Does Fair Trade USA's expansion plan threaten its purpose?

Paul Rice is a man on a mission.

The 51-year-old president and CEO of Fair Trade USA, who has led the group since 1998, says he wants the practice of Fair Trade to become bigger, engaging more consumers and helping more farmers around the world.

To that end, Fair Trade USA last year quit the international Fairtrade Labelling Organizations, or FLO, an international federation of fair trade groups, to pursue a vision that Rice calls "Fair Trade for All." He and his allies want to broaden the definition of Fair Trade, which when it comes to coffee now requires importers to buy from grower-owned cooperatives.

The "Fair Trade for All" permits buying from collections of small farmers and even coffee estates, or plantations, that are deemed to be worker-friendly.

"Fair Trade can be more than a tiny market niche," Rice says. "It can be scalable and significant."

Bringing in plantations will make it easier for big coffee buyers like Green Mountain Coffee Roasters, Starbucks (Nasdaq: SBUX) and Whole Foods to buy more Fair Trade products -- and that's exactly the problem, his critics say.

Including bigger farms, they argue, will endanger the co-ops that are the heart and soul of the Fair Trade movement.

"Fair Trade is designed to change commerce," says Rodney North of Equal Exchange, a cooperative that sells Fair Trade and organic coffee, tea, chocolate bars, cocoa, bananas and almonds. "We shouldn't be changing Fair Trade to accommodate commerce."

Equal Exchange's campaignEqual Exchange has launched a petition drive asking companies, organizations and consumers to choose "authentic, small farmer-centered Fair Trade." It says:

Small farmer co-operatives are the center of our Fair Trade movement. We believe that cooperative organization is essential for small farmers to survive and thrive, and the cooperative model is an important vehicle for economic empowerment and social change….
Therefore we vigorously oppose Fair Trade USA (previously Transfair USA)'s Fair Trade for All initiative, which seeks to allow coffee, cacao and other commodities from plantations into the Fair Trade system. This strategy means that small farmers will now be forced to compete with large plantations for market access… We oppose the lower standards Fair Trade USA proposes and the lack of farmer and producer governance on Fair Trade USA's board. We believe that their Fair Trade For All initiative threatens small farmer cooperatives' existence and Fair Trade itself.

Caught in the middle are coffee companies (and other retailers big and small), which must decide whether to embrace Rice's "Fair Trade For All" mantra or side with the international federation and traditionalists in the U.S. who favor the co-op model. The brouhaha creates a risk: That what is now a relatively small market — roughly 5 percent of the coffee sold in the U.S. is certified as Fair Trade — will be further splintered, with competing logos, brands and ideologies.

"This is an exciting moment in the Fair Trade movement's history because it's a chance to revisit our purpose, our goals and our practices," says Ben Corey-Moran, the president of Thanksgiving Coffee Co., a socially conscious artisan roaster in northern California. (Its slogan: "Not Just a Cup, But a Just Cup.") "But it's also a very dangerous moment. We could confuse or alienate a lot of consumers."

The idea of Fair Trade dates back to the 1940s when a prominent Mennonite woman from Pennsylvania began selling imported crafts in small stores that eventually grew into the Fair Trade retailer Ten Thousand Villages. "Max Havelaar," the first Fair Trade label, was launched in Europe in the late 1980s. Other labels followed, and FLO was established in Germany in 1997 to bring the labels together and set worldwide certification standards.

Now producers and consumers faced a proliferation of labels and standards -- not just Fair Trade International and Fair Trade USA, but also independent labels like Rainforest Alliance, which certifies cocoa, coffee, flowers, tea and other products, and a Bird-Friendly seal from the Smithsonian Institution. In every instance, buyers are assured that growers are being paid a premium price for their products and that, in return, they adopt social and environmental practices that are verified by third parties. It's a market-friendly way to fight global poverty.