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Towards a Fair Agro-food Regime? A Regulationist Reading of the Fairtrade System

Vers un régime agroalimentaire juste ? Une lecture régulationniste du système de commerce équitable
Juan Ignacio Staricco


The hypothesis of an emerging corporate-environmental food regime postulates that accumulation in the sector is based on the organization of quality audited supply chains governed by corporations. However, this reorganization of the food regime is being done on the basis of the appropriation of demands for a more socially, economically and environmentally sustainable agri-food system. This article proposes to examine the certification-based Fairtrade initiative as an entry point to the discussion of the potentiality of a corporate-environmental food regime. To do so, a regulationist conceptual framework is put forward in order to analyze the case of Fairtrade wine produced in Argentina and consumed in the United Kingdom. The analysis is done in two parts: first, by describing the concrete ways in which the Fairtrade mode of regulation institutionalizes socioeconomic relations; second, by reconstructing the Fairtrade concept of control in order to account for the political dynamics and ideological elements that underlie this system. The analysis concludes that the Fairtrade mode of regulation offers a very limited scope for transformation due to the inherent limitations imposed by the central role that capital fractions are given in the system.

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1. Introduction

1Harriet Friedmann and Philip McMichael (1989) have conceptualized and empirically analyzed two historical international food regimes: the first food regime (1870-1914), was structured around a division of labor in which European countries imported wheat and meat from so called “settler states” (United States, Canada, Argentina, Australia and New Zealand), while the latter imported manufactured goods, labor and capital from Europe. In the second food regime (1947-1973), instead, Western European countries and the United States developed their own agricultural sectors with the use of subsidies and price supports, fulfilling local demand and dumping surpluses to former colonies in the form of food aid. The latter group of countries tended to import cheap agricultural products in order to direct investments to the development of their national industries. This regime, which had one of its pillars on the national regulation of agriculture (one of the few domains exempted from GATT) saw its demise with the crisis of Keynesian/Fordist models and the hegemonic ascendancy of neoliberalism (McMichael, 2005:273). By 1995, the achievement of an Agreement on Agriculture within the WTO, together with the increasing transnationalization of agri-food corporations and economic relations, undermined an international regime based on nation-states and led to a much more globalized agriculture.

2It is within this context that Friedmann (2005) has put forward the hypothesis of an emerging third food regime, which she describes as “corporate-environmental”. As this duo indicates, it is characterized by two main features: in the first place, the dominance of corporate actors. In a context of higher transnationalization and increasing deregulation of economic activities – combined with the current impasse in inter-state negotiations, as evidenced by the Doha Round – private actors have become able to “organize supply chains that cross many national borders as private transnational supply chains, and to create, enforce, and ‘audit’ […] producers, shippers, and handlers along the chain” (Ibid.:253). In the second place, this reorganization of supply chains is based on the “selective appropriation of demands by environmental movements, and including issues pressed by fair trade, consumer health, and animal welfare activists” (Ibid.:229). The term “environmental”, hence, works here as a shorthand for a variety of critiques related to the social, economic, health and environmental dimensions of agri-food relations. In this way, the emerging food regime seeks to appropriate some of the critiques that its predecessor had suffered. However, and because of the dominance of private capitals, this appropriation is done in a way that secures accumulation and deepens commodification.

3Fairtrade appears as one of the clearest embodiments of Friedmann’s corporate-environmental food regime. It is possible to find a wide variety of initiatives under the label of “Fair Trade”, ranging from informal networks of peasants organizations to highly formalized certification schemes. In this paper, I will look at the system structured by the network of non-governmental organizations Fairtrade International, which seeks to guarantee certain social, economic and environmental conditions of productions in the global South and promote fairer terms of international trade, especially in the agri-food sector. To do so, Fairtrade International has developed its own standards and requirements that are to be fulfilled by all relevant actors along the value chain (e.g. producers, traders, importers) who, in order to be certified as fair and become part of the system, must accept periodic audits. In this way, Fairtrade International attempts to advance the situation of marginalized producers and workers by superseding or complementing state regulation with the standards it has developed in consultation with a variety of stakeholders.

4In this paper, I propose to analyze the capacity of the emerging corporate-environmental food regime to advance the agri-food sector in the direction of socioeconomic sustainability by looking at the example of Fairtrade. To do so, the article begins by presenting the regulationist conceptual framework that will guide my analysis. It then continues with the empirical examination of what I term the “Fairtrade mode of regulation” as it takes place in the case of Fairtrade wine produced in Argentina and consumed in the United Kingdom. After the main limitations of such mode of regulation have been shown, I resort to the notion of a “Fairtrade concept of control” in order to identify the political and ideological dynamics that contribute to the explanation of Fairtrade’s shortcomings. Finally, I conclude by discussing the implications of my analysis for the assessment of the emerging corporate-environmental food regime.

2. A regulationist conceptual framework

5Fairtrade International seeks to advance the position of marginalized producers and workers in the global South by proposing alternative socioeconomic relations in the spheres of production, exchange and consumption. In order to grasp the specificity of this initiative and comprehensibly assess its transformative potential, a regulationist framework will be deployed. This perspective builds on the key concepts developed by the French Regulation Approach and its sectorial applications as well as the Amsterdam Project in International Political Economy. By conceptualizing Fairtrade as a mode of regulation, the former offers the possibility of identifying fundamental social relations that become critical for its smooth functioning and, in this way, analyzing the concrete ways in which Fairtrade International attempts to impact on their institutionalization. In a complementary way, the Amsterdam Project, by looking at the most relevant actors in the system and analyzing the political dynamics in which they engage, makes possible to explain the reasons behind the concrete way in which the Fairtrade mode of regulation has been institutionalized. While the regulationist strand has not been developed specifically with the goal of assessing the implementation of sustainability certifications, this original application shows this perspective’s potential for providing a holistic analysis of the Fairtrade system from a political economy perspective (Staricco, forthcoming). The remainder of this section offers a description of the main features of this approach.

6The Regulation Approach understands social relations as essentially contradictory (Billaudot, 1996:32), which is why it emphasizes the fragility of social arrangements and the always-present possibility of conflicts and transformations. While social reality is characterized by change and underlying tensions, it is also true that certain periods of stability can be achieved, and this is what the Regulation Approach attempts to explain. Within the field of political economy, this concern can be summarized by the question: how is accumulation achieved in spite of the contradictory social relations that constitute it? It is with the goal of giving an answer to this question that the Regulation Approach has developed its main concepts.

7A regime of accumulation describes a long-term macroeconomic situation in which the transformations in the conditions of production and the transformations in the conditions of consumption evolve in parallel, maintaining a complementary pattern (cf. Lipietz, 1983:xvi). However, long-term capital accumulation is an unstable and highly improbable phenomenon, since the contradictory nature of the social relations at the heart of the capitalist mode of production frequently tends to disrupt its reproduction.

8The key for success relies on finding a suitable mode of regulation, which shall be understood as a relatively coherent combination of compatible institutional or structural forms that at a certain point in history becomes able to adjust, guide or coerce individual and social behavior in such a way that the regime of accumulation becomes stabilized (cf. Boyer and Saillard, 2002:64). By ensuring over time the compatibility of multiple, decentralized and conflictive procedures and decisions, a mode of regulation is not only able to support and steer a regime of accumulation, but also to enable the reproduction of fundamental social relations (Boyer, 1990a:43).

9A mode of regulation is the conjunction of a group of coherent institutional or structural forms. The latter are understood as the configuration or codification that fundamental social relations assume at a specific time in history and in particular geographical areas (cf. Ibid.:17). They are the transitory arrangements that help social relations to reproduce and, therefore, constitute the main formations that the approaches in terms of regulation seek to analyze (Aglietta, 2000:27-9). They adjust the heterogeneous decisions of economic agents, originating in this way regularities in individual and collective action and, ultimately, in the accumulation of capital.

10Most regulationist authors agree that the relations of exchange and production typical of the capitalist mode of production are mainly made viable and normalized by three structural or institutional forms: the wage relation, a monetary regime and a form of competition. These three forms express, respectively, the way in which surplus value is appropriated, how economic units are connected and the pattern in which centers of accumulation relate to each other (Boyer, 1990a:37). Two other structural forms have been identified – the state and the mode of insertion in the international context –, completing what has come to be known as the five main institutional forms (Boyer, 2004).

2.1 A sectorial perspective

11The main concepts developed by the Regulation Approach belong to a macroeconomic perspective of analysis. However, in this paper, I am applying them to the analysis of one particular sector: Fairtrade wine. It is necessary, therefore, to discuss how such a perspective can be adapted to provide an adequate framework for the analysis of the (agricultural) sectorial level.

12The challenge posed is not a new one, since this issue has already received attention, with some of the main conclusions having been collected in “La grande transformation de l’agriculture” (Allaire and Boyer, 1994). However, only a few years earlier, it was Pierre Bartoli and Daniel Boulet (1990) who discussed the conditions for regulation in the agri-food sector and offered the first valuable contribution towards the establishment of sectors as scales of regulation. In an attempt to overcome dichotomic interpretations, in which the global level determines sectorial logics or regulation is considered to be strictly sectorial, they proposed to begin with the hypothesis of the existence of a specific sectorial level of regulation, but leaving to the empirical case-by-case analysis to determine its nature and significance.

13In a similar fashion, Robert Boyer (1990b) described three different ways in which (agricultural) sectorial modes of regulation had been understood. First, many scholars had simply projected the global level into the sectorial one, assuming a homology between the sectorial and global levels. Second, some researchers had acknowledged the specificities of the agricultural sector, but explained them from a functionalist point of view. Third, the path opened by Bartoli and Boulet led to the assumption of the existence of specific institutional regimes within sectors, which enjoyed relative autonomy. While Boyer criticized the first two approaches for being unable to acknowledge any sectorial specificity, he considered that the third one overestimates the autonomy of the sector and its originality. Alternatively, Boyer proposed a fourth, “synthetic” approach. This perspective sees the sectorial mode of regulation as the result of the combination of sector-specific institutional arrangements and their articulation with the global mode of regulation. This possibility is expected to solve the tension between the global/sectorial divide by recognizing agriculture as a specific but not autonomous sector.

14This paper seeks to make a contribution to Boyer’s synthetic perspective. However, my approach to the sectorial level is not framed by an attempt to prove or refute its existence as a mode of regulation in itself. Instead, I use the notion of a mode of regulation as a heuristic tool, as a particular entry point to reality, because it provides important criteria for the examination of Fairtrade’s implementation in the Argentinean wine industry. In this sense, and following Allaire’s (1988; 1994) path, I have decided to deploy the original regulationist concepts instead of providing sectorial-adjusted equivalents. I understand a sectorial mode of regulation as a meeting point between those features defined at the global level of regulation and others that are determined within the particular industry. In accordance with Boyer, it will be seen as a specific form within the overall mode of regulation.

15While I have decided to preserve, and work with, the original five structural forms, I also consider it relevant to include a sixth form that becomes of importance for the study of sectors: the representation of the product. While there has not been much theoretical elaboration on this concept, different authors have highlighted its relevance, precisely because it is around a certain product that sectors are built. Touzard (1994:298), for example, highlights the representation of the product as one of the most relevant elements to be discerned within the “group of rules, norms and routines, more or less homogeneous, interiorized by the agents and that condition their economic choices” when studying the features that characterize a particular sector. Bartoli and Boulet (1990:24-5) acknowledge this when using the notion of “system of representation” to explain the different definitions that wine has received throughout history, and how the changes in its representation have been accompanied by changes in sectorial accumulation and regulation. Boyer, in a similar vein, highlights the relevance of the “social construction of use values”, which confers a “social and symbolic stratification to the product” (Boyer, 1990b:55) that is the determinant in its perception and the definition of its social destination.

16All in all, it can be said that the representation of a particular product is a key feature in drawing the limits of a particular sector and, more importantly, in understanding the particular way in which the social relations of production, circulation and consumption are articulated in specific ways. Therefore, it will be considered in my analytical framework as a sixth structural form, together with the wage relation, competition, money, state and international insertion.

17While conceptualizing Fairtrade as a mode of regulation makes possible to account for its most relevant structural features – i.e. the concrete ways in which it institutionalizes socioeconomic relations – it does not bring to the fore the wider political dynamics and ideological elements that underlie its actual workings. To do so, this conceptual framework proposes to complement the main concepts of the original Regulation Approach with those developed by the Amsterdam Project in International Political Economy.

2.2 The Amsterdam Project

18The Amsterdam Project refers to a group of scholars who have come together to develop a perspective also known as “neo-Gramscian transnationalism” or “transnational historical materialism”. The initial landmark of the Amsterdam Project was Kees van der Pijl’s The Making of an Atlantic Ruling Class ([1984]2012), a volume that sought to explain the transnational nature of capitalist regularization and the importance that ideological elements play along with economic ones in the constitution of social classes and the specific articulation that capitalist social formations assume. Van der Pijl was followed by a group of scholars working in Amsterdam, who progressively developed a perspective that, working within the Marxist tradition, seeks to advance it in order to better account for transnational economic and political processes. In doing this, they have critically engaged with the Regulation Approach, producing a dialogue that has been of importance for the development of the Dutch perspective (see: Overbeek, 2004:122; van der Pijl, 2004:182; 2005:51). The Amsterdam Project shares its interest in understanding the processes through which capital accumulation is normalized and thereby builds on the original regulationist concerns. That is why I propose to read it as a specific way of advancing the Regulation Approach (Staricco, 2016a).

19One of the main theoretical premises underlying the Amsterdam Project is that capitalist societies are class societies in which the capitalist class is the ruling class (van Apeldoorn, 2004:154). The most simple class division is given by the relation between those who control and supervise the process of production (the capitalist class) and those who execute productive tasks (the working class) (van Apeldoorn, 2002:3). The capitalist class owns the means of production and thereby, based on a much bigger market power, exercises a structural domination that is used to its advantage in the material struggle between wage and profit. The asymmetry that characterizes capitalist social relations can therefore be explained in terms of its underlying class structure (Ibid.:21).

20The interest in understanding how this domination is imposed has led to the study of the processes through which the capitalist class achieves hegemony and exercises power over society at large. This requires going beyond the basic class division between capitalists and workers since, as van der Pijl (2012:31) puts it: “class strategies on the part of the bourgeoisie are determined, first, by the relation to the working class in the labor process, and secondly, by the functional positions in the process of circulation of capital”. The capitalist class can, initially, be understood by opposition to the working class as homogeneous and unitary. However, remaining at this level hides the complex arrangements among different capitalist groups that have been necessary for overcoming their conflicts and acting as a unitary social class.

21The Amsterdam Project goes back to Marx’s second volume of Capital and uses his conceptualization of the different functional forms that capital assumes (namely: commodity capital, money capital and productive capital) to show how capitalists engaged in different stages of the reproductive circuit of capital express particular interests associated to the specific needs and requirements imposed by the way in which accumulation takes place in each case. Fractions of capital are consequently understood as “units other than individual capitals related to particular functions in the reproduction of capital” (Ibid.:4). This functional division of capital is used by the Amsterdam Project to explain the tensions within the capitalist class through the concept of class fractions: “groups unified around a common economic and social function in the process of capital accumulation and sharing particular ideological propensities organically related to those functions” (van der Pijl, quoted in van Apeldoorn, 2002:27). Fractions of capital set the material basis around which class fractions are formed, since a common position within the relations of production offers a common interest to ground their articulation into a single actor.

22However, shared structural positions and material conditions do not necessarily translate into class agency. For a class to acquire subjectivity, it is necessary for its members to build a common project and this can only happen through political intervention. Individual capitalists need to be able to imagine themselves as part of a wider community, as a group where the general interest transcends fractional ones, and the possibility of constituting a single class actor appears as a logic consequence. To explain the process through which class fractions merge into a class actor, through which special interests are arbitrated and synthetized (van der Pijl, 2012:7), the Amsterdam Project has developed the notion of comprehensive concepts of control.

23According to Holman (1996:20) “concepts of control are long-term strategies, formulated in general terms and dealing in an integrated way with such areas as labor relations, socio-economic policies, and the international socio-economic and political order. These concepts serve to organize and safeguard specific interests related to specific social groups or classes”. Comprehensive concepts of control work as frameworks of thought and practice (van Apeldoorn, 2004:155) that lead to particular ways of interpreting reality and, consequently, acting. In this way, comprehensive concepts of control should be better understood as the conditions of possibility for specific actions and policies than those policies per se (van der Pijl, 2004:183).

24While a comprehensive concept of control is firstly aimed at unifying the different views, identities and interests within a class, its ultimate goal is to spill over to the other social groups, gaining support and legitimacy as the representative of not just a social class, but the society’s general interest (van Apeldoorn, 2002:30). A comprehensive concept of control is not only fundamental in constituting a social class as an actor, but also in providing ideological and political legitimacy to the domination of a social class.

3. The Fairtrade mode of regulation

25The empirical analysis of the Fairtrade mode of regulation presented in this section is based on the case of Fairtrade wine produced in Argentina and consumed in the United Kingdom (UK). All data in relation to this case was collected between August 2013 and April 2014 in both countries, comprising over 45 in-depth, semi-structured interviews with relevant actors (including certified and non-certified wineries, grape growers, traders, importers and a major retailer, as well as representatives of workers, Fairtrade International and its certifying body) and more than 40 documents (including standards, regulations and diffusion material).

26When it comes to the Argentinean Fairtrade sector, wine grapes are the most important product, being produced and traded by more than half of the total number of certified producers in the country. At the moment of my fieldwork, there were 11 certified actors in the Argentinean wine industry. Fairtrade International works with three different types of certifications: Small Producer Organization (SPO) – developed specifically for associations of small producers – Hired Labor (HL) – which is granted to conventional firms and has the goal of benefiting plantation workers – and Trader – for tt’oseactors that buy, sell and/or process Fairtrade products. In Argentina, we find a predominance of HL (5) over SPO (2) certifications. This fact is in part explained by the current tendency in the industry towards vertical integration, where players – especially in the higher-quality sector – seek to control the whole process of wine production (Staricco, 2015 :157). As a consequence, the HL certification allows wineries to certify their vineyards and use their own grapes to make wine. Traders (4) pursue different strategies, as two of them buy certified grapes to produce wine themselves and the other two, instead, buy certified wine. This last fact, combined with the predominance of vertical integration, reduces considerably the market for certified grapes, making it difficult for the only SPO in the country that produces exclusively grapes to integrate into the circuit.

27Having given a brief overview of the Argentinean Fairtrade wine sector, the remainder of this section will describe the six structural forms that constitute its mode of regulation.

3.1 Wage relation

28The wage relation will be analyzed by looking at two of its most relevant dimensions: work conditions and wage determinants.

29While the Fairtrade mode of regulation defines certain minimum thresholds in relation to work conditions, most requirements are settled in accordance with state or sectorial legislation. As a consequence, interviews with both, managers and workers, have evidenced that most of these regulations were already fulfilled before the process of certification. In spite of that tendency, a few minimums have been set above conventional sectorial regulations (most relevant for the Argentinean wine sector: maximum number of working hours and overtime, and the progressive obligation for companies to hire workers without intermediaries). However, when the actual implementation of Fairtrade standards was analyzed, it was found that these regulations were by-passed with the granting of exceptions by Fairtrade International or the latter’s acceptance of the less-demanding sectorial legislation. As a consequence, when it comes to work conditions, Fairtrade has contributed to the enforcement of some aspects of official legislation – especially through audits –, but it has failed to produce changes in the most critical areas of the wine industry. This has been a result of the systematic granting of exceptions in relation to those aspects where the standard is more demanding than national legislation or the sector’s traditional way of working.

30Wage determinants can be discussed by looking at what the Fairtrade mode of regulation considers to be a “fair wage” and analyzing the impact of the Fairtrade Premium. In relation to the former, Fairtrade International stipulates that for a company to be certified it must pay, at least, the official minimum wage. This parameter has been adopted without taking into account the purchase power of minimum wages, ignoring in this way its real value. As a consequence, Fair Trade legitimizes with the status of fairness those companies that simply pay legal wages in spite of their actual purchase power.

  • 1 This was the case during my fieldwork. Nowadays, however, workers can use up to 20% of the total Pr (...)

31The Fairtrade Premium is an extra amount of money that the buyer must pay on top of the settled price. This additional money is to be used exclusively for the benefit of producers in SPOs or workers in HL situations. The empirical examination of its use shows that the Premium has different effects in each kind of organization. In the case of SPOs, the Premium provides an extra profit for producers, which can be freely used by them according to their needs. In the case of HL, instead, regulations exclude the possibility of using the Premium as a direct wage determinant.1 While the Premium was initially used to make donations to local institutions and other charitable activities, workers are increasingly organizing themselves in order to use it as an indirect wage determinant (for example, through the collective purchase of wage-goods within the frame of nutritional programs or access to health insurances).

3.2 Competition

32Because of the degree of innovation it entails, the analysis of the competition structural form will be here devoted to the analysis of the process of price formation of the Fairtrade mode of regulation.

33The most innovative feature of Fairtrade in regards to the process of price formation is the settlement of a minimum price for certified products. What Fairtrade International does is to estimate what they term “costs of sustainable production” – how much it costs to produce according to the standards – and add to that a margin for investments and profits, obtaining at the end a minimum price under which no agreement can be achieved. Its main goal is to protect producers from sharp drops in the price of their commodities. However, when market prices rise above the minimum price, the buyer must pay the higher value. All in all, the process of price formation the Fairtrade mode of regulation can be described as semi-administered, where a minimum price and the payment of a Premium is established by an authority but a market-based definition of prices becomes mandatory when above the minimum price.

34The introduction of a minimum price should be particularly welcomed in the Argentinean wine industry, which displays a long history of over production and sharp price declines (Tacchinni, 2008). However, its implementation has proved to be futile. Interviews with grape producers and Fairtrade International representatives have evidenced that this is a consequence of Fairtrade International’s inability to update its minimum price at the same pace at which the costs of production have increased. Argentina’s inflationary context (between 20 and 25% per year) produces increases in costs that have left Fairtrade International’s minimum price very outdated, making it useless even during an eventual crisis.

3.3 Money

35In relation to this structural form, I will focus on the system of payments put forward by the Fairtrade mode of regulation.

36Fairtrade International includes in its standards the goal of transforming the system of payments through the enforcement of contractual relations with requirements that do not exist in the local industry or the international market. This is to be done by framing trading relationships within long-term partnerships and transforming the conditions of payment in favor of producers (e.g. giving the buyer a maximum of 30 days after the invoice’s date in order to pay). Such a goal would entail an enormous transformation for the Argentinean wine sector, since the lack of contractual relations puts producers in a precarious situation. Furthermore, Fairtrade International’s requirement of paying for the total production in a single payment could be described as quasi-revolutionary in an industry where grape producers are usually paid in 12 instalments. However, the empirical analysis has shown that the Fairtrade mode of regulation fails to deliver these important transformations. In the first place, because it has not taken any concrete action in order to build long-term partnerships – the latter ends up being an aspiration with no enforcement. In the second place, because it relaxes the requirements in relation to the terms of payments, allowing some buyers to pay for certified grapes within two, three or even six months.

3.4 State

37Fairtrade, as many other voluntary certifications, constitutes a form of private governance (cf. Pattberg, 2005). This means, regulation that is neither designed nor enforced by the state, but by relevant actors from civil society (NGOs, producer organizations, corporations). However, it is possible to identify two ways in which the state can be of relevance. First, the state has the potential to contribute to Fairtrade’s consolidation by grating the system some of its regulatory authority: either by making it a condition for state purchases, enforcing it at the level of production or offering benefits to certified organizations. Nevertheless, as the case of Argentinean wine evidences, it is only the first possibility – exemplified by the Swedish alcohol monopoly, which periodically demands tenders of Fairtrade wine – that takes place in practice. Second, when we look at the state from the perspective of its rulemaking role, we find that it acquires a much more central position, as many of the requirements in the standards take official legislation as their parameter. This, however, might act as a limitation of Fairtrade’s transformative potential, as it evidences its implicit acceptance of the status quo in multiple problematic issues – as the example of minimum wages (vs. living wages) shows.

3.5 Representation of the product

38The representation of Fairtrade wine emerges from the convergence of two trends. On the one hand, the increasing dominance of a quality-led representation in Argentina’s and the world’s conventional wine markets, which has boosted sales of higher quality products over table wine. This tendency towards a “premiumization” supports a definition where quality becomes central. On the other hand, the Fairtrade representation of the product, which in the standards is simply defined as the process of “fair” production and commercialization, is increasingly informed by a notion of quality that puts this category to compete with any other conventional product of similar price (Goodman and Herman, 2015). As a consequence, Fairtrade wine should be better understood as a product that offers a seductive quality/price relation and is produced and traded within a framework that empowers producers and workers. The consequence of such a representation of the product has been that all certified wine in Argentina comes from the quality-led section of the industry, as all certified products are fine wines. The combination of the quality imperatives of the conventional and Fairtrade international markets seems to offer no room for the certification and commercialization of table wine, excluding from Fairtrade those actors attached to the weakest part of the sector (Staricco and Ponte, 2015)

3.6 International insertion

39Fairtrade has historically been linked to international trade. Its project has always been to support and empower producers in developing countries (the South) by achieving better exchange terms when exporting their production to richer societies (the North). Therefore, Fairtrade becomes of interest only for those who offer a product that is of interest to importers and consumers in the northern hemisphere. The main consequence of this has been the prioritization of products that fit the current international dominating representation of the product, which, as it was explained, is that of fine wines. In the context of the Argentinean wine industry this has meant that inclusion into the Fairtrade mode of regulation has been exclusively limited to those actors that are engaged in the production and commercialization of fine wines and the concomitant exclusion of those linked to the table wine value chain.

3.7 Assessing the Fairtrade mode of regulation

40A comprehensive appraisal of the Fairtrade mode of regulation should discriminate between its characteristics on paper – this is, as it appears in the mandatory standards – and its actual implementation.

41When looking at the standards, it is possible to affirm that one of their main limitations is given by Fairtrade International’s formalist approach – i.e. its recursive use of official regulation as a parameter to define many minimum requirements. In this way, Fairtrade’s most relevant impact can be seen as a supplement to the state in the inspection and enforcement of national or sectorial regulations. This, of course, shall be welcome as a positive contribution. However, it also evidences that Fairtrade’s adherence to official regulations is ill-equipped to improve the situation of workers and producers in those aspects that are a consequence of those regulations themselves.

42In spite of the inherent limitations of this formalist approach, it is also true that the standards present some innovative elements that differ from the conventional economy. Three aspects are of importance in the case of the Argentinean wine industry: (1) even if Fairtrade mostly bases its work conditions on state regulation, it also introduces some minimum requirements that differ from the official ones – limitations to working hours and overtime, together with regulations for hiring, are particularly relevant for our case; (2) the implementation of a minimum price independently from market conditions; (3) the establishment of long-term trading relationships between producers and their buyers, and the establishment of terms and conditions of exchange that favor small producers. In this way, even if the Fairtrade mode of regulation is far from revolutionary, it can be said that its standards possess a reformist spirit that aims at improving the position of producers and workers in some aspects.

43However, the empirical analysis shows that the three most important areas where the Fairtrade standards offered opportunities for relevant changes were not fully implemented. Regulations in relation to direct hiring, overtime, and working hours were systematically by-passed with the use of exceptions; minimum prices proved to be extremely outdated, being irrelevant in practice but also in the hypothetic case of a crisis; and the requirement to build long-term trading relationships is neither practiced by the certified actors, nor demanded by Fairtrade authorities. While the failure of the minimum price could up to a certain point be blamed on Argentina’s “exceptional” economic conditions (constant and high inflation rates), the other two areas seem to suffer from Fairtrade’s self-undermining behavior - the tendency to make its own regulations more flexible whenever its requirements have superseded those posed by the state or the traditional institutions of the sector. In this way, the potential to produce some relevant changes in the conventional economy offered by the Fairtrade mode of regulation ended up being withered away by its actual implementation.

4. The Fairtrade concept of control

44The previous section described the Fairtrade mode of regulation and exposed its limited transformative potential. However, it did not explore the underlying causes that contribute to the explanation of this outcome. Hence, this section will resort to the notion of the Fairtrade concept of control in order to account for the most relevant political dynamics and ideological elements that characterize the Fairtrade system, making it possible to identify the inherent contradictions at its heart that are responsible for its limited transformative potential and self-undermining behavior.

45In order to reconstruct the Fairtrade concept of control (FTCC), I undertook a thorough analysis of the most relevant institutional documents (annual reports, standards and their explicative documents, brochures and promotional materials) produced by Fairtrade organizations. In this way, by relying on the sources produced by the system’s official, authoritative voices, it was possible to identify the most defining features of the FTCC. These can be condensed in three main elements: first, a Fair Trade geography, which uses a North/South dichotomy in order to explain the main problems of international trade and offer a solution. Second, a fairness principle, according to which a more balanced global distribution of wealth can be achieved by the mutually beneficial collaboration between actors with conflicting interests. Third, the postulate of a subaltern-consumer nexus emphasizes the new relations of proximity that Fairtrade can build between both poles of the commodity chain.

46These elements, I argue, constitute the three pillars on which the FTCC is based. The remainder of this section describes them in detail.

4.1 Fairtrade’s geography: A North/South divide

47A divide between North and South lies at the heart of the Fairtrade proposal. This dichotomous Fairtrade geography informs not only the diagnosis put forward by Fairtrade (in terms of unfair international terms of exchange, where the North enriches at the expense of the South), but also one of the most defining attributes of its political project: “the unique relationship between the North and the South, a strong voice and role for producers and workers, makes Fairtrade different from all other competing ethical schemes” (Fairtrade International, 2013:6).

  • 2 In this section, and following Gramsci (2014), I use the notion of “subaltern classes” in order to (...)

48The centrality of this North/South divide is given by the fact that the Fairtrade geography also fulfills a cartographic function, since it provides the coordinates along which all relevant actors connected to the Fairtrade system can be positioned. In this way, the North/South cleavage contributes with an organizing principle that makes possible to convey a more synthetic image of the system: the South equals producers and workers (subaltern classes),2 while the North comprises consumers, importers, processors, distributors and retailers (mainly, capital fractions). What this particular geography explains is that a praxis inspired by the FTCC entails a redistribution of wealth flowing from the North to the South, from capital to the subaltern.

  • 3 While four actors in the Argentinean wine industry are certified as “Traders”, they should be bette (...)

49When looking at the distribution of class fractions along the value chain of Fairtrade wine produced in Argentina and consumed in the UK, we find a majority of subaltern groups (workers, peasants, small producers) and, within capital fractions, a minority presence of commercial vis-à-vis productive capital (wineries) 3 in the former, while in the latter the situation is exactly the opposite (importers, distributors, retailers). At a first glance, this would seem to point towards a divide that is drawn along Fairtrade’s geography: on one side, we find the global South, characterized as the “producer pole” of the relationship (be it in the form of local SPOs or HL situations) and in a disadvantaged position due to the unfair terms of exchange under which their commodities are sold. On the other, we find the global North, responsible for these unfair terms of exchange and committed to fairer commercial relations with producers from the global South. In other words: commercial capital cooperates in order to improve the situation of those engaged in production (subaltern classes and productive capital) through the construction of a more balanced distribution of value between South and North.

50However, upon a closer inspection of the certified organizations, the North/South contradiction becomes more difficult to sustain. Simply by looking at the origin of each actor, we can find a heterogeneous profile, quite different from the purely national composition one might have derived from the North/South dichotomy. Out of the 11 certified organizations in Argentina, only five belong to local actors. These include, of course, the two SPO, which are owned by their members, plus three HL firms. Five other wineries, instead, belong to international wine groups and holdings, with headquarters in Chile, South Africa, Austria and France. The remaining winery is owned jointly by Argentinean and Swiss capital, though the biggest economic contribution has come from the foreign investor. When looking at commercial capital in the UK, three main companies concentrate the majority of Fairtrade wine imports: a British wine importer and distributor, the UK-based commercial branch of a South African group and a joint venture between an Argentinean SPO-certified winery and a Swedish company.

51The clearest conclusion that emerges from this overview is that Fairtrade’s main cleavage, opposing South and North, does not seem to apply. As it is evident, more than half of the Argentina-based certified wineries are owned by transnational capital, while one of the main Fairtrade wine merchants in the UK is owned by a South African group and another one is half-owned by an Argentinean cooperative. The heterogeneous origins of the capitals involved among the Fairtrade actors make it in extreme difficult to buy into Fairtrade’s narrative of northern capital and buyers helping southern producers and workers.

52What these findings seem to point towards is the convenience of analyzing the conflictive interests that Fairtrade seeks to arbitrate along the lines of class fractions. Because, at the end of the day, Fairtrade is attempting to regulate not so much North-South connections as the relationships between groups with different functions and positions in the economic system. What the FTCC does when insisting on the North/South cleavage is actually a displacement: it has found a pair of concepts that do not directly find the roots of injustice in the capitalist system as such, in its social relations, tensions and contradictions, but, instead, in the geographical distribution of value. In this way, the problem is not posed in the terms of the exploitation of labor or small producers by capital, but it is found in a much vaguer, superficial, dichotomy with no direct, evident link to the economic structure that causes this unequal distribution. In this way, Fairtrade functions as an alternative, capital-friendly way of denunciation.

4.2 The fairness principle: capitalist and subaltern interests’ conciliation

53While the analysis of Fairtrade’s geography gave us an insight into what the FTCC seems to pose as its objective (a transformation of commercial relations between North and South), the current subsection will look at the way in which such transformation is expected to be achieved. Under the label of “the fairness principle” I would like to present the particular understanding of justice that underlies the strategy adopted by Fairtrade: the conciliation of capitalist and subaltern interests.

54At the core of the FTCC rests the idea that the interests of capitalist fractions and subaltern classes can be conciliated. The guiding principle of the FTCC is that the system can bring together capital and labor, producers and their buyers, and make them cooperate in order to improve the situation of workers and small producers while providing benefits to firms, commercializing companies and retailers at the same time. The FTCC rests on the commitment to this convergence of interests and that is why it seeks to present the socioeconomic development of producers as a business case: “strong, independent producer organizations rooted in fairness and striving for social, economic and environmental sustainability are good for businesses too. They are reliable partners, who know their farmers and crops, and what the market needs” (Fairtrade International, 2014:4). It is clear how this quote stresses that the improvements experienced by producers do not threaten in any way the interests of businesses but, on the contrary, benefits them. The same reasoning applies to the case of workers, as Fairtrade’s liaison officer for South East Asia explained: “a happy worker is a good worker. A good worker is an asset to the plantation as well as to its owning company” (Fairtrade Labelling Organizations International, 2004:9). Here, once more, the improvement of the subaltern subject (presented as an asset) is not portrayed as an end in itself, but as a means to improving capital’s position.

55This principle of interest conciliation is inscribed in the main tool that Fairtrade has chosen: voluntary certification. Fairtrade is part of a broader trend of ethical initiatives that seeks to transform corporate behavior without resorting to the state – previously described as private governance. Due to the absence of a formal political authority typical of this sort of schemes, these initiatives cannot be imposed in the form of compulsory regulation and, therefore, depend on the voluntary acceptance by those same entities on whom the norms are to be applied. The voluntary nature of the system determines from its inception the overall logic of private regulation: if the standard setter expects producer organizations and firms to incur on the extra costs associated to the adoption of the new norms, it will have to offer certain benefits in exchange.

56As a consequence, the decision of constructing the Fairtrade system on the basis of voluntary certification provides a first and original structural constraint: business-friendliness. If the Fairtrade movement wants to improve the situation of workers in plantations, it needs those plantations to be certified; if they want to improve the situation of small producers, they need them and their buyers to be certified. And, most importantly, if the Fairtrade system wants plantations, traders, importers, exporters and retailers to work within their certification-based framework, it needs to offer them some incentives to do so. This does not only mean providing economic or symbolic rewards, but also tempering the conditions set by their standards: because if standards become excessively demanding, they will eclipse the potential benefits of joining the system, frightening away potential members. Consequently, Fairtrade needs to achieve a balance between, on the one hand, what would constitute ideal conditions of production and trade and, on the other, the initial limited interest that firms have in subjecting themselves voluntarily to an extra body of regulations.

57While subaltern and capitalist interests are included in the FTCC, and their convergence seems to be the ultimate goal, both social classes are endowed with very different amounts of power. This happens as a consequence of, first, the structural constraint imposed by a system based on voluntary-certification and, second, the critical importance of capital for the functioning and growth of the system. This second reason is quite simple to understand: even if SPOs and companies relying on HL have obtained their respective certifications and comply with them exemplary, they will not yield some of the main benefits of Fairtrade if they fail to secure sales. Both the Fairtrade minimum price and the Fairtrade Premium depend on the (volume of) sales achieved by producers. Here again, capital – and, more importantly, commercial capital – is invested with a fundamental importance, because for Fairtrade to provide benefits to producers and workers, it depends on commercial capital for the realization of production. Therefore, it is not only the nature of voluntary-certification-based systems, but also the particular position occupied by capital in the Fairtrade mode of regulation, that reinforces the principle of mutual benefits at the heart of the FTCC: “FLO is here to introduce companies to producers and open doors for both” (Fairtrade Labelling Organizations International, 2010:4).

58While capital power in the system is clear and undeniable, the FTCC presents the relationships between managers and workers and producers and their buyers as horizontal partnerships. Capital fractions and subaltern classes are presented as equals who share decision making faculties. This, in the first place, conceals the actual unequal structural power that each class possesses in the system. In the second place, it implies that most decisions have to be taken consensually by capital and the subaltern classes, limiting in this way the freedom and autonomy of the latter in the process of creating a fair productive and commercial regime. The idea of a partnership between capital and subaltern classes is embedded in the practice of standard and minimum price setting, as Fairtrade International explains: “we consult both producers and business partners to regularly review our standards and prices” (Fairtrade International, 2012:8).

59The works by Reinecke (2010) and Reinecke and Ansari (2015) provide valuable empirical examples of how the pursuit of a capital-subaltern compromise undermines the possibility of advancing decisions in the direction of an emancipatory position for small producers and workers. Both publications show how in different minimum price negotiations – for rooibos tea and coffee – opposition between small producers and capital representatives (productive and commercial) emerge and, after tough negotiations, minimum prices well below the “costs of sustainable production” adduced by small producers are adopted.

60Fairtrade portrays the interests of subaltern classes and capital as convergent and deserving equal consideration. In this way, it legitimizes its political project on the basis of the compatibility of contradictory interests, which, as it has been shown, actually limit Fairtrade’s transformative potential. The previous section described Fairtrade’s self-undermining behavior in a variety of situations, including the relaxation of standards and the lack of implementation of certain aspects. This self-undermining tendency is the direct outcome of the fairness principle described here: in an attempt to conciliate subaltern and capitalist interests, Fairtrade capitulates to many of the requirements posed by the latter, limiting importantly its potential to improve the situation of small producers and workers.

61In the Fairtrade system capital continues to have a privileged position over the subaltern classes, but because it has accepted to grant certain concessions in favor of weaker players, its domination re-emerges legitimated by a halo of ethicity. The FTCC prefigures an image according to which employers and workers, producers and buyers coincide in this system because they want to cooperate with each other in order to yield mutual benefits. However, as it has been shown in the previous section, the actual changes and impacts produced by Fairtrade are minor adjustments. In this way, what the FTCC does is to take away the conflicting aspects of economic relations, legitimizing domination and granting it an appearance of justice. As a consequence, a system that seeks to empower workers and small producers in order to grant them “more control over their lives” (Fairtrade Labelling Organizations International, 2010:2) actually institutionalizes and coats with a veil of legitimacy the power of capital and the control it exercises over the subaltern classes.

4.3 The subaltern-consumer nexus: an unmediated relationship

62Fairtrade is presented as a praxis that corrects injustices in international trade by putting decisions in the hands of ordinary people: any person concerned about the situation of marginalized producers and workers in the third world can simply contribute to their well-being by buying the right product. Consequently, Fairtrade consumers are endowed with a political aura, since they are key actors in fueling the Fairtrade system and boosting transformation. Some Fairtrade slogans appear as excellent condensations of this view: “shopping for a better world” (Fairtrade Labelling Organizations International, 2004), “grab a Fairtrade banana and change a life” (Fairtrade Labelling Organizations International, 2007:16). Consumers decide to buy Fairtrade products because they want “the world’s disadvantaged producers to have a chance to realize their dreams of a decent living” (Fairtrade Labelling Organizations International, 2004:1). Given that consumers are given a role with such a transformative potential, it should not be surprising that the FTCC presents them as the main ally of producers and workers.

63While both groups stand at the opposite extremes of the commodity chain, it is them who constitute the essence of Fairtrade. That is why Fairtrade International has stated as its mission “to connect disadvantaged producers and consumers” (Fairtrade International, 2011:3) and ensure a win-win situation for both. Fairtrade International constantly seeks to highlight the importance of direct linkages between producers and consumers, showing how the latter contribute to the wellbeing of the former, and often portraying these relations as unmediated: “fortunately, they [producers] are not alone in this endeavor, as millions of consumers and supporters are helping out” (Fairtrade Labelling Organizations International, 2007:12).

64In this way, the subaltern-consumer nexus presented by the FTCC could be understood as a dialectical union in which both poles of the commodity chain, in spite of their radical differences, come together into a relationship which is characterized by the development of close bonds and empathy. This is possible due to what the FTCC presents as a reduction of the distance between the subaltern classes and consumers, as the emphasis on information flows and the elimination of intermediaries in the value chain evidence.

65However, this emphasis on proximity fails to account for what actually is a fundamentally mediated relationship between both extremes of the value chain. If any Fairtrade product gets to be consumed, it is because it has been bought to a producer, exported, imported, distributed and sold to a consumer. Supply chains are increasingly and almost exclusively based on the certification of actors, making of the commercialization of Fairtrade products the monopoly of professional trade firms, thus, commercial capital (Reed, 2009). Even if Fairtrade seeks to shorten value chains and avoid intermediation, a direct transaction between producers and consumers is very difficult to achieve; Fairtrade products always need to be commercialized by intermediaries.

66The presence of capital fractions and their central role in the system introduce certain tensions within the FTCC. The fact that capital is able to make decisions and even profit from the system is something only seldom openly acknowledged by Fairtrade actors. The preferred option, instead, is to ignore its presence, as it would otherwise put into question the fragile and always disputed legitimacy that characterize sustainability standards (cf. Loconto and Fouilleux, 2014). Capital, therefore, assumes the role of a taboo for the subaltern-consumer nexus, because even if it is a constitutive part of this relationship, it should not be mentioned. This is the clear conclusion emerging from a symptomatic reading of all the different passages in which Fairtrade International seeks to emphasize the importance of consumers without acknowledging the intermediation of capital – “to survive producers need markets, consumers to purchase their products” (Fairtrade Labelling Organizations International, 2005:18) – or those other ones in which it highlights who the winners of this system are – “FLO and its 20 members work to ensure a win-win situation serving both producers and consumers” (Ibid:3).

67The taboo of capital should be understood as more than a simple curiosity within the FTCC. It is an expression of the tensions that emerge in a system that has been built on the basis of accepting the contradictions inherent to capitalist social relations. The taboo of capital shows how part of the FTCC rests on the repression and denial of commercial capital. And this is not a minor point, because commercial capital plays a central role in any trade system. As a consequence, an unmediated, direct, subaltern-consumer nexus is impossible (see: Staricco, 2016b). Commercial capital, as a commodity-dealer, makes possible the connection because Fairtrade, as a system based on mainstream international trade that permanently seeks to expand, cannot do without it. Therefore, from a functional point of view – because the relationship is built through a commodity and the commodity cannot be transmitted without the intervention of multiple merchants – the subaltern-consumer nexus, as portrayed by the FTCC, cannot take place.

68In conclusion, this section has reconstructed the FTCC by analyzing the three most important pillars on which it is erected: (1) the displacement of the centrality of class-struggle and capitalist contradictions by the proposal of the North/South dichotomy as an alternative cleavage; (2) the legitimation of the domination of capital over the subaltern through the postulation of the compatibility of their interests; and (3) the overshadowing of capital’s centrality in the system by the portrayal of the consumer-subaltern nexus.

5. Conclusion

69The examination of the Fairtrade mode of regulation has shown that, due to a formalist approach, Fairtrade standards offer a limited transformative potential. In spite of this, it was possible to identify some elements (stricter regulation of certain work conditions, a minimum price and the promise of long-term commercial relations) that would entail relevant innovations if applied to the Argentinean wine sector. However, when the implementation of the standards was analyzed, it was found that these innovative elements where withered away due to Fairtrade International’s self-undermining behavior, either through the relaxation of its rules or their lack of enforcement. When the analysis turned to the Fairtrade concept of control it was possible to identify the main reasons behind the limitations suffered by this mode of regulation: Fairtrade’s dependence on voluntary-certification and a market-based strategy grants important amounts of power to (commercial) capital, making necessary to conciliate their interests with those of workers and small producers, diminishing in this way the system’s potential to advance the situation of the latter.

70Fairtrade was presented in the introduction of this paper as a paradigmatic example of the corporate-environmental food regime, as hypothesized by Friedmann. Hence, the implications of the findings presented here can contribute to a critical examination of this emerging structure. Most centrally, it could be said that the analysis of Fairtrade has exposed the main tension at the heart of the corporate-environmental regime: on the one hand, the incorporation of demands for a more economically, socially and environmentally sustainable agri-food system; on the other hand, the structuration of a system of private governance where corporations occupy a central regulatory role. The key question for the assessment of Fairtrade (and the corporate-environmental regime) would then be whether a movement towards social and environmental protection can be materialized in a context in which regulatory power seems to be migrating from the state to private actors.

71The case study presented here shows that the answer to such question is marked by the constitutive tension that springs from the FTCC’s combination of a content that longs for an agri-food system driven by principles of economic and social protection and a form that epitomizes a neoliberal understanding of political praxis. The empirical analysis demonstrated that the latter induces Fairtrade’s self-undermining behavior, as it exposes the system’s overall acceptance of the logic of private regulation, which ultimately weakens its reformist potential. More generally, this fact sheds light on the contradictory dynamics of de- and re-commodification that characterize sustainability standards, as described by Daviron and Vagneron (2011).

72All in all, it can be concluded that we are faced with a conservative political outcome: because Fairtrade manages to channelize the concerns of those dissatisfied with the social inequalities produced by the current economic system through, precisely, the very same means that the system proposes, it turns out to contribute towards its perpetuation rather than its transformation.

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1 This was the case during my fieldwork. Nowadays, however, workers can use up to 20% of the total Premium as a direct wage determinant.

2 In this section, and following Gramsci (2014), I use the notion of “subaltern classes” in order to account for a variety of social groups (workers, peasants, small producers, etc.) who, in spite of their different functional positions, share a common subordination to capitale fractions. For a detailed justification of this choice see: Staricco, 2015: 78-82.

3 While four actors in the Argentinean wine industry are certified as “Traders”, they should be better understood as part of the industrial capital fraction because they are not trading companies but wineries. Hence, even if they perform some commercial functions (e.g. purchasing grapes or wine, selling wine), their main economic activity (i.e. source of accumulation) is wine production – unlike commercial capital, which makes a profit from the mere buying and selling of commodities.

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Juan Ignacio Staricco, « Towards a Fair Agro-food Regime? A Regulationist Reading of the Fairtrade System », Revue de la régulation [En ligne], 20 | 2e semestre/ Autumn 2016, mis en ligne le 30 janvier 2017, consulté le 19 février 2017. URL :

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Juan Ignacio Staricco

Postdoctoral Fellow, Management Institute, School of Economics, National University of Cordoba, National Scientific and Technical Research Council (CONICET),

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