Is Fairtrade really a fair trade?

Rachel Graham 

Staff Writer

If we could just convince every family in the country who shops in our supermarket to put a few Fairtrade products in their shopping trolley over the next few years…”, droned the radio guest, and the presenter agreed. What a great and important cause it was – sure wouldn’t the world be saved if we could just get every schoolchild eating Fairtrade bananas on their lunch break by the year 2020?

I was coming home from Leitrim in the rain, which perhaps only sharpened the cynicism drawn forth by listening to Irish radio, so I admit that my reaction to the lovely, well-meaning, Fairtrade banana-eating people on the radio was pretty harsh. But it did make me wonder about the business of Fairtrade, something I hadn’t looked into too much since school when we were told something like “there are poor farmers in poor parts of the world and we get most of our goods from them but we’re not very nice to them, and Fairtrade makes it better”. Sounds good, right? Sure does. As I got a bit older Fairtrade started to develop connotations of fashion and wealth (the Western variety). Starbucks sells fair-trade coffee – which adds some ethical chic to the exorbitantly priced, cosmopolitan vibe – as does Insomnia, Bewleys, and upmarket supermarkets such as Marks and Spencers. The label has essentially come to denote high quality and high-priced goods, packaged with a moral freebie.

So what is fair trade? It’s not one charity or organisation; the term describes a social movement that concerns itself with establishing trading partnerships with poor farmers in developing countries that assure them a better price for their raw goods than they would receive on the open market, and a more transparent trading process with buyers in the West. The idea is to do something to make up for the fact that many producers of primary goods worldwide are in poverty and work in terrible conditions. Their livelihoods dangle at the whim of the international markets by which they are perennially exploited and exposed to disruptive instability through the rising and falling of prices. In practice, the movement is made up four major networks that act as certifying organisations. The group which we see at work in Ireland and the UK, and indeed the most prominent organisation internationally, is Fairtrade International, FLO. This is the group which licenses the products you see with the blue, green and black logo on them to call themselves Fairtrade-certified. The Fairtrade Foundation sets minimum environmental, political and working-condition standards that producers must prove adherence to in order to gain permission to use the Fairtrade label. These producers are usually large cooperatives. Packaging firms in the importing country then pay a fee to the Fairtrade Foundation to use the brand and logo.

Are there problems with Fairtrade? Many critics think so. Most worries stem from issues relating to the lack of adherence to standards, the lack of proper impact reports, the lack of transparency in the Fairtrade Foundation, and economic issues to do with the business and marketing model. Let’s look at a couple of them.

“As I got a bit older Fairtrade started to develop connotations of fashion and wealth (the Western variety). Starbucks sells fair-trade coffee – which adds some ethical chic to the exorbitantly priced, cosmopolitan vibe – as does Insomnia, Bewleys, and upmarket supermarkets such as Marks and Spencers. The label has essentially come to denote high quality and high-priced goods, packaged with a moral freebie.”

Firstly, there is great uncertainty as to whether or not individual farmers’ wages actually do increase when they sell their products as Fairtrade. If not, it would seem that reality is at odds with the basic tenet of the movement – that producers get a fair price for their produce. The issue is that the Fairtrade Foundation license cooperatives – not individual farmers – and it is the cooperative that gets paid a standard premium per unit of coffee that they sell. This premium can go towards a number of things: social projects, covering costs incurred by meeting production standards stipulated by Fairtrade, or increasing farmers’ wages. There is little or no evidence to suggest that the premium goes towards boosting farmer’s production. In fact, the wages of individual farmers may decrease when they sell their products through Fairtrade certified cooperatives, due to inefficiency of the cooperatives or due to the cooperatives’ prioritising of other projects. There is evidence to suggest that a significant amount of the premium may go towards covering the costs incurred by meeting Fairtrade’s production standards. Though only some of the produce that a cooperative sells each year can be sold under the Fairtrade scheme (depending on the particular level of demand that year), but all of what they produce must meet Fairtrade standards. This means that in some cases cooperatives end up selling produce with a relatively high production cost on the open market for no extra benefit. Much of the burden of these extra costs are also incurred down the line by the individual farmers who supply the cooperative but who can only sell a small fraction of their produce as Fairtrade in any given year. In fact, some farmers are faced with the possibility of earning less than they would have if they sold directly to private traders, leaving them less well off than they were before they started selling to Fairtrade cooperatives.

A second qualm that might arise relates to how Fairtrade operates on the other end of the chain. When you buy a Fairtrade chocolate bar from your local shop, you’re probably buying it because you want to benefit poor farmers in a way that you wouldn’t be by buying a multipack of imitation Milkyways, and you think it’s worth the considerably higher price to do so. But where is the profit from that extra-large mark up going? The simple answer is: you don’t know. The likelihood is that almost all of it is going to wherever you happen to be buying your Fairtrade treats. Fairtrade doesn’t monitor how much more certified goods are sold for than identical un-certified goods in the importing countries, which allows shops to charge you hugely inflated prices for products which are only benefitting the producer a small fraction more than much cheaper items being sold in the same shop. This lack of monitoring means importing firms in the West can make huge profits from Fairtrade goods while passing on only tiny fractions of that profit to the cooperatives in exporting countries. When you take into account the possibility of the exporters not always being paid the agreed Fairtrade price for their goods (something which researchers in Berkeley found substantial evidence for), this begins to look like a pretty big problem. Even if buying Fairtrade products is a consumer choice that means more money gets back to poor countries, it still appears to be a consumer choice that benefits wealthy MNCs and suppliers in developed countries to a hugely disproportionate degree. Even the Fairtrade Foundation itself, which most consumers probably think of as a charity, is constituted of a non-profit and for-profit arm. The for-profit arm, FLO-CERT, handles inspections of exporting cooperatives and licensing fees, arguably acting as nothing more than a large and profitable marketing organization. FLO-CERT is predictably not the arm of Fairtrade International that you come across if you google search ‘fairtrade’.

There are many other problems people have with Fairtrade, such as creating distortions in the market, a lack of transparency, the fact that it works with farmers in the middle income bracket and excludes the poorest farmers (due to the costs involved in becoming Fairtrade certified), they sapping of social capital away from more radical projects, and the complaint that it simply reconciles poor farmers to their conditions without helping them to gain real mobility or independence.

All of these issues are worth looking into if you are a regular consumer of Fairtrade products. But at the end of the day, are Fairtrade deniers just desperate to rain on the parade? Is the wealth of Fairtrade criticism just another manifestation of our desire to be critical, cynical and superior about things going on in the world, even when good things are happening? Perhaps. Even if the criticisms listed above are valid, most agree that Fairtrade has brought monetary and social benefits to places where it is active. Even if farmers’ wages don’t increase – or don’t increase by much – under Fairtrade schemes, cooperatives being able to sell their produce at stable prices is arguably more important than them being able to sell at high prices. It is the income stability that allows for long-term planning and development, which can benefit the community at large when educational and sports facilities are invested in by the cooperatives. Even if the West benefits more from Fairtrade than the countries it purports to help, that doesn’t cancel out the help that is being provided. Whatever your conclusion, I suppose it all depends on what carries more weight with you when you’re sipping your Starbucks coffee: that you’re buying into the successful and arguably misleading marketing scheme of a Western multinational company in the name of charity, or that in a very small way you’re helping a poor farming community to make a little more money than they did before.