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How Fair is Fairtrade?
In response to fair trade's skyrocketing popularity in the UK, this BBC article looks at the questions that have been asked (particularly by the Adams Smith Institute) on the effect fair trade has in the developing world, and finds the resulting increased self-sufficiency of producers.
Last Updated: Wednesday, 7 March 2007, 11:58 GMT
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 Fair trade products are popping up everywhere. Gone are the days when you had to trek to an off-the-beaten-track shop that smelt of hemp in order to buy a fair trade woolly jumper or bar of chocolate. Now you just need to visit the High Street. Topshop, once a bastion of cheap and cheerful garments, sells fair trade tunics, bubble tops and racer-back vests. And Marks and Spencer works with more than 600 fair trade cotton farmers in the developing world, using their cotton to produce chinos (for men), jeans (for women), hooded tops (for the kids), and a host of other fair trade fashion items.
There are more than 2,500 product lines in the UK that carry the Fairtrade mark. Last year we spent £290m on fair trade food, furniture and clothing - an increase of 46% on the previous year. It is currently Fairtrade Fortnight, organised by the Fairtrade Foundation. Events at schools, colleges, universities and workplaces up and down the country consist of everything from makeovers (swap those ordinary store-bought clothes for fair trade threads) to food exchanges (bring along your favourite brand of tea, coffee or jam and swap it for a fair trade alternative). The aim of fair trade is clear - to get a better deal for Third World farmers. In order to win the Fairtrade tag, the application of which is monitored by Fairtrade Labelling Organisations International, companies have to pay farmers higher than the market price for their products. This means fair trade farmers are not at the mercy of the market's whims, and have extra money to invest in education for their children and other social needs. Poverty trap But not everyone is convinced that fair trade is a good idea. Some critics claim that by focusing on achieving a fair price for poor farmers, the movement doesn't address issues of mechanisation and industrialisation - radical changes that might allow farmers in the developing world to stop doing back-breaking work and break out of the poverty cycle.
Eileen Maybin, a spokeswoman for the Fairtrade Foundation, says it does help to improve farmers' lives. "Fairtrade focuses on ensuring that farmers in developing countries receive an agreed and stable price for the crops they grow, as well as an additional Fairtrade premium to invest in social projects or business development programmes. "Typically, farmers' groups decide to use the premium on education, healthcare and clean water supplies, or the repair of roads and bridges, and to strengthen their businesses, improve the quality of their crop or convert to organic production." Ms Maybin says that those farmers involved in fair trading are happy with the results. "The farmers and workers involved in Fairtrade always talk about how much they, their families and their communities benefit."
Madsen Pirie, of the right-leaning think-tank the Adam Smith Institute, says that in protecting the market for certain producers, the movement effectively makes farmers "prisoners to our market". "They become dependent on us continuing to pay premium prices for their goods." Many tens of thousands of people escaped poverty last year, most of them in India and China, but he says that was done through real market developments rather than small-scale fair trade deals. They were lifted out of poverty because they could sell their products on the open global market, rather than being sectioned off in the fair trade market. Extra pennies In the charity world, too, there are critical voices in the fair trade debate. Steve Daley, who works with the education development charity Worldwrite, argues that fair trade's horizons are dangerously low.
He cites a report from the Financial Times last September, which revealed that some fair trade coffee farmers in Peru were being paid 10 soles a day (about US$3) for working from 6am to 4.30pm. This is more than the conventional coffee farming wage of eight soles a day, but not much more. Mr Daley is concerned that the fair trade movement is reshaping the debate about underdevelopment, so that the main concern today is with increasing farmers' wages by fairly small amounts rather than really transforming poor communities through development, modernisation, even industrialisation. "Fairtrade seems to be rooted in a conviction that 'small is beautiful'," says Mr Daley, who argues that the movement does not focus enough on developing modern agricultural methods, which is "surely what farmers in the developing world need". Mr Daley says that fair trade is more about "flattering Western shoppers" than transforming the lives of Third World farmers. Self-sufficient Justin Purser, the commodities manager for Trade Aid Importers in New Zealand, disagrees. He has witnessed some of the big changes fair trade can make. "It is very common for fair trade coffee co-operatives to seek to build infrastructure which will cut down on the amount of labour required to process their coffee, and will also enable them to improve their coffee quality and, thereby, the higher prices they can command in the market." He gives as an example Prodecoop, a coffee cooperative in Nicaragua that he has worked with. "Prodecoop has grown, with the aid of a longer history of fair trade sales, to the size where it is now constructing wet mill facilities for its smaller member co-ops. And to help them along, Trade Aid is supplying an additional US$7,000 in funding this year." Fair trade helps to "promote self-sufficiency" among Third World farmers, he says.
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Major, mechanized farming methods are what made these
people reliant on the so-called First World to begin with. Coffee is a
primary example. All coffee used to be shade-grown. Today most of it is
produced in cleared fields. This clearing of the native environment
eliminated the natural system of pest control, necessitating the use of
chemical insecticides. It depletes the soil, meaning that you also end
up using chemical fertilizers. Between the use of these chemicals and
modern tilling techniques, the soil is utterly depleted and a layer of
hardpan is created below it, eliminating drainage. The result?
Environmental devastation. Anyone who claims that these people need to
convert to our way of farming is really saying that they need to
convert to our way of life (such as it is) because there is something
wrong with theirs.
I thought that one of the key aspects about fair trade
was not that they pay the farmer a little extra, but that they
guarantee a reasonable price from one harvest to another. So when
prices are high, the farmers get the benefit, but when prices are low
the farmers have a safety net. This allows long-term planning in the
farms and communities, which leads to self-determination. Yes it is a
market intervention, but so are the European subsidies.
How about paying a fair price to British farmers? A
farmer will be paid about 19p a litre of milk produced. Also a recent
study showed that the average annual income for a UK farmer was £12,700
- compare this to the national average of about £25,000. Fair trade
inside UK please.
The critics are right: it is tokenism. It is charity by
another name - solidarity. But without it happening, there are an
estimated five million producers and their families in poor countries
who would receive even less than they currently do. Surely, the way
forward is to encourage fair trade as an interim measure that people
can take here and now, in their everyday buying behaviour, whilst also
spending time and energy informing themselves about the real causes of
poverty in the world, and then lobbying for political change in the
rich countries. It is not an either/or; it is not even a choice between
an ethical and moral approach v a hard-headed approach based on tough
political analysis. The world needs immediate action through fair trade
AND medium to long-term action through political means -
awareness-raising among your neighbours and lobbying of politicians and
other decision-makers.
Having visited a fair trade vineyard last year in South
Africa, and comparing it with a non-fair trade vineyard, I can say the
few pence extra you pay is really a massive difference. The kids had a
school to go to. Their houses were clean. The black farmers owned their
own land - giving them both long term security, and justice after years
of apartheid.
Interesting. So fair trade is either: (a) bad, because
it gives people extra money; or, (b) bad, because it doesn't give
people enough extra money; or, (c) good. It would be even more
interesting to see how Madsen Pirie and the Adam Smith Institute might
explain how farmers who receive a fair trade premium are "prisoners to
our market", while those who depend instead on the ups and downs of the
so-called "free" market are somehow not. Until the Adam Smith Institute
stop campaigning for things like lower taxes for rich people, then I'm
afraid I can't take much they say seriously. I buy fair trade products
because I don't like my coffee to leave a bitter aftertaste in my
mouth. Yes, it is about saving my soul. But you can't save souls
without saving bodies too.
By promoting fair trade all we are doing is providing an
incentive for developing countries to continue production in the
primary sector. How can this help a country in the long run? What we
should be doing is erasing all forms of market interference. If African
farmers can't produce enough crops to make a profit then too bad. They
should be producing some other goods in which they have a greater
comparative advantage. That's the beauty of a market system. Fair trade
will only bring inefficiency.
It's a shame that as soon as something like fair trade
gets popular, people come out to argue that it's not all that great.
Fair trade is fantastic - sure, there are even bigger things that need
to be done, but buying fair trade products is something I personally
can do every day to help, rather than saying its not worth it and go
back to buying products which have been made cheap mainly through
exploitation.
Modernisation and industrialisation has killed hedgerows
and whole species in the UK and created the problem we call climate
change. Most people in the Third World do not want to be Westernised,
they just want a fair deal.
The only effects of industrialisation will be to
increase expenses for farmers (who will be dependent on importing
expensive machine parts, fuel and fertilisers), put other farm-workers
out of work (as industrial methods are less labour-intensive) and
reduce the price of the crops (as there will be greater surpluses).
I've always been of the opinion that fair trade, along
with ethical, green and organic serve the dual purpose of allowing
supermarkets to charge premium prices for bog standard products, and
allowing self-hating liberals to buy off a bit of their own guilt. They
do little for the Third World and are at best a gesture which I refuse
to buy into.
Matt, so what do you buy into then? Of course fair
trade, organic, green and ethical products aren't perfect and don't end
world poverty and global warming, but you have to start somewhere don't
you?
Maybe it doesn't strike high enough for some people, but
guaranteeing farmers higher, stable prices for their crops can be
nothing but a good thing. If they choose to spend their money on
community projects and a future for their children rather than
mechanisation, who are we to argue?
Fair trade will inevitably distort markets leading to
overproduction of coffee, cocoa, bananas etc in random areas. This will
push down prices elsewhere, randomly impoverishing less favoured areas.
Markets work - including the market for labour. Much of the charity
business seems determined to maximise the number of people following a
peasant lifestyle in developing economies. However peasant economies
are always unpleasant to live and work in - subsistence or close to
subsistence farming will always be economically risky and unpleasant to
work within. Do you see many Westerners volunteering to become
peasants? Of course not, so why perpetuate the lifestyle for others?
Not everyone can be (or wants to be) involved in
specific charities or projects. Are we in danger of creating a
hierarchy of interventions where leaders of community-based projects
are at the top, and chocolate buyers at the bottom? Isn't there room
for all of these in the drive for greater fairness?
RE "They become dependent on us continuing to pay
premium prices for their goods." Who else are they going to sell their
produce to? Other poor developing countries just as desperate for
foreign exchange? And how will they earn the foreign exchange to repay
their own debt? Labour and agriculturally rich countries have little
choice but to sell what they can produce now, with little or no
investment in hi-tech mechanical aides that require first world
resources to maintain.
Steve Daley says that some fair trade coffee farmers in
Peru were being paid 10 soles a day (about US$3) for working from 6am
to 4.30pm. This is more than the conventional coffee farming wage of
eight soles a day, but not much more. The levels of pay may seem
relatively low to us, but I'm sure a 25% pay rise would make most
people smile.
Supermarkets sell fair trade goods because they have
larger profit margins. How much of the price difference between a
normal product and a fair trade one actually go to the farmer? Usually
a tiny percentage of it. If I thought the extra 50p I'm paying was
going to the farmer rather than the supermarket, I'd buy a fair trade
product. Until then, I'd prefer to donate money to charities who are
honest about their admin and central costs, and about how much actually
reaches the people its aimed at.
I think it is more than worth it. I am from Mexico and a
few pennies do make a big difference for these farmers who are not
subsidised and I have known personally. In my country many people
prefer to buy imported fruit, veg and even meat in Walmart than go to
the local market and buy them from the immediate farmer.
I have supported fair trade since visiting Saint Lucia
some years ago. It is because of support for the small local growers
that they have been enabled to stand up against the large, mainland
companies who flooded the market with cheap product. As long as there
is a USP which sells then price is not the major buying criterion -
that USP may be quality, or it may be something less tangible, like the
consumer's good feeling that a sustainably "generous" payment is going
to the grower. That is not charity, it is good marketing, but it can
have the same positive results.
If I were a poor farmer, I would definitely prefer
fairer wages than being exploited and having no way out. If I were
short sighted enough not to use any extra income to invest in my
children's education and health, then it would be my fault if I remain
dependent on "charity-minded shoppers in the West". The Fairtrade
movement is at least giving me the choice to get me, my family and my
community out of the poverty trap created by unfair trade policies.
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How can a few extra pennies a day from Fairtrade be celebrated as an outstanding achievement?
