|Fair Trade Craft Business and Challenges|
|01 December 2012|
As a Fair Trade handicraft business in the US, we at Global Crafts experience the same challenges that most import businesses face. We pay for our products long before the products are available for sale and offer credit to our wholesale customers so cash flow is a constant issue. Import regulations and requirements are constantly changing, making it necessary for producers to meet regulations such as include genus and species names with wood products and testing products for lead. But the biggest challenge of being a Fair Trade business in the US is exactly that: Being a Fair Trade business had little value to the US buyers.
There is a very low awareness and concern for Fair Trade and its principles among the US consumer audience in comparison to say Europe. This creates a difficult dynamic when US trading members strategize for growth. With more Fair Trade importers entering the market each year and a dedicated Fair Trade market that is not growing substantially, there is more pressure to seek mainstream sales channels and contracts with mainstream companies.
Fair Trade producers often believe that putting a Fair Trade label on a product will make it easier to sell in the US mainstream market. While this may be the case in Europe, the term “Fair Trade” is constantly confused with “Free Trade,” neither of which the US consumer understands. “Free Trade” sounds like a good thing to the average US consumer because when is “Free” not good? To all but a very small percentage of the US population, a Fair Trade label means nothing. In fact, in the mainstream market, a Fair Trade label actually has the potential to make it more difficult for a store owner, when confronted by a consumer, to justify why he/she is carrying Fair Trade products and products other than Fair Trade. An informative, attractive label about the artisan, the production process, and what makes the product unique is more meaningful to the US consumer than a label that certifies the product as Fair Trade.
At Global Crafts we feel that ultimately the immediate success of growth will require a more determined entry into the mainstream world. This mainstream commercial world has requirements that present significant challenges to a Fair Trade importer, not the least of which are price points and consistent quality control, but also longer cash flow cycles with contracts with wholesale buyers being paid 60 or more days after delivery. An expectation of mainstream businesses is that a supplier can deliver inventory quickly based on consumer demand, or “just-in-time” for sales. If we are unable to meet inventory needs we risk alienating our customer and being in breach of contracts. We face two options; stockpile inventory, with the significant negative implications to our cash flow, or scramble to secure inventory from producer partners. The implications on cash flow are significant as well as a negative effect on the entire supply chain with irregular and unrealistic production requirements from producers.
Ultimately the challenge in the US is to reframe the conversation in a way that captures US consumers’ imaginations and grows the Fair Trade marketplace, thus enabling us to grow without becoming beholden to a mainstream marketplace. The US consumer is much more individualistic, seeing support mechanisms as interfering with a free market, which is held in high esteem. US Fair Trade has its roots in missionary work rather than social justice, and it has proved very difficult to engage in a social justice message in an environment where the term socialism is seen with intense negativity as demonstrated in the many negative presidential election commercials. A common question to a Fair Trade business owner is, “What is the percentage of the price that goes back to the artisan?” US consumers often imagine the seller brought the products to the US in a suitcase and are selling on behalf of the artisan rather than operating under a business relationship that mirrors traditional distribution businesses. The fact that a successful US Fair Trade importer operates as a successful US business can be construed as unseemly to the traditional Fair Trade consumers who feel that buying handicrafts from artisans in developing countries must be aligned with charity. To grow the Fair Trade marketplace in the US, entrepreneurs need to believe that selling Fair Trade handicrafts can be a profitable business model, entering into it not just to provide a market for producers, but an income for themselves.
We feel that the current discourse between the Fair Trade membership organizations such as the Fair Trade Federation and the WFTO and the largest certification body in the US Fair Trade USA, is doing nothing to help clarify and frame the Fair Trade and Social Justice message to the US consumer. The current move by Fair Trade USA in its Fair Trade for All initiative, and the vocal opposition by Fair Trade activists in the USA is creating confusion and undermining even the little recognition that Fair Trade has in the USA. Ultimately, pushing us to a mainstream marketplace while maintaining Fair Trade practices is a relationship that is extremely challenging. If US consumers only hear of Fair Trade when it makes news that a committee of traditional big businesses chastises an organization with Fair Trade in its name, we cannot expect US consumers to feel confident when they hear the term.
The line we walk as a Fair Trade import business in the US is a fine one. On one side we are committed to operate under the auspices of the Fair Trade principles with regards to our producer partners yet this adherence has little positive impact on our success as a business. Only when US consumers decide that not only is Fair Trade the “Right thing to do,” but also can conclude that Fair Trade benefits society and them personally, will being a Fair Trade US business have an advantage. This education of the US consumer is a large part of our ongoing mission.
By Renice Jones