BY MOLLY RENALDO
Dairy farming in America has never been easy, but years of market volatility, industry consolidation and changing consumer tastes have compelled the country’s milk producers and suppliers to explore new avenues to manage costs, improve worker safety, and more directly address consumer interest in sustainably and ethically produced products.
Once the domain of family farms, industry consolidation has resulted in larger herd sizes and increased reliance on an immigrant workforce - now believed to make up an estimated half of all dairy workers. Like many other industries, dairy has suffered from critical news coverage related to employee working conditions - including reports of long hours, no overtime pay, wage theft, unsafe working conditions, workplace harassment and inadequate housing. While some regulatory strides have been made recently by the state of New York, more must be done to bring protections and benefits to workers there and within the industry at large.
If all this wasn’t enough, new dairy alternatives, including oat and soy-based products, have cut into traditional dairy market share. To remain competitive, dairy producers and suppliers need to address these issues and find new opportunities to form closer relationships with the buying public.
Our mission at Fair Trade USA® is to partner with businesses on their journey to creating more responsible, ethical sourcing practices. Our rigorous, time-tested certification process and training programs help businesses strengthen their supply chains, reduce risks, increase transparency and engagement among those in the supply chain, and meet the demands of conscious consumers.
While new to the dairy industry, the fair trade movement has flourished around the world for more than 50 years. Typically associated with commodities like coffee, cocoa and textiles commonly sourced from southern countries, fair trade now encompasses everything from sustainably-farmed salmon in Norway to ethically-produced rum in Nicaragua.
Within this movement, Fair Trade USA has been operating for more than 20 years and today partners with more than 1,400 businesses. 63% of consumers recognize our Fair Trade Certified™ seal, making it one of the most widely-recognized ethical labels on the market. It differentiates products in the marketplace by telling the story behind the product and demonstrating proof of our rigorous certification process, which now spans dozens of product categories. Last year alone, our work helped empower nearly one million farmers, workers, and fishers across 63 countries.
Stakeholder collaboration is at the center of Fair Trade USA’s business model. Beginning in early 2019, we embarked on a year-long effort consulting with cooperatives, farm owners, farmworkers, workplace safety experts, manufacturers, labor groups, academics, brands, retailers and other stakeholders. Our goal was to determine whether Fair Trade Certification could complement existing industry initiatives and be most relevant, impactful, and valuable to dairy supply chains and the people who work in the sector. Their feedback indicated certification had strong potential to help farmers improve operations, address workforce vulnerabilities, and open new markets for fair trade dairy products.
Fair Trade USA takes a market-based approach to certification, meaning we do not certify producers until we have confirmed buyers willing to purchase on fair trade terms. We do this to ensure that after putting in the hard work of coming into compliance with our standards and passing annual audits, producers and workers can reap the full benefits of market access from their investment.
Beginning in May 2020, we initiated a Fair Trade Certification pilot program in partnership with dairy farms and cooperatives affiliated with Chobani in New York and Idaho. The goal of this effort was to test our certification process in a real-world scenario.
At the heart of the program is Fair Trade USA’s Agricultural Production Standard (APS). The APS includes detailed modules that outline systems, operations, implementation, and auditing processes designed to ensure product traceability, supply chain transparency, and implementation of an Internal Management System to monitor certification compliance and progress.
Building off of processes developed by the globally-recognized International Labor Organization (ILO), the APS also serves as a foundation to ensure safe work conditions, freedom of association, protections against harassment and discrimination, provision of benefits, clear terms of employment and pay slips, reasonable working hours, safe and sanitary housing conditions, and increased access to on-the-job training, in addition to many other protections.
Dairy farming is a highly regulated industry, particularly relating to animal care standards and environmental protection. As a result of the pilot program, we determined Fair Trade Certification for dairy would initially focus on human and social welfare, in keeping with our organization’s global goals related to income and social sustainability, and community and individual well-being. As the program develops through 2021, we will explore avenues to develop dairy-appropriate environmental requirements into the standard.
Incorporating feedback from pilot program participants, we created a rigorous 200-point checklist of social and labor criteria necessary for a farm or cooperative to achieve Fair Trade Certification. Because of the unique nature of dairy operations (including definitions and clarifications to enable the Standard to be interpreted and audited in a dairy context), we made small changes to the APS that have been published as the U.S. Amendment to the Agricultural Production Standard.
Based on results from the pilot program, dairies and producers interested in pursuing Fair Trade Certification can expect the process to take six to nine months to complete.
When Fair Trade Certified commodities are purchased, buyers pay an extra amount of money – the Fair Trade Premium – which is used to invest in community sustainability. These extra funds are allocated to a Community Development Fund which is managed by a Fair Trade Committee, made up of democratically-elected workers. This group works collaboratively to identify projects and on-farm investments to support their workers, families and communities, after which all participants vote to determine which projects get invested in.
In 2020 alone, Fair Trade USA helped generate an estimated $105 million in financial benefits to producers, including Community Development Funds that farmworker and factory worker committees used to conduct needs assessments, develop project plans and then deploy toward education and scholarships, healthcare, savings programs and other vital community benefits.
To determine the Fair Trade Premium rate, we take into consideration income levels, living income estimates and program implementation costs, along with market factors including what the market can handle and at what level the premium provides a significant impact for producers. Unique to the dairy program, we also created a temporary Compliance Support Fund that helps farmers offset investments needed to comply with the U.S. Amendment to the Agricultural Production Standard.
The premium rate for Fair Trade Certified milk is set at $0.45/cwt. Two-thirds of this — $0.30/cwt — is allocated to the Community Development Fund. The remaining one-third — $0.15/cwt — goes to the Compliance Support Fund. As the program develops, we will review the Premium rate in mid-2022 to re-evaluate its effectiveness. This will include consideration of volume discounts in specific supply chains. The Compliance Support Fund will be re-evaluated for effectiveness after three years.
In May 2021 we announced certification of the first Fair Trade Certified dairies, coinciding with Chobani’s nationwide launch of the first Fair Trade Certified™ Greek yogurt versions for all of its 32 oz, multi-serve tubs available in most major retail locations.
As a market partner for brands, farmers, and cooperatives across sectors, our work does not stop with certification. In addition to our impact goals of enhancing income and social sustainability, and community and individual well-being, we have established relationships with leading retailers like Whole Foods, Costco, Kroger, and Walmart to source various ingredients on fair trade terms for their own private brands and to highlight other national brands sourcing Fair Trade Certified ingredients.
These retailers come to Fair Trade USA for a solution-focused partnership because our standards address many facets of ethical sourcing – social, economic, and environmental – and because of our scope. One benefit to retailers is that Fair Trade USA offers more than 45 certified produce items and 120 certified produce farms to source from globally, including in the U.S., making it accessible for retailers to partner with us and ensure year-round supply.
We promote fair trade products through press, social media and marketing support, and drive consumers to #SeekTheSeal wherever they shop. When they join Fair Trade USA, brands and retailers gain exposure to our engaged consumer base through a range of marketing initiatives. These include online shopping guides, like the Global Farmers Market, Fair Trade Month in October, and much, much more.
With consumers spending $300 billion per year on ethical products and 72% willing to pay more for the trusted Fair Trade Certified seal, the U.S. dairy industry is well-positioned to leverage Fair Trade Certification, joining producers and workers around the globe who have improved operations, raised up their workforces, helped the environment, and profited from an investment in the common good.
Molly Renaldo is a Partnerships Development Manager on the Packaged Goods Team at Fair Trade USA. Molly has spoken at the G7 Agricultural Summit, the World Coconut Congress, and more and has been published in international food journals. She holds a Master’s degree in Food Culture and Communication, with a specialization in the Marketing and Sustainability of High-Quality Products, from the University of Gastronomic Sciences in Pollenzo, Italy.