What is fair trade?
Fair trade means a better deal for small farmers and agricultural workers who produce goods for trade in the global market.
We hear a lot about the benefits of the free global market, but for millions of small farmers and landless labourers these are hard to see. Free trade can be fair only if
- everyone has equal, direct access to the market
- everyone has access to credit to launch and run their businesses
- everyone has the same information about market trends.
Yet for all sorts of reasons, these conditions do not apply in rural areas of developing countries.
Access to the market for small farmers is mainly through middlemen, who drive prices down to the lowest point.
Banks rarely want to extend credit for seed and fertilizer to small farmers, or else they lend against the farmers’ only asset: the land which is their livelihood. So when product prices drop and times are bad, farmers must lose both to pay off their debts.
Plantation workers fare even worse: to ensure plantation owners’ profits, workers have to tolerate low wages and poor, unsafe working conditions. Often they are forbidden to join a trade union to defend their rights and give them a say in decisions affecting their working lives. When prices fall, so do wages, or workers are laid off.
Fair trade organizations (backed by consumers) aim to even up these inequalities. The Fairtrade Foundation, probably the best known of these, guarantees small producers:
- a stable price for their crops
- business support
- direct access to markets
- a premium to invest in improving the living conditions of their communities
Small producers are also required to satisfy conditions of respect for the environment. This actually gives them the opportunity to develop organic growing techniques for which their former hand-to-mouth existence left no time.
For employees, they require employers
- to pay decent wages
- guarantee workers basic health and safety
- respect the environment
Fair trade organizations are also are actively engaged raising awareness, and campaigning for changes in the rules and practices of conventional international trade.
To appreciate how fair trade improves the lives of producer communities, read about Fairtrade coffee in Nicaragua.
Alternative certifications
Fair trade is popular. That’s very good news, and a tribute to work of the Fairtrade Foundation. However, there are now products which don’t carry the blue and green FAIRTRADE Mark, but do claim to be fairly traded. Many of these are genuine, fairly traded products. For instance, there is no Fairtrade certification for craft goods as yet; in other cases, the Fairtrade Foundation may not have developed the capacity to inspect the product, or certification may be expensive.
Sometimes, however, importers jump on the bandwagon. How can you tell the difference? Obviously, you can’t tell just from the packaging, so it’s worth looking into their claims a bit before you shop.
Remember the basic Fairtrade standards, and ask whether the goods you are buying measure up to them. The importers or traders should be able to show:
- they have a long-term relationship with the producer
- they offer a guaranteed price for the product
- they care about environmental protection
- they pay a social premium invested in the community.
- producers either work in co-operatives or, on estates, have trade union rights.
Some schemes have different priorities. The Rainforest Alliance, for instance, emphasises the environment, but now registers producers without inspecting them. Some labels (Rainforest Alliance, Utz Kapeh) do not pay the social premium; others pay a premium but it is the buyer who decides how it is used, not the community. In Fairtrade, the social premium, and especially community control over it, are important to community empowerment.
Ask questions and beware of vague claims: you will be strengthening your support for producers.
Fairtrade and transnational companies – some questions
If transnational companies get the FAIRTRADE Mark, is this a victory for trade justice, or cynical bandwaggoning?
These companies wield huge market clout, and generally use it to lower costs and undercut other products. Will they eventually undercut other Fairtrade brands and run them out of business? They can secure Fairtrade licences for a tiny part of their operations; so do they just use these to deflect criticism of unfair practices elsewhere? If so, Fairtrade might remain a nice smiley brand, but lose its role in the global trade justice movement, which aims to rebalance unfair trading relations at a deeper level. So, should stricter standards of 'fairness' be applied to these rich, powerful firms?
Does this matter, if these brands give some of their workers a better life? Many small producers – of bananas in the Windward Islands, coffee and sesame in Nicaragua – think it does. For them, this is not just a matter of money, but of control over their products and their lives. They fear multinationals will reintroduce the middlemen the Fairtrade system has removed, and destroy thriving fair trade co-operatives.
These are the kinds of question we should consider when we shop between fair trade brands, or stock them in our shops.
Site created by Dan Freeland