

caring for others

autonomy and independence

relations with/dependence on the state; market position

equity

 

education, training and information

public relations; member education; management training

solidarity

 

co-operation among co-operatives

federations; networks; joint enterprises

 

 

 

concern for community

 

policy on environment, stakeholders, community development

 

Adapted from Birchall (1997:Figure 2.1,7.1)

Birchall (1994) points out that one of the fundamental reasons for the success of the Rochdale Pioneers in Britain was good business principles and exceptional leadership whose social goals focused on the benefit of members, rather than on private gain.  Co-operative structure differs from that of investor-owned firms (IOFs) in that all members pay a uniform membership which entitles them not only to an equal share in the co-operative, but also an equal responsibility for controlling it.  Because all members are both users and managers of the enterprise, there is theoretically an equal incentive for all to participate in the active running of it.  Where the main objective of an IOF tends to be profit maximization, maximum return to members is the general objective of co-operatives, though not necessarily their only aim.  Milford (2004:11-12) explains

...the [co-operative] member group consists of different persons with differing ideas, ... creating the greatest possible surplus may not be equally important to all of them... In addition to having several alternative objectives, co-operatives often [but not necessarily] have other, non-economic aims that IOFs do not have, such as participation, democracy and member education."

One of the primary reasons for establishing co-operatives in both Northern and Southern contexts has been to enhance the function of marginalized peoples and enterprises in market situations characterized by imperfect competition.  Co-operatives are made up of individual creative beings, and hence differing objectives, both within and among them.  This has important implications for the way they are able to operate as economic agents in a marketplace run primarily by investor-owned firms (IOFs). Southern co-operatives serve both a social and an economic function.  Economic benefits are generally in the form of "increased competitiveness, economies of scale, credit opportunities, innovation and member education" (Milford 2004:35).  Innovation is supported in co-operatives through improved access to information and technical capacity.  Some fair trade co-operatives (i.e. UCIRI) have formed unions to help them manage economies of scale.  Economies of scale help co-operatives attain collective goods such as infrastructure, vehicles, shops, hospitals, etc.  In addition to managing economies of scale, co-operatives help producers negotiate better prices (Bacon 2004).  The success of fair trade co-operatives has been attributed to their capacity to invest a portion of the higher prices they receive in infrastructure, payment of co-operative debt, member credit, technical assistance, administrative costs, housing and education. 

The social benefits of co-operation are equally important.  Grassroots involvement and democratic participation as a function of co-operatives has the spin-off effect of creating social capital (i.e. understood to mean trust, norms and networks).  Social capital directed at practical ends such as common marketing brings people together in the first instance, then through the empowerment of co-ordinated action "networks are formed, people start trusting each other more and participation becomes the norm.  [The process often] enables people to join forces in other beneficiary ways" (Milford 2004:36).  Indeed, the United Nations Secretary General (2001) has acknowledged co-operatives as "associations and enterprises through which citizens can effectively improve their lives while contributing to the economic, social, cultural and political advancement of their community and nations."  Effective co-operation would seem to be the key to involving local people in processes of development and social economy.  Yet, while co-operatives have an important social and economic function in Southern agriculture and fair trade, Northern markets have by and large eschewed the co-operative approach as a means of expanding fair trade.  Low utilization of co-operative models may be partly attributable to the historic failure of many early co-operatives to successfully achieve their social development goals (Birchall 1994).  Recent studies in the area of fair trade, however, do not suggest that the co-operative model itself is defective, but rather attribute failure to particular co-operative structures and external conditions and events (Fridell 2007; Jaffee 2007; Calo & Wise 2005; Bacon 2004; Taylor 2002).  The coffee industry has seen many fair-trade success storiesMilford's (2004) study, for instance, shows that while Southern co-operatives in general may not necessarily succeed in their attempts to support marginalized producers, those associated with fair trade, particularly in the coffee sector, have almost without fail seen their living conditions improve, albeit in limited ways. 

2.  The International Development of Fair Trade

The idea of fair trade has its roots in initiatives aimed at ethical trade practices initially conceptualized as 'alternative' trade.  These date back to co-operative movements working in late 19th century Europe to create integrated economies from the producer to the retailer (Young 2003:4).  The notion of an integrated economy, or 'alternative' trade, is not necessarily the same thing as 'fair trade.'  The International Fair Trade Association (IFAT 2003:1) explains that the word 'alternative' was initially used to denote "a different set of values and objectives that put the well-being of people before the pursuit of profit."  Many of the early 'alternative trade' initiatives began as international development initiatives carried out by religiously affiliated non-profit organizations, such as Ten Thousand Villages in the 1940's, and Oxfam in the 1960's. With the exception of the purchase of coffee to support the Sandinistas in Nicaragua, the early fair trade market did not trade commodities, but was primarily concerned with handmade folk crafts. 

The 1964 United Nations Conference on Trade and Development (UNCTAD) marked the call for "trade not aid" that was to become the hallmark of fair trade organizations over the next few decades.  The UNCTAD slogan arose from evidence that the current trade system based on commodity production was creating "a self-perpetuating cycle of subordination and impoverishment that was a major factor in the 'under-development' of the Third World" (Ogle 1994:1).  The early fair trade movement, much like the early co-operative movement, was a response to this issue. 

From the late 1960s onward, the notion of 'alternative trade' was primarily associated with political solidarity movements such as Oxfam campaigns which sought to address power imbalances in the dominant world trade system.  Alongside such efforts toward 'solidarity' trade was a branch of alternative trade whose focus was economic development.  Rather than focusing on solidarity with the politically and economically marginalized, 'development' trade was more concerned with organizing producers and production, providing social support to farmers, and creating an export market to the North (IFAT 2003).  The fundamental difference between 'solidarity' and 'development'  trade is that one wants to change the rules and practices of conventional international trade, an agenda which can be understood as 'solidarity' with marginalized producers, while the other wants to develop the fair trade industry with conventional market strategies which are in accordance with 'development' policy. 

Over the course of the 1970s and 1980s, a surge of new economic/political Alternative Trade Organizations (ATOs) arose in North America in response to the failure of foreign aid and development initiatives to alleviate poverty in the South[1].  ATOs such as Stichting Ideele Import in the Netherlands, and Twin Trading in the UK, were likewise established in Europe to assist politically and economically disadvantaged countries by providing poverty relief through trade.  As questions arose about the motivations and effectiveness of foreign aid policies, awareness of the growing gap between rich and poor nations also began to grow. 

Over the course of the 1990s, tensions developed over differences in foci between environmentalists concerned with organic or environmentally friendly products and social activists concerned with economic justice.  Two key organizations began to work on setting international labeling standards for certified Fair Trade.  Fairtrade Labelling Organizations International (FLO), with headquarters in Bonn, Germany, was established in 1997 in an effort to develop standards for international product-specific and fair trade criteria.  FLO affiliates negotiated an agreed upon set of standards and a system of independent monitoring to produce a certification label that consumers could recognize as 'authentic' fair trade.  Several participating countries had already established markets based on local certification labels so it was not considered feasible to instate a new internationally recognized certification label. TransFair Canada is Canada's only non-profit certification and public education organization promoting Fair Trade Certified trading Hence, it was agreed that each affiliated country could choose its own FLO certifying body trade name (i.e. Canada, USA - TransFair, UK - Fair Trade Federation, Netherlands - Max Havelaar).  Today, FLO certifies the chain of supply and coordinates National Labelling Initiatives in 21 countries in Europe and North America, as well as Mexico and Japan. Canada's FLO affiliate and national labeling body is TransFair Canada. 

The other key organization was the International Fair Trade Association (IFAT), with headquarters in The Netherlands.  In May, 2007 elected representatives from IFAT's network of artisans, farmers, growers, cooperatives, networks and businesses from Asia, Africa, Europe, Latin America and the Pacific Rim initiated an 'Agenda for Change' which involved a strategic review and global restructuring of the network. The World Fair Trade Organization is a global association of Fair Trade producer cooperatives and associations, export marketing companies, importers, retailers, national and regional Fair Trade networks and Fair Trade Support Organizations. In February, 2009 IFAT declared itself the World Fair Trade Organization (WFTO) with an agenda to implement strategies and tools for addressing poverty, climate change and the financial crisis.  The newly formed WFTO operates in 70 countries across 5 regions; Africa, Asia, Europe, Latin America, and North American and the Pacific Rim, and is comprised of 350 organizations committed to 100% Fair Trade.  The WFTO is a global federation of businesses using standards similar to those of FLO-certified Fair Trade but verified by self-assessment, mutual reviews and external verification. The Fair Trade Organization (FTO) mark used by WFTO does not certify products, but rather identifies an organization as belonging to a global network of organizations whose core mission is commitment to 100% fair trade.

3.  Solidarity and Development: Contradictions of Certified Fair Trade and the Co-operative Solutions

The Rochdale style of consumer co-operative became the norm for others to follow because it clearly demonstrated a model that worked effectively to the benefit of all.  The 'fair trade' movement, like the original Rochdale consumer co-operative movement grew slowly at first, but gained notable momentum in the past decade, due in part to initiation of the FLO Fair Trade label in 1997.  Recent studies, however, have criticized the FLO-certified system of Fair Trade for its limited capacity to work effectively to the benefit of all (Dergousoff 2009, Fridell 2007, Jaffee 2007).  Although certified Fair Trade labels have arguably contributed to rapid growth of fair trade market share, the system has been criticized, particularly by Southern trading partners, for its focus on market growth at the expense of the transformation of existing relations of trade.  There is a significant difference in the kinds of empowerment made possible by invoking the rights of 'solidarity' as opposed to the rights of 'development' trade.  Although the 'fair trade' project was initiated as a framework of action for 'solidarity,' current action is more heavily focused on the 'development' agenda of the certified fair trade project which involves a set of rules to guide market growth and relations of sustainable trade.  It must be understood that while FLO certification guarantees that a fair price (determined by FLO) is paid to producers, it does not certify fair business practices throughout the supply chain. 

Many fair trade advocates believe that by concentrating primarily on paying a fair price, the FLO system glosses over the larger problems behind capitalist trade relations.  The WFTO system offers a more holistic assurance of an organization's business practices and standards with monitoring methods more geared to local particularities. However, fees are still required for certification.  In the interests of avoiding such fees some companies have adopted other means of verifying their claims to social responsibility: promoting their own company, adopting other third-party systems, or implementing industry codes of conduct.  Traders who self-identify as 'ethical' in one way or another but who for various reasons opt out of either of the certified labeling scheme prefer the terms 'fairly traded,' 'farmer friendly,' or the lower-case 'fair trade' (Dergousoff 2009). 

While fair trade principles and standards moderate some of the injustices of conventional international commodity trade, there is an inherent assumption in them that inequitable behavior in market relations can be corrected by paying a fair price to producers for the products they produce.  While 'fair' pricing arguably improves the lot of many producers, and contributes to sustainable relations of trade, recent studies have shown that certified systems of fair trade fall short of addressing the root causes of impoverishment and inequitable power relations (Fridell 2007; Jaffee 2007; Raynolds, Murray & Wilkinson 2007; Calo & Wise 2005; Milford 2004).  Fridell (2007a:23) explains that

...while [the] bonds of North/South solidarity...are indeed positive and represent a challenge to the principles of market exchange under global capitalism, this challenge is strictly limited by existing capitalist relations of property and labor and by fair traders' market-driven approach... [Fair Trade has attempted to promote] a different attitude toward market exchanges, while neglecting that it is not an attitude but a specific set of social relations of production that result in the imperatives of the capitalist market.

The problem with universal verification and standardization schemes is that they fit well with the standard mode of Northern economic distribution and consumption patterns on a grand scale, but dismiss opportunities for creative beings to realize their common humanity in small, local ways.  By focusing on the social economy and small local markets, Northern co-operative models have the capacity to provide distinct opportunities for expanding the concept and meaning of fair trade.  The co-operative model not only provides a framework for critiquing issues of fair trade, but also provides an alternative way to organize the Northern market for fair trade, a way that may be more conducive to supporting creative local and regional social economies. 

The co-operative model is a natural for fair trade organization because co-operative enterprises are: 1) owned and controlled by their members, and 2) as diverse in their structure as they are in members.  The BC Institute for Co-operative Studies (2006) suggests "like people, it is impossible to create categories and expect every co-op to fit into only one."  Milford (2004:64) suggests that by bringing actively participating members together to improve their incomes, "co-operatives [can] empower and give a voice to poor and marginalized people ... thereby [enhancing] democracy and social development."  Democracy and social development are written into standards for fair trade and the social economy that it supports.  Yet, co-operative organizing for fair trade in the Canadian market has been almost negligible.  An indepth, historically grounded study examining reasons why fair trade developed primarily as a co-operative/non-co-operative trade relation between Southern producers and Canadian distributors/consumers needs to be done.  Such a study could help develop a broad understanding of the ethical implications of particular ways of organizing fair trade and why certain strategies do not result in working effectively to the benefit of all.  The following section imagines some alternative possibilities for organizing Canadian fair trade.

4.  Co-operatives and Fair Trade: Shaping Ethical Trade in Small, Local Ways

Alternative-trade markets had their origins in ATOs  working to alleviate poverty by creating consumer markets for the products produced by people in developing countries.  ATOs typically paid producers above market prices for their goods and were responsible for importing, distribution, and sale of the products.  The certified Fair Trade system was developed to work with already established distribution networks rather than to create and establish its own (Milford 2004).  The Fair Trade label made it possible to make products available in mainstream as well as specialty stores, thereby reaching a larger group of consumers.  Given that networks of Northern co-operatives were well established in the 1990s when the idea of certified Fair Trade began to develop, it is interesting that the movement conceptualized a 'labeled' approach instead of a co-operative one for Northern fair trade.  My aim here is to understand the opportunities lost in a 'labeled' approach versus a co-operative one.  I begin by outlining some of the issues and imbalances of 'fair' trade, especially from a Southern perspective, and suggest how Northern co-operatives might work to address them   My critique does not take up the notion of 'fair' itself, but rather observes that 'fair trade' is variously experienced in a way that makes a project of universal certification inadequate as a means of realizing it.   

A truly equitable trading partnership requires equal say, equal gain, and equal risk among all the parties involved.  It has been argued that current conceptualizations of fair trade are more representative of interventions than of partnerships (Paul 2005).  A closer look at 'partnerships' reveals the nature of standardized fair trade relations. There is much documented both in FLO and WFTO/IFAT policy, and in studies of fair trade, about the way partnerships are presumed to operate in fair trade.  While fair trade standards are constantly being updated to account for an increasing number of variables, the standards themselves do not provide an accurate picture of the way partnerships actually come into play in fair trade, nor the way they come to have meaning or not, to the participants in any particular fair trade relationship.  The concrete form and effect of standards is invisible.  What we see is the abstract concepts standards produce (i.e.'fair price,' 'sustainable trade,' and so forth) whose meaning and interpretation is taken for granted.  While boosting producer/consumer relations is touted as one of the keystones of fair trade, little work has been done in the area of actual producer/consumer relations (especially producer knowledge of consumers), nor the way standards might actually destabilize relationships both within and between producer and consumer communities.          

Information disparity between Northern and Southern actors is one of the principle critiques of fair trade (Fridell 2007; Calo & Wise 2005; Milford 2004; Taylor 2002).  Lyon claims (2006:457) "the disjuncture between consumer life politics and producer livelihoods reflects the questions raised by critics of fair trade who maintain that fair trade normalizes global inequalities, re-enacts colonial trade relationships and relegates Southern participants to mono-crop export production."  Taylor (2002) argues that the depersonalization resulting from standardizing practices such as certified Fair Trade promotes stereotypes and idealized assumptions about producing communities, leading to misconceptions about 'the producer' by consumers in the North, and notions among producers that the most important precondition for their participation in fair trade is that they are poor.  Indeed, it can be argued that current conceptions of and approaches to fair trade rely heavily on the politics of difference, both structurally and in terms of strategically essentialized identities like 'consumer' and 'producer,' "celebrating some kinds of difference while submerging others" (Lyon 2006:459).  

Taylor (2002) argues that it may be less important for the project of fair trade to foreground identities than to establish actual functional relationships.  Functional relationships imply the active participation of all parties involved.  Murray, Raynolds & Taylor (2006:190) conclude that "broadening and deepening Fair Trade means expanding participation and increasing the benefits captured by the rural poor, while maintaining and strengthening the core values of the Fair Trade movement in the Global South and the North alike."  This brings us back to the fundamental value differences between solidarity and development trade, and Northern and Southern perceptions of them. 

Many of these fair trade goods are produced by co-operatives.Many argue that farmer participation is key to the success of fair trade in the international arena and that farmers must contribute to the formation of standards.  Yet, while the strongest link in the fair trade coffee sector is said to be between the producer and roaster (Milford 2004), the fair trade system neither accounts for the need, nor facilitates the process for communication between them.  The terms of participation were established by the certifying institution without input from farmers or roasters, therefore, participation takes place under the terms of external interests rather than the collective interests of those who participate in the actual practice of fair trade.  Within a co-operative there are no 'others,' everyone (theoretically) has an equal say, an equal share in the gains, and carries an equal risk.  It would seem then, that if Canadian co-operatives built on these principles were to form partnerships with Southern co-operatives also built on these principles, it is likely for participation of members in the partnership to be relevant, meaningful and in the interests of all parties involved on both ends of the interaction or enterprise.  Why then has co-operation rarely been the organizing principle for Canadian fair trade?

Both empirical and theoretical studies have demonstrated the potential advantages of co-operatives and also reasons why advantages have at times been difficult to realize (Milford 2004; Calo & Wise 2005; Taylor 2002; Fairbairn, MacPherson & Russell 2000).  Co-operatives have proven to have the potential to serve as innovators, educators, channels for information, creators of social capital, and providers of social services, while at the same time functioning as democracies and efficient enterprises.  Given the conflicting objectives of profit maximization, combined with social and economic aims and varying interests among the members of any given co-operative, it is not surprising that some do not succeed.  Milford (2004:67) asserts that despite documented evidence of failure co-operatives should not be dismissed as an alternative before extensive research and investigation of their successes and failures can determine their capacity to "play an important part in poverty alleviation and economic development, with or without Fair Trade" in the Southern context. 

I assert that given the link between the success of co-operatives and their association with fair trade in the South, more research and investigation of possible links between co-operatives, fair trade, the social economy, and poverty in the Northern context is also required.  Why are co-operatives so important on the Southern end of distribution chains and infrequently a part of Northern fair trade distribution?  What imbalances exist in North/South trade relations in terms of fair trade in Canada?  What is the current role and extent of co-operation in Canadian fair trade?  What opportunities can co-operation present for addressing imbalances in North/South fair trade relations?  What opportunities can co-operation and fair trade together present for addressing poverty and enhancing the social economy in Northern contexts? 

Going back to the suggestion that "like people, it is impossible to create categories and expect every co-op to fit into only one" (BCICS 2006), co-operative principles lend themselves to the creative potentials, not only of individual members, but also of co-operative collectives.  Rather than forcing individual or collective creativity into a set of standards, working in relationships between or among co-operatives allows room to account for variations in economic and social objectives, and the ability to work out creative solutions to disjunctures that take into account the points of view of all people involved.  An approach that links Northern co-operatives with Southern co-operatives not only facilitates the connection of producer to distributor (for example, coffee roaster), but also has the potential to address the separation of producers from consumers in a way that sets them on an equal footing at the outset. 

A North/South co-operative collaboration would mean that both producers and consumers, as members of co-operatives, have an equal stake in the relationship and input into the way it functions.  Information flows and the consequences of failure in such a relationship do not only flow one way.  Certification of products or practices becomes unnecessary because producers, consumers, and distributors, as members of co-operatives, are informed about the particular production, distribution, or consumption circumstances of the co-operatives they are dealing with.  If fair trade is indeed as many claim, consumer driven, then consumers should have a greater stake in the consequences of it.  In a co-operative-to-co-operative relationship, the fate of the producer is more closely tied to the fate and conscience of the consumer.  When producers, distributors, retailers and consumers are working co-operatively to maximize returns to their respective members, the empowerment of all members in the chain is in the interests of everyone involved.  Social economy initiatives and small local markets may give Northern co-operative models the capacity to provide distinct opportunities for expanding the concept and meaning of fair trade. 

It has been argued that "changing markets and power shifts to the... retailer end of the commodity chain suggest a set of demand side interventions that compliment more innovative supply side projects" (Bacon 2004:508)   Exploring the idea of co-operative models to enhance the fair trade market in Canada is, I believe, a viable way to complement the more innovative supply side projects of Southern fair trade.  Calo & Wise (2005:45) conclude in regards to niche markets that "for the FT movement to impact more farmer's lives - and the poorest farmer's lives - it must create openings in this market while continuing to critically engage the industry around the need for reforming trade relations."  Co-operative structures are already in place to serve both mainstream and niche markets as required.  Again the potential for creative innovation is not stifled by a set of standards that regulate the imagination of how business can be done.  Co-operative principles and structures support both the idea of small Canadian co-operatives working with small Southern co-operatives in small local ways, and also the idea of large enterprises suitable to mainstream marketing with specific or wide-sweeping aims and objectives.  Co-operatives also have international structures in place that can work on strengthening international co-operation and on financing diversification.

There is much to be learned about opportunities to enhance the social economy in Canada from the way co-operatives and fair trade work together to contribute to the social economy of communities in the South.  For example, there is much evidence that fair trade agricultural co-operatives are of great benefit to small producer communities in the South.  Research needs to be conducted into possibilities for small businesses and rural communities in the Canadian context to work co-operatively in support of local social economy initiatives by forming partnerships with Southern fair trade co-operatives.  Collaborations such as the example provided by Murray et al. (2006:185) of larger co-operatives in Mexico who have helped smaller ones enter the fair trade market reflect "the fundamentally different values embedded in Fair Trade, involving solidarity and the moral obligation to offer mutual support."  Collaboration between Canadian and Southern co-operatives can deepen the impact of fair trade and broaden participation in efforts toward it, thereby enhancing the practical and conceptual meanings of fair trade.

5.  Conclusion

The greatest challenge for fair trade is finding a way to expand the movement while remaining true to a set of guiding principles.  The Canadian fair trade movement could learn much from the co-operative experience.  Co-operatives do not opt out of market society but work within it to meet the immediate needs of members.  One of the most important lessons the co-operative movement has to teach is that "without the active participation of...members...there is little chance of long term success" (Milford 2004:37).  Low levels of participation in co-operative enterprises open the door to free riding (enjoying the benefits without expending any effort in the enterprise).  The FLO system is flawed and imperfect in its systems of participation.  Participation, especially by consumers, is passive and ineffectual beyond the dollars they spend on fair trade products.  In fact, it can be argued that the role of consumers in certified fair trade is designed to 'free ride.' 

Inadequate systems of participation may be one of the reasons why 10 years after the initiation of certified Fair Trade in UCIRI (one of the most  successful Southern fair trade examples) many communities are still living in miserable poverty (Fridell 2007; Francisco VanderHoff Boersma, personal communication).  It has been argued that peasant economies are "patchworks of diverse survival strategies" (Calo & Wise 2005:48).  If this is indeed the case, then blanket solutions such as the project of certified Fair Trade may not be the best way to approach them. 

The development of a Canadian fair trade co-operative movement is not a blanket solution.  Opportunities for creative innovation are built into the values, ethics, principles and practices of the co-operative enterprise.  Southern fair trade co-operatives have long been helping members to coordinate collective marketing strategies and execute their own development projects.  Expanding a fair trade co-operative movement in Canada should be explored as a strategy for assisting depressed local economies by engaging them proactively in international commodity trade.  Co-operatives are able to work across national boundaries, and international organization is already a part of the co-operative idea.  Although success stories have not happened without struggle and the lessons of failure, Canadian co-operatives have historically provided small businesses and rural communities with viable and innovative plans for survival (Fairbairn, MacPherson & Russell 2000).  Although many Southern co-operatives have realized significant social and economic benefits through participation in fair trade, the overall impact has been inadequate to overcome poverty in a sustained and meaningful way.  Nonetheless, co-operative models working with fair trade still show some promise of success.  To realize this promise in the Canadian context, more research needs to be directed into ways the Canadian co-operative movement can work synergistically with fair trade and social economy advocates to develop locally-based regional alternatives for ethical trade in ways that both integrate and empower Northern and Southern economies.  Rather than understanding alternative trade in terms of concepts like 'ethical,' 'fair' or 'sustainable,' the definition needs to shift to 'co-operative trade.' If we think about it, that really is the concrete desired outcome of the whole project. 

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[1] The IMF and World Bank provided loans to developing nations but then required them to base their economies on the export of commodities.  In the 1970's when the value of commodities began to drop in relation to the cost of production, a twofold problem arose:  not only were producers losing value on their products, but land that had formerly been used for subsistence had been converted for commodity export crops so that affordable food was no longer available.