Fairtrade Fortnight Fairtrade: Is it really fair?
NO: Other schemes are just as valuable
It is trade, of that there is no doubt. Some £1.3bn is spent on Fairtrade-badged goods in the UK. But nearly two decades after the launch of the scheme, the question that increasingly vexes consumers as they make their purchases is: is it really fair?
By Philip Booth, Institute of Economic Affairs
The UK is the world’s biggest fair-trade market, and it continues to grow. The first three products to showcase the Fairtrade mark hit the shelves in this country 26 years ago. Now, there are more than 4,500 products carrying the familiar logo in our shops. The scheme was set up with the anything-but-simple mission of providing “better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world”. Farmers who pay for certification are assured a minimum price – which can never fall below market level – and a premium to invest in their communities. Despite becoming increasingly mainstream, the Fairtrade label has persistent critics. It is attacked by those on the left who say it has sold out and given in to the market. Pundits on the right argue that it distorts markets, exaggerates its claims, prices out the poorest farmers, and perpetuates inefficient modes of production. But is it FAIR?
YES: It puts people back at the heart of trade By Harriet Lamb, Fairtrade Foundation Fairtrade does what it says on the tin: it is about better prices for smallholder farmers and workers in developing countries. Fairtrade addresses the injustices of conventional trade, which too often leaves the poorest, weakest producers earning less than it costs them to grow their crops. It’s a bit like a national minimum wage for global trade. Not perfect, not a magic wand, not a panacea for all the problems of poverty, but a step in the right direction. Free-market economists complain that Fairtrade benefits only a small number of farmers, penalising those outside. This is plain wrong. In fact, the evidence suggests that the opposite is true. Research in Bolivia, for example, found that coffee producers outside Fairtrade were able to negotiate higher prices: Fairtrade had become a price setter. Fairtrade farmers also share their knowledge in trading. For those inside the system, our research shows that through the minimum price guarantee, farmers have more secure and stable incomes. A group of rice farmers in India invested their premium in buying a tractor and a land leveller; productivity increased by 30 percent. Other critics ask why we are working with retailers or big brands like Cadbury’s and Starbucks. Our answer is that only by mainstreaming Fairtrade will we be able to reach more producers. So, we are unapologetic in our commitment to scale up. By doing so, moreover, we begin to affect all business behaviour. A favourite question is why don’t we work with UK farmers. We recognise that many farmers in the UK face similar issues to farmers elsewhere, but Fairtrade was established specifically to support the most disadvantaged producers in the world - like the teagrowers of Malawi, who don’t even have drinking water in their villages. I always buy my cheese, pears, and carrots from my local farmers’ market - and enjoy Fairtrade bananas, tea, and coffee. It’s two sides of the same movement to put people back at the heart of trade. Surely you cannot say fairer than that.
Private certification schemes are the unsung heroes of a market economy. They are far more effective than state regulation. It is therefore with a heavy heart that I have always had reservations about Fairtrade-labelled products. The foundation pounces on critics with its well-oiled publicity machine, always responding with anecdotes. But doubts remain. There are many ways in which poor farmers can get better prices. They can do so through speciality brands, via traditional trade channels, and using other labelling initiatives. Does Fairtrade help? The evidence is limited, but even proponents of Fairtrade would argue that only about 50 per cent of the extra money spent by consumers is available to spend on social projects, and others have suggested a figure much closer to zero. No clear evidence has been produced to suggest that farmers themselves actually receive higher prices under Fairtrade. Fairtrade cannot help all farmers. Some poorer or remote farmers cannot organise and join up; others cannot afford the fees; still, others will be working for larger producers who are excluded from many Fairtrade product lines. Against that background, “Fairtrade absolutism” does not sit well. Fairtrade schools have to do everything possible to stock Fairtrade products - but, what about speciality brands produced by individual farmers? What about Rainforest Alliance products? Are poor producers to be expected to pay the costs involved to join every labelling scheme? Fairtrade is a brand that promotes itself the way all brands do. As noted, the brand is prominent in schools. It is worrying that its PowerPoint presentation shows graphs of commodity prices that stop in 2001 and graphs of the coffee price relative to the Fairtrade minimum price that stops in 2006. The picture since then tells a different story. This is marketing, not education. Fairtrade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.
Am I being treated fair ly?
Source: The Independent