New Internationalist

Fair Trade: Small Change, Big Difference.

April 2000

David Ransom goes for the jugular of consumer capitalism and looks at the benefits of fair trade.

[image, unknown] The Economist cover

Last December The Economist, the in-house journal of big business, featured a front-cover picture of a malnourished child crouching under the headline:

‘The real losers from Seattle.’1 The World Trade Organization (WTO) had just been stopped in its tracks by an unlikely alliance of environmentalists, trade unionists, Southern governments and official bungling. Big business was displeased – it hadn’t got the cosy deal it expects from all such occasions.

Now, The Economist rarely enlists the ‘the poor’ to its cause. It may seem churlish to suggest that something must be amiss when it does. But precious little evidence is produced here to support its humanitarian thesis. The editorial just burbles away: India, ‘home of our cover child’, is poor because ‘for four decades it pursued policies of socialist anti-globalization’. Now it has come to its senses and ‘begun to embrace globalization, gradually opening itself up to the world. Finally, its economic growth rate, and with it the welfare and prospects of the poor, has begun to pick up. The process has barely begun, but hopes are high.’

So it all boils down to yet more jam tomorrow. No attempt here to explain that India suffered relatively less from the Asian economic crash precisely because its economy was more closed and thus better protected than ‘open’ economies like Indonesia or Brazil. Nothing to contradict the forecast made by Oxfam – among many others – when the WTO was set up back in 1995, that by 2002 the European Union would have gained $80 billion from trade liberalization while Africa would have lost $2.6 billion.2 Nothing to deny the hard evidence of history that the ‘freer’ trade is, the wider the gap between rich and poor invariably becomes. Two hundred years ago, an equivalent headline might well have read: ‘Slaves – the real losers from abolition.’

Free trade may have its virtues, but fairness is certainly not one of them. The way it works is quite simple. The awesome forces of globalization are in truth nothing of the kind, merely the result of mundane trade ‘deregulation’ – in other words, the removal of any democratic control. Transnational corporations, inanimate beings that lay legal claim to human rights and immortality as well, like world trade to be ‘free’ because they control two-thirds of it, and most of the governments they want to control us.

Two-way traffic at the World Trade Organization in Seattle.
NICK COBBINB / STILL PICTURES

Big business aims to buy cheap from producers and sell dear to consumers, enhancing its profit margins and ‘shareholder value’ as it goes. Nothing unusual about that, you might think. But 80 per cent of the world’s resources are consumed by the richest 20 per cent of the world’s population, most of whom live in the North. An increasing proportion of the world’s resources, on the other hand, is produced by the 80 per cent of its population who live mostly in the South. That means making monarchs of Northern consumers and wage slaves of Southern producers – hence the notion of ‘consumer capitalism’.

World trade was ever thus, from the earliest days of European imperialism, through industrialization to the post-industrial corporate empire of ‘information’ and consumer capitalism today. There’s no obvious reason why it should ever be otherwise. Unless, that is, 80 per cent of the world’s population should ever decide to restore some sanity to the situation and take democratic control.

The cure for an illness depends on the diagnosis. In real people the terrible affliction of schizophrenia bears little resemblance to the ‘split personality’ associated with the label. In consumer capitalism, however – which makes labels and ‘brands’ the most valuable things on earth – everything is split in two: image and reality, supply and demand, producers and consumers. Real people are never entirely consumers or entirely producers, always both at the same time – and a great deal more besides. We have just one life to live, and one shrinking planet on which to live it. If we are ever to live at peace with ourselves, let alone with one another and the planet, the two halves made by consumer capitalism have to be put back together again.

[image, unknown]

How can this be done? Revolution, marching in the rain dressed as a turtle, pulling up plants, even writing a letter to your local bigwig are not everyone’s cup of tea. So how about this instead? Go shopping! Keep your eyes open for ‘Fair Trade’ labels on your local supermarket shelves, be prepared to pay a little extra, and it’s sorted! This might eventually be everyone’s cup of fairly traded tea.

Of course no fair traders ever make such a claim. There are, nonetheless, widely differing claims they do make. Some say that traditional products like handicrafts, made in the South for a fair price and sold in the North by alternative trading organizations (ATOs), help to overcome ‘exclusion’ from the benefits of conventional trade. Others say that selling Southern products like coffee, chocolate and tea in supermarkets, with a fair-trade label that guarantees a better deal for the producers, not only helps more people but challenges orthodox trading relationships. Still others believe that even more people will benefit if big business is made socially responsible and signs up to codes of conduct. Yet more combine various elements of all three.

There are, inevitably, snags with them all. Not every ATO is content with the charitable overtones of a steadily shrinking niche market. Fair-trade labellers have to make unholy alliances with giant retail corporations. Some people think we’d be better off with no world trade at all.

The other end of fair trade – coffee beans spread out to dry in the Tambopata Valley, southern Peru.
PHOTO: DAVID RANSOM

Social responsibility, meanwhile, can be an optional extra. Since 1982 Levi Strauss, originally a pioneer in the field, has laid off almost 30,000 largely unionized employees in the US and shifted its garment factories to wage-slave locations in the South – the process continues today.3 Marks and Spencer is doing much the same thing in Britain. Market forces trump social responsibility every time.

Besides, there are just 2,000 self-styled ‘socially responsible’ businesses – like Ben and Jerry’s ice cream or The Body Shop – in the world with an annual turnover of about $2 billion between them. That may sound like a lot, but it is a mere one-hundredth of one per cent of the $20 trillion in sales from 80-100 million enterprises worldwide. Simple maths suggests that we’re more likely to experience global boiling than to live in a socially responsible world. As one respected observer, Paul Hawken, has commented: ‘What we have is not a management problem but a design problem.’4

So what’s fair, how do we know and who decides? Is it unfair to a Chiquita banana if a fair-trade banana sits right next to it on a supermarket shelf? Would fair-trade heaven have descended to earth if, say, fair-trade Nescafé were sold by a socially responsible Wal-Mart? Heaven only knows.

Nonetheless, the first and most important task is to get such questions asked at all – and it’s because of fair trade that they are. Most fair traders are keenly aware of the compromises they make with survival ‘in and against the market’ – as most of us do in our everyday lives. All pioneers tend to get lost before they arrive.

Fair trade has now grown up into a venerable middle age. Why, it even has its own veterans. Roy Scott set off into a wilderness 35 years ago and is still going strong from his One Village shop in Woodstock, Britain.5 Way back in 1972 Richard and Vi Cottrell returned to Aotearoa/New Zealand from India, where they had been working with Tibetan refugees. Determined not to break the connection, they started importing Tibetan crafts at fairer prices – and Trade Aid in Christchurch got going. This year Traidcraft in Gateshead – another pioneer in Britain – celebrates its twenty-first birthday.6

[image, unknown]

In the Netherlands and Germany fairly traded coffee now accounts for roughly two per cent of all coffee sales – perhaps $100 million in annual turnover. Fairly traded products reach the public through some 45,000 different points of sale across Europe. Annual ATO sales worldwide exceed $200 million.3

I first stumbled across the other end of fair trade late in 1993, while I was researching a magazine about Mexico (NI 251). I was travelling through the southern state of Chiapas just before the uprising – which, incidentally, coincided with the signing of the North American Free Trade Agreement (NAFTA) on 1 January 1994. In the village of Las Margaritas I found a group of coffee farmers who seemed to believe quite firmly in fair trade and were beginning to receive real benefits from it – better prices, more reliable markets and equal trading partnerships in place of predatory coyotes (intermediaries). Fair trade worked for them, free trade worked against them, and it wasn’t hard to tell the difference.

So I decided to look into it a little more closely. I went to Peru in 1995 to talk to coffee farmers on the Andean escarpment of the Amazon rainforest (NI 271). This time I followed the coffee bean back to Britain with Gregorio Gomez, one of the farmers, finding out along the way exactly how the rip-off gets passed down the free-trade chain to the first and ‘weakest’ link, coffee farmers like him. Gregorio had only a few reservations about the alternative. What he wanted was more of it.

Last June I was in the Dominican Republic (NI 317) looking at bananas. The growers I met at Finca 6, near the border with Haiti, had achieved something quite remarkable: a fairly traded and organic fruit. They were delighted with the results, and the reasons were plain enough to see – decent working conditions, decent houses, decent water, kids in college, plump cheeks...

The global free-trade bazaar – a supermarket in Ulan Bataar, Mongolia.
GAR POWELL-EVANS / PANOS

The fact remains that fair trade really does work. There is an alternative. Many thousands of people in the South who would otherwise be living in much more desperate conditions really do benefit. People who buy fairly traded products in the North really do make a difference.

Like any adult, however, fair trade has to take its share of responsibility for the big bad world it inhabits. Why just two per cent of coffee sales and only a tiny proportion of the 20 million lives that depend on farming coffee? The banana growers of Finca 6 seemed so prosperous precisely because their neighbours – that is, virtually everyone else – were anything but. No-one can feel satisfied until fair trade benefits everyone, otherwise it’s not fair at all. For that to happen, political change is essential.

Most of the products involved in fair trade are still traditional commodities produced by small farmers or crafts people. Some of them can, and do, take control over what they produce and the land from which they produce it – a basic requirement of fair trade. ATOs in the North can, and do, form partnerships of equals with them. The International Federation for Alternative Trade (IFAT) is controlled by its members, most of whom represent Southern producers. AgroFair in the Netherlands and the Day Chocolate Company in Britain share ownership with Southern producers.

The vast majority of them, however, work as wage slaves on plantations and in factories, making potato chips and computer chips consumed in the North. ‘Fairness’ for them hinges on the health or otherwise of the labour movement, part of a Southern civil society – distinct from government and crucial to the development of democracy – that is rapidly emerging. Fair trade and the international labour movement will eventually have to come to terms with each other.

Otherwise the dangers are real. In Seattle, environmental and social clauses were rejected by the opposition to the WTO for the sake of its own unity and on the grounds that the WTO has done quite enough damage already – which is perfectly true. But conceding that the environmental and social agendas belong to Northern, corporate, free-trade interests is quite another matter. Unless the Southern voice of the labour movement is heard loud and clear at the WTO, that is the way it will stay – leaving the opposition without a principle to stand on.

[image, unknown]

The Canadian journalist Naomi Klein has just published a brilliant assault on consumer capitalism. She argues at one point that fair trade privatizes what are essentially public issues of democratic accountability. She goes on to suggest that the worst problems of labour exploitation could be overcome almost straight away if the International Labour Organization (ILO) were able to implement its basic standards worldwide.7

But it can’t, because the ILO is part of the UN system and therefore has no teeth. The WTO is not part of the UN system and therefore has a fearsome array of trade penalties it can sink into anyone who steps out of line. Eventually this could affect all public services like health, education and transport. It claims to be democratic because it is supposed to be run by virtually all the world’s governments, North and South. But in Seattle the rich countries repaired to the Green Room and cut deals on their own. Market forces prevailed again. What is needed, of course, is a fearsome World Fair Trade Organization run by the UN and accountable to the majority of the world’s people who need it, not to the corporations that can fend for themselves all too well.

Trade is the jugular of consumer capitalism, and fair trade in its broadest sense is a very useful weapon, another link in a dynamic new network that has grown from the 1992 Earth Summit and now has to fill the space it created for itself in Seattle. Michael Barratt Brown describes wonderfully well how such networks of people, which fair trade mimics in material form, grow out of localities and regions across national, cultural and geographical boundaries.8

My nagging worry is that fair-trade products still cost more to buy and so are apparently aimed at people like me who can just about afford them. In the article that follows (The level playing field), Mari Marcel Thekaekara mentions the direct links that her project in India has made with Matson, a neighbourhood of Gloucester. That’s not far from where I live, and I decided to pay them a visit.

Matson is a pretty bleak area of public housing where 8,000 tenants got together some ten years ago to stop their homes being sold from under their feet. They won. They also set up the Matson Neighbourhood Project9 which runs the only shop in one corner of the estate. It’s been ram-raided (smashed into by a stolen car and looted) twice and the windows are still boarded up. No place for fancy fair trade, you might think.

Far from it. They’ve been exploring the scope for Matson Tea, imported directly from the growers in India and sold to local authorities, employers, co-op retailers and anyone else who’s interested. True, as yet they don’t actually have the tea. True, not everyone in Matson likes the taste of it. True, ram-raiding doesn’t help. These things take time.

So I asked one of the more sceptical women if she thought she’d been wasting her time with fair trade. She was indignant. ‘Good lord, no!’ she said. ‘We’ve had great fun!’

Up to that point no-one had suggested to me that fair trade, with or without the tea, could ever be fun. The very best motive there could possibly be, I reckon.

1 The Economist, 11-17 December 1999.
2 See NI 271, September 1995, keynote.
3 Information from Fuerza Unida: chisme@igc.apc.org
4 I’m indebted to Bob Thomson for this information – more is available on www.fairtrade.org/fairtrade  or www.transfair.ca 
5 Contact progress@onevillage.co.uk
6 Contact details in ‘Action’ section.
7 Naomi Klein, No Logo, Flamingo, London, 2000.
8 Michael Barratt Brown, Fair Trade, Zed Books, London and New Jersey, 1993.
9 Contact andy.jarrett@talk21.com

Going bananas
Harriet Lamb on the latest fair-trade launch.

Banana traders have always taken a strange pride in their cut-throat reputation. Now they are faced by consumers all over Europe demanding fruit that carries the fair-trade label. In January, Britain joined eight other countries selling Fairtrade Mark bananas, with the Co-op and Sainsbury’s the first supermarkets to stock them, and others set to follow suit. Terry Hudghton, Marketing Manager at the Co-op, which is stocking fair-trade bananas from Costa Rica and Ghana, says: ‘Britain is going bananas about bananas. But many people are unaware of the misery which can lie behind their best-loved fruit. We’re committed to selling fair-trade products wherever and whenever we can.’

The British launch is a much-needed boost for fair-trade banana producers, who all met together for the first time in the autumn of last year in Brussels, scene of so much political wrangling over the banana trade. Enrique Grijalba, President of Coopetrabasur in Costa Rica, said: ‘We need the supermarkets to do more work promoting fair trade to consumers.’

Since their launch in the Netherlands in late 1996, sales of fair-trade bananas have climbed steadily, with figures for 1999 indicating a further rise of 20 per cent. The record-breaker is the Swiss Co-op, where 20 per cent of all bananas sold now carry a fair-trade label. But even these impressive figures fall far short of the needs of the 12 registered fair-trade producers. They face an uphill task surviving in a competitive market dominated by a handful of multinationals.

Throughout the summer of 1999, as prices fell to historic lows, many small farmers outside the fair-trade system were forced out of business, while others had their contracts with multi-national companies cancelled. ‘Fair trade is the reason that the small farmers in our association still have a livelihood at all,’ said Jorge Ramirez, President of an Ecuadorian co-operative of small farmers. Meanwhile, farmers in the Windward Islands are also pinning their hopes on fair trade to help them survive, as the WTO rules remove their access to European markets.

Consumers are clearly keen. A European Commission survey found that three-quarters of those questioned # would buy fair-trade bananas if they were available in shops alongside ordinary ones, and 37 per cent would pay ten-per-cent extra.

Deris Ariza, a co-operative farmer with less than one hectare of bananas in Colombia, underlined the benefits fair trade can deliver in just one year: ‘Without the premium price, we would not be farming still. Farmers here are getting prices that do not cover their costs. We, however, have been able to cut fertilizer use by half and started using animal manure. We have stopped using herbicides and the ground-cover between plants is now attracting back the wildlife. We have also built a kindergarten for 120 children and organized waste collection in the community. We hope soon to have piped drinking water for the first time.’

Everyone is hoping that the new sales in Britain, and the plans being laid for future launches in countries like Canada, will help ensure that such benefits can be guaranteed into the future.

For further information contact:
Harriet Lamb at FairTrade Labelling Organisations International (FLO);
Tel: +49 228 949 2322,
E-mail: h.lamb@fairtrade.net

Or the Fairtrade Foundation in London;
Tel: +44 207 405 5942.


Previous page.
Choose another issue of NI.
Go to the contents page.
Go to the NI home page.
Next page.


Front cover of New Internationalist magazine, issue 322 This special report appeared in the fair trade issue of New Internationalist. You can buy this magazine or, to get stories like this one through your door every month, subscribe.

Comments on Fair Trade: Small Change, Big Difference.

Leave your comment