New Internationalist

Fair enough?

Issue 395

Big business, mass markets and fretting farmers – Albert Tucker reports from the frontline of the battle for fair trade’s soul.

KAREN ROBINSON / PANOS / www.panos.co.uk
Is this Ghanaian cocoa farmer getting a good enough deal from fair trade? KAREN ROBINSON / PANOS / www.panos.co.uk

On a recent trip to Latin America, I met with people from the regional network of fair trade producers. They are worried about the deals being done with transnationals. They also feel powerless to influence the criteria surrounding these big players’ participation, and fear they are being marginalized within their own system. One farmer leader told me incredulously: ‘We thought this fair trade would help us escape the practices of companies like Nestlé. How can it be that they are now a fair trade company, buying a tiny amount, while their practices on the whole remain as exploitative as ever?’

Merling Preza, general manager of a coffee farmers’ co-op in Nicaragua, feels threatened by Nestlé’s tokenistic approach to fair trade. ‘I don’t want to criticize but there are other elements more profound in our fair trade system than in the existing system. For example, the social programmes and services to our communities, investment in farmers, democracy. This is all important to tackle poverty, but it is expensive.’

It’s the added value and power that fair trade brings to producers – beyond just getting a better price – that is under threat. The certification of huge privately owned plantations (as opposed to small farmers’ co-ops) for new products, the recent introduction of a substantial licence fee charged to producers wanting to qualify for the mark1, the alleged squeezing of non-accredited producers (who perhaps can no longer afford the licence fee) out of potential marketplaces2 – all these developments raise questions as to whether fair trade’s move into the mainstream is still meeting poor producers’ aspirations.

Victor Perezgrovas from Mexico sends out a plea to maintain a vision of long-term structural change, producer power, a renewed focus on small farmers and protection for those who genuinely share this vision from newcomers who don’t. ‘Any big players coming into the system must recognize that they have to change the global principles of their business with all producers, increase volumes and commit to promote the principles of fair trade. When they don’t do this, they simply displace the more committed companies.’

Playing with the big boys

Surely this movement exists to challenge the destructive power transnationals and supermarkets have over the world’s supply chains? The fair trade labelling organizations have chosen a risky ‘thin end of the wedge’ route, believing that they’ll be able to influence big companies once they are working with them. Harriet Lamb, Director of the UK’s Fairtrade Foundation, defends their approach passionately: ‘We were always going to have to work with other companies. Watering down of standards just wouldn’t happen. They are our heart, they are sacrosanct… Our job is to make fair trade incredibly simple for people, to break out beyond the NGO sector and reach the everyday customer. We’ve set our sights high. We want to change the way people think about how they shop. If you’re going to do that, you’ve got to play with the big boys. It’s an incredible step for Nestlé, one of the four biggest companies, to recognize the values of fair trade.’

Commendable aspiration. But has Nestlé really recognized the values of fair trade? Commercial considerations seem to have been the real driver here, according to Hilary Parsons at Nestlé UK: ’We researched the market and we found that there are consumers out there who are very interested in development issues… and they would be attracted into this market by the strength of the Nescafé brand.’3

My worry is that transnationals are trying to capitalize on fair trade’s success with the minimum commitment and investment. They will put considerable pressure on the labelling organizations to accredit their products, even if they have no genuine intention of changing their practices and translating this across their business. It is up to us to keep the pressure on until they have transformed their exploitative relations with poor producer communities, not welcome them in and risk damaging the reputation of fair trade amongst its long-term supporters.

In fact, given the enormous popularity of fair trade amongst consumers, and the astonishing success of the ‘100 per cent fair trade companies’, I think we should be working to take over the market from the Nestlés of the world! If anything can trigger structural change, this will. Furthermore, if 100 per cent fair trade companies continue to develop better models of genuine producer ownership and participation, they do not run the risk of being bought out by a greedy transnational as soon as they get big enough to have a real impact. We must support the alternative business models that will enable people in the Majority World to build themselves an independent long-term future, not tinker at the edges and sell a few more tonnes of commodities at slightly better prices.

Facing the critics

A second, related challenge is that the labelling and accreditation organizations are coming under increasing scrutiny from critics who claim their standards are not ‘fair’ enough. In March 2006, a BBC programme speculated that the higher price consumers were paying for fair trade products was not all going to the producers but being pocketed by supermarkets.3 Then on 8 September the Financial Times reported from Peru that non-certified coffee produced by labourers paid less than the minimum wage was being sold as fair trade, and that the Fairtrade Foundation ‘misleads consumers about its ability to monitor production practices’.4

These serious accusations are to be expected given the success of fair trade, and they are easily responded to. However, the labelling organizations are being forced into reacting defensively, having presented fair trade as a perfect system. Their starting position should be accepting that fair trade needs to continue to improve its standards, raising the bar for any new players coming in. I believe this would do them more justice.

A third issue that has been widely ignored but needs tackling head on is a concern that the movement is not taking the environment seriously enough. ‘There’s a big issue with carbon footprints,’ admits Sophi Tranchell, Director of The Day Chocolate Company. ‘It doesn’t make sense to import fair trade goods that we can grow ourselves. Buy fair trade tropical crops, and buy everything else local,’ she adds. With climate change looming we should not be flying-in fair trade roses from Kenya for Valentine’s Day and importing fair trade apples from South Africa when they are in season down the road.

We need fundamentally to restructure international markets. Ultimately, I believe we’ve got to dismantle global companies, not simply accept their long-term existence and necessity. We could in this way invigorate local and regional markets, force greater collaboration and share wealth far more effectively.

A really exciting development is the growth in fair trade relationships being forged between Majority World producers and consumers. Networks of fair traders in Asia and Latin America are already starting to market their goods closer to home. It should not just be for privileged Westerners who can afford to pay extra, and it should not require a huge environmental sacrifice to participate. Farmers in Western countries are also starting to talk about how fair trade principles could apply to them. The incorporation into the movement of more local relationships is part of the way forward.

On your marks! How to decipher what the labels – or lack of them – mean

There are three broad categories of fair trade goods:

1. FLO-labelled product

This applies to individual products, not the organization that produces them. It is administered by Fairtrade Labelling Organizations International (FLO) http://www.fairtrade.net and its national subsidiaries, such as the Fairtrade Foundation in the UK, Transfair in North America, and the Fair Trade Association of Australia and New Zealand. It is an independent guarantee that Majority World producers receive a minimum price that covers the cost of sustainable production, no matter what the current market price is. They also receive an extra premium that is invested by the community in social or economic development projects. Originally applicable purely to small farmers’ co-ops, now producers with varying degrees of autonomy can be awarded the mark, including workers on large privately owned plantations. It’s a simple shortcut for consumers who want to avoid directly exploitative products, but it is worth differentiating between 100 per cent fair trade companies in which producers may have some power, and more mainstream fair trade products which may be just one item in an otherwise not very responsible company’s range.

2. IFAT-labelled organization

The International Fair Trade Association registers entire organizations committed to fair trade: http://www.ifat.org

It has around 150 members in many different countries, representing the entire chain from producer to seller. It guarantees minimum standards in working conditions, wages, child labour and the environment.

3. Non-certified fair trade product

Watch out for bandwagon-jumpers here and scrutinize their standards carefully. But not having a fair trade mark does not necessarily mean the product is unethical. The company could have chosen not to apply for certification, or is in a category for which certification does not yet exist, such as handicrafts. There are many organizations, North and South, which don’t use labels but actually provide better deals for producers than the label’s minimum standards require. If you really want to know what you’re buying, there is no substitute for doing a bit of your own research!

How can fair trade rule the world?

So we stand at a crossroads in the journey to end the exploitative dynamics of the mythical ‘free’ market and make fair trade rule the world. At the moment, it is still a tiny niche market. Producers in poor countries are still disempowered, battered by market trends and biased trade rules; while the powerful continue to do better and better, even – to some degree – within the fair trade system itself. Those of us who are fans of fair trade should be much more ambitious.

The movement needs to go back to its radical roots. It needs to work much more closely with producers on its agenda for change, so that fair trade businesses are training people, creating jobs and stimulating markets in the Majority World. Producers should be getting much more of the value of their products by part-owning successful companies and running processing and packaging operations, rather than just exporting the raw commodities that are worth so little. If any transnationals are involved, they must negotiate with poor farmer businesses on an equal basis, having signed up to stringent standards across their entire operations.

The movement should be more open about the fact that fair trade is not yet going far enough towards achieving true economic justice. It should focus more on achieving structural political change, using what it has learned in order to influence trade negotiations. It should proactively pressurize governments – rich and poor – to intervene more in the market, provide incentives to fair trade producers and consumers, and regulate against bad practice so companies would have to comply.

Fair trade is far from perfect. But it can be a potent force for change and this debate is happening because it has demonstrated it can flourish, against all odds. We cannot let our radical vision of a completely different way of doing business be watered down by opportunistic transnationals. The fair trade mark should be regarded as a ‘badge of honour’ not just a brand of food that demonstrates you are paying a little more to desperate farmers. It is now our responsibility to ensure fair trade does not lose its soul.

Albert Tucker is from Sierra Leone. He has worked in the public and private sectors, and was Director of Twin Trading, a pioneering fair trade company, for nine years. He is currently working as a consultant with the Latin American fair trade producers’ network CLAC, looking at the future of fair trade.

  1. Flurina Doppler and Alma Amalia Gonzales Cabanas, ‘Fair Trade: benefits and drawbacks for producers’, June 2006, Latin America Relations Observatory, http://www.obreal.unibo.it/File.aspx?IdFile=530
  2. Father Shay Cullen, ‘Fair Trade controversy: Did FLO plan to cause problems for Preda?’, 21 September 2006, http://www.preda.net/ftnews.htm
  3. Andy Webb , ‘How fair is fairtrade?’, BBC Money Programme, 9 March 2006, http://http://news.bbc.co.uk/1/hi/business/4788662.stm
  4. Hal Weitzman, ‘The bitter cost of “fair trade” coffee’, Financial Times, 8 September 2006, http://www.ft.com/cms/s/d191adbc-3f4d-11db-a37c-0000779e2340.html

What is fair trade’s future? Join the debate at http://interact.newint.org

‘Fair trade is a European phenomenon. It’s just replacing the middleman, so that now middle-class NGOs can get a piece of the capitalist action. Perhaps “fair trade” is a description of the colour of their skin?’
Firoze Manji
, co-Director of Fahamu, a pan-African organization supporting the struggle for human rights and social justice in Africa. http://www.fahamu.org ‘Carlos Vargas, a coffee-grower from Costa Rica says: “By supporting fair trade you support democracy in our country” because they get together as a co-op and decide how to spend the premium. This is well paralleled by the flourishing of fair trade towns, universities, schools, churches and synagogues in the UK. We can’t keep up! It’s a grassroots social movement pushed forward by people all the time. It’s got energy and enthusiasm because it’s something concrete and achievable that people can do locally to help change the world for the better.’
Harriet Lamb
, Director, Fairtrade Foundation. http://www.fairtrade.org.uk

‘I represent growers on the board of Cafédirect. We are asking them for some capital so that instead of sending our tea to a factory we can own our own factory. When you are exporting tea leaves you only get 5 per cent of the profit, but if you own the factory the profit is about 40 per cent.’
Lazaro Mwakajila
, Chairman of the Rungwe Small Tea Growers’ Association in Tanzania. http://www.cafedirect.co.uk

‘The term “fair trade” is a ridiculous over-exaggeration. It’s not right to say the relationships are fair – they are not. The consumer lives in a different world from that of the producer in terms of opportunity, wealth, freedom, healthcare, etc. We need a much more profound change in the world before we can honestly stand before a producer and say that our relationship with one another is “fair”.’
Roy Scott
, One Village, which since 1979 has sold craft-made articles in partnership with craftmakers’ co-ops. http://www.onevillage.org

‘For better or worse, as soon as Dunkin’ Donuts has fair trade espresso it does open doors. It’s a mistake to discount the impact of things just because you don’t agree with the motives of the people doing it.’
Pauline Tiffen
, co-founder of Cafédirect and Divine chocolate. http://www.divinechocolate.com

‘Awareness about fair trade and therefore the acceptance that there is unfair trade has been enormous. But the concept of solidarity, which was at the heart of fair trade as it existed before labelling started, has somehow been lost. So it’s possible for you to buy a fair trade product without you having any sense of engagement or involvement with the producer community.’
Stan Thekaekara
, founder of Just Change, which links communities in India and around the world and encourages them to trade amongst themselves. http://www.justchangeindia.com

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