Since the early days of the spice and herb trade, the industry has become progressively more concentrated. Today, two firms dominate the global spice and herb market; McCormick and Company Inc., and Tone Brothers Inc.
In contrast to manufacturing where power is concentrated in the hands of a few, the growing of herb and spice crops is generally carried out by thousands of small scale farmers dispersed over remote areas. However, this reality renders small-holder producers vulnerable to fluctuation in the demand and prices of herbs and spices which depend on global weather patterns, past production levels and changes in consumer preferences.
In recent years, an increase in the number of countries supplying spices and herbs has led to an overall drop in the market price which results in poor living conditions for producers.
The market for black pepper, the most widely used spice in the world, provides a prime example of these challenges. Small-scale pepper growers face unreliable income because of significant fluctuations in the price. In the last decade they have also experienced an overall decline in the price of black pepper due to increased competition from new producing regions, particularly Vietnam. Today, the trading price of black pepper is lower than it was in 1990 and falls far short of production costs.
Since 2005, when Fairtrade Standards were introduced for spice and herb production, farmers who produce Fairtrade certified spices and herbs receive a Fairtrade price that covers their costs of sustainable production, as well as a Premium to invest in social and economic projects in their communities. Additionally, pre-harvest lines of credit are given to cooperatives, if requested, of up to 60% of the purchase price. These social benefits are complemented by environmental benefits comprising a restrictive use of agrochemicals, banned genetically modified pants and incentives to move towards sustainability.