Is Fairtrade just feel-good-trade?

by John Hayward

Next Monday begins Fairtrade Fortnight, the Fairtrade Foundation’s annual attempt to promote their scheme. Twenty years since the first Fairtrade consumer guarantee label was launched – on Mexican coffee in the Netherlands – UK consumers spent £450m on fair trade goods last year, almost half of the worldwide total of £1.1 billion, an increase of 42 per cent on the previous year.

Over the course of those two decades, income among Africa’s poorest has decreased by 25 per cent, with Europe and America spending seven times more subsidising their own farming than they provide in development aid – a policy that directly undermines Third World producers. Thus, while we impose tariffs sometimes in excess of 100 per cent on imports from poor nations, the British Government presses them to reduce their tariffs, quotas and subsidies, apparently blind to any hypocrisy. So, one has to ask, does the Fairtrade initiative make any real difference to international trading structures, or even to the lives of poor-nation farmers?

Part of the recent increase in the UK Fairtrade market is in fact attributable not to consumer choice but to the removal of choice at the supermarkets where many of us do our shopping. Thus, Sainsbury’s own-label tea is now all Fairtrade, all its bananas are Fairtrade, and its sugar is increasingly moving the same way. And Marks & Spencer, which last year purchased about a third of the world’s Fairtrade cotton, makes all its jams and conserves with Fairtrade sugar.

wikimedia commons author Onderwijsgek fair trade bananas

Yet, research published last year by the previously sympathetic Institute of Economic Affairs made clear:

‘Whilst it is clear that fair trade might bring some benefits to particular groups, whether it brings significant net benefits to the poor in general is questionable. Moreover, the claim that fair trade transactions are more “just” cannot be substantiated. Customers also might be surprised to learn that the majority of the Fairtrade Foundation’s income is spent on promoting its own brand.’

More than that, those of us who seek to live an ‘ethical’ lifestyle might also be shocked to learn that typically 85 per cent of the ‘fair trade’ mark-up in price goes not to the ‘poor producer’ we are trying to help but to the ‘already wealthy supplier’.

If we really want to ensure the poor-nation farmer profits from our purchases, we might do better to avoid investing in the Fairtrade organisation and instead spend a little bit more to pay a fair price for a higher quality product. For instance, speciality coffee produced in Rwanda trades at a price about 80 per cent higher than the guaranteed price to fair trade producers. Otherwise we risk joining the fashionably ‘ethical’ and politically correct, who assume the moral high ground but achieve little more than the salving of their consciences.

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Category: Blogs

February, 2008

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