Fair Trade

The aim of Fair Trade is clear – to get a better deal for Third World farmers, but does the label ‘Fair Trade’ always ensure this?

Fair Trade labelling was created in the Netherlands in the late 1980s. The Max Havelaar Foundation launched the first Fair Trade consumer guarantee label in 1988 on coffee sourced from Mexico. Here in the UK, the Fairtrade Foundation was established in 1992.

What is it?

Fair Trade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers and workers who have been economically disadvantaged or marginalised by the conventional trading system.

What you should know

  • Fair Trade is an organised social movement and market-based approach that aims to help producers in developing countries to make better trading conditions and promote sustainability. The movement advocates the payment of a higher price to exporters as well as higher social and environmental standards. It focuses in particular on exports from developing countries to developed countries, most notably handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate and flowers.

The basic principles of Fair Trade include:

  • A fair, living wage for workers
  • Safe, healthy working conditions
  • Environmental sustainability
  • Respect for cultural identity
  • Community development
  • Opportunities for marginalised communities

Even though these are all good things, sometimes people are still not persuaded to buy fair trade products. However, there are many good reasons to buy fair trade products:

  • Help Plantation Workers Get Fair Pay – Most plantation workers are slaves or get very little money for their work. When you buy fair trade, the money goes to farmers and other workers who get a fair wage for their work so they can easily live and support their families.
  • Help Develop Communities – Buying Fair Trade products help develop communities. Money goes to a community bank account and is managed by a cooperative. Funds can be used to create better schools, better working conditions or buy essential supplies such as seeds and tools.
  • Challenge the Business Community – Big companies are located around the world. We all use them at times. However, it is not always necessary. By buying Fair Trade products, the middle men that are often used in production for big companies are not used. This means that the money goes directly to the farmers and the workers instead of being spread out among people who do not truly help to get the product to the shelf, but instead reduce the wages of the people who actually work.
  • Protect People and the Environment – Big businesses often use processes that are not natural and that use harmful chemical and pesticides in growing fruits, coffee beans, and cacao beans. Fair Trade growers do not use these processes and chemicals. This makes the working environment safe and it also makes the food safe for consumers.
  • Protect and Developing Communities – In many countries where cacao beans and bananas are grown, children under the age of 12 are forced to work long hours with little to no pay. The law is that children age 12 or over can work limited hours as long as it does not interfere with their welfare or education. Big companies often break these laws and nothing is done about it. Fair Trade follows these laws and makes sure children are in good health and not abused or trafficked.
  • Whilst there appear to be many reasons to support the Fair Trade scheme some people see it as holding the farmers back and even keeping them in poverty, with some critics claiming 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. So how fair is fair trade? Is it about getting Third World farmers to accept their lot, or, at best, a little better than their lot?
  • The UK Fairtrade Foundation says it does help to improve farmers’ lives. “Fair Trade 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, health care 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. The foundation says that those farmers involved in fair trading are happy with the results.
  • Yet others argue that Fair Trade can end up being a trap for farmers, tying them into a relationship of dependence with charity-minded shoppers in the West. 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.

What you can do

The Good

  • Support Fair Trade farmers by purchasing products with the branded logo on whenever possible
  • Support supermarkets such as the Co-op in the UK for leading the initiative.
  • Purchase Fair Trade non-food products from retailers with good ethical policies

The Bad

  • Fair Trade should support and develop communities and farmers – not entrap them in the red tape system
  • Some companies exploit the scheme by purchasing small volumes (under 1%) of their product spend before spending 100 times more on advertising their credentials – boycott these companies and their products

Where is this applicable?

The ‘Fair Trade’ label is most commonly used in Europe, North and South America, Australia, Africa, India and Asia.