Fair trade pros and cons - Does fair trade challenge or support existing power relations?

We discuss the Fair Trade (or Fairtrade) movement, its principles, goals, products and more importantly, the impact it has on existing power relations in developing countries. Is fairtrade good for development? 

What is the goal of fair trade? Facts and examples

Fair trade or Fairtrade is a social movement which aims at supporting sustainable farming and helping producers in developing countries by introducing better trading conditions for them. Fair trade supporters believe that by incentivizing changes in the supply chain of certain products it is possible to introduce changes in the rural labor markets and improve the lives of many disadvantaged people. As Wilson (2011: 326) points out, fair trade begins with a "critique of the ‘unfair’ operation of global markets." Fair trade aims at reducing exploitation and empower women workers and producers in rural labor markets. Small producers in poor countries organize themselves in groups or cooperatives. Buyers participating in the Fair trade systems must establish long-term relationships with these groups of producers and pay a minimum price for the commodity.

There are many organizations using fair trade as a marketing strategy to both sell more products and contribute to fighting poverty in developing countries. The Fairtrade Certification Mark (see image above) is probably the best known of these marketing efforts for poverty reduction. Retailers and packers in developed countries pay a fee to be able to use the Fairtrade certification and logo. A series of organizations such as the British Fairtrade Foundation, Fair Trade Association of Australia and New Zealand, Fairtrade France, Fairtrade Canada and Fairtrade America established the Fairtrade Labeling Organizations International in 1994. This organization split in 2004 into two:

1. Fairtrade International, which sets the standards and requirements necessary to obtain the Fairtrade Certification Mark; and
2. FLOCert, which inspects and certifies producers.

Fair Trade Facts

• Fairtrade Mark products reached €7.3 billion in 2015.
• More than 1.65 million farmers and workers are involved in the 1,226 Fairtrade certified producer organizations.
• 26% of all farmers and workers are women, 48% in the larger plantations certified.
• Small producers spend 31% of the Fairtrade premium income on investments supporting productivity or quality improvement.
• On large fair trade plantations 26% of their Fairtrade premium is spent on education.

Fair Trade products

Coffee is one of the products in which fair trade has had the strongest impact. Even multinationals such as Nestlé and Starbucks have joined the Fair Trade movement and contributed to its impact. Countries such as Costa Rica, Guatemala, Uganda and Tanzania have become important sources of fair trade coffee.

Consumers are also willing to pay an extra price for fair trade cocoa products and their sales of grew by 27% in 2015. Brands such Divine Chocolate, Cadbury, Ben & Jerry's, and Green & Black's have made of fair trade an important part of their marketing strategy. Textiles from fair trade cotton, are also increasingly popular. Bananas, flowers, sugar, gold, honey, tea, fruit, spices, rice and wine are other examples of fair trade products.

Power relations and fair trade

Fair trade schemes could lead to systemic changes in the way power relations are embedded and exercised in the international trading system. Fair trade brands try to do this is by making the producers more visible to consumers, as well as the potentially exploitative social and labor relations underlying global commodity chains. Fair trade seeks to bring consumers into a more direct relation with producers and hence overcome "commodity fetishism."

However, it has been argued that the top-down approach adopted by the Fair Trade movement, has proven inadequate or insufficient in modifying the international trading system, as well as the power relations on which it is grounded. Its almost exclussive focus on farmers and consumers and the fact that it mainly works with big brands, may be construed as problematic. The use of fair trade as "radical mainstream" or "alternative high street" marketing could dilute and jeopardize fair trade principles or at least not produce the intended effect on pre-existing power relations (Wilson 2011). Fair trade is not sufficient to shift longstanding power relations: farmer ownership, democratic practices, forward integration and women's enpowerment require additional efforts. 

A team of researchers based at SOAS, University of London, recently conducted an extensive study of fair trade coffee and flower production in Ethiopia and Uganda (Cramer et al. 2014) concluding that fair trade is making at best only a very limited impact on rural poverty, wages and working conditions. Child labor and routine sexual harassment were found to be present at both fair trade and non fair trade sites. Fair trade may be helping to support the development of a class of capitalist farmers, but not empowering the poorest.

The effectiveness of fair trade remains contested. Do you think the Fair Trade movement is succeeding in altering "unfair" power relations in developing countries? What do you think are the main limitations encountered? Should governments play a more active role in promoting fair trade? Vote and comment on the forum below.

Watch these lectures on fair trade by Professor Chris Cramer, SOAS, and Professor Michael Northcott, The University of Edinburgh

Fair trade pros and cons

Pros

• Producers participating in fair trade schemes in low-income countries have seen their income increased. According to Fairtrade International they received  €138 million in Fairtrade premium in 2015.
• An important part of this extra income received by fair trade producers is invested in education and other activities which promote productivity and sustainability.
• A minimum wage is granted to farmers and workers of fair trade certified producers.
• Fair trade schemes have allow small producers to become competitive in the context of globalization.
• The movement has also supported organic production and offered emergency assistance to growers.
• Fair trade initiatives are being used to protect the most vulnerable segments of the population in some areas. For instance, there are specific programs for child and women's protection. Discrimination is not allowed.
• Fairtrade has contributed to empowering and giving voice to small producers who previously had very little bargaining power vis-a-vis buyers and traders.
• The majority of producers are satisfied with Fairtrade systems.
• Social conditions in many areas with free trade cooperatives have improved dramatically.

Cons

• Fair trade often creates divides within communities as not all workers and farmers qualify to be part of a certified cooperative or group.
• Fairtrade does not ensure better wages. For instance, a report by SOAS, University of London, about Fairtrade in Uganda and Ethiopia found that wages in Fairtrade certified markets were very low. The report observed that there was inadequate monitoring of pay and conditions by certification schemes. Wages were usually lower than those in producers without the Fairtrade certification in the same area and working on the same crop.
• According to the same study, working conditions in Fairtrade certified cooperatives were often worse than in non-certified.
• Keeping the accreditation is expensive and may be out of reach for some local entrepreneurs.
• The impact of the movement is still reduced in scope as consumers can only buy a few fair trade products.
• It is difficult to make sure that abusive labor practices are not reintroduced after certifications are expired or abandoned.
• Once the initial changes allow producers to obtain the certification, they have little incentive to keep on investing in improving efficiency and working conditions.
• For some companies the goal of fair trade is simply to increase profit. So they may be using the fair trade acreditations as marketing tools to differentiate their products or, even worse, to regain reputation lost for other bad practices.

Recommended readings

• Goodman, M. K. (2010) "The mirror of consumption: Celebritization, developmental consumption and the shifting cultural politics of fair trade" Geoforum 41(1): 104-116 (article)
• Fairtrade Foundation (2014), "Britain’s Bruising Banana Wars: Why Cheap Bananas Threaten Farmers’ Futures" (report)
• Jaffee, D.(2014), Brewing Justice: Fair Trade Coffee, Sustainability and Survival. Oakland: University of California Press.
• SOAS (2014) 'Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda" (report) 
• Troulis, P; (2016) Power Relations And Fairtrade In Cocoa And Cotton Value Chains In The UK, Ghana And India. Doctoral thesis, UCL (University College London).
• Wilson, K. (2011) "‘Race’, Gender and Neoliberalism: changing visual representations in development" Third World Quarterly 32(2): 315-331

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