Fair Trade not Fair Enough?

http://money.independent.co.uk/personal_finance/invest_save/article2298342.ece
Fairtrade is booming - but is it still a fair deal?
Trade justice at last or a perpetuation of a rotten system? Decide for yourself, says David Prosser
Published: 24 February 2007
Fairtrade is booming - but is it still a fair deal?
It's almost 11 years since the first Fairtrade bananas went on sale in Britain, and on Monday the Fairtrade Foundation will launch a fortnight-long celebration of the movement. The foundation, the umbrella organisation of Fairtrade groups active in the UK, wants Fairtrade Fortnight to be a showcase for more than 200 products that now bear the movement's kitemark.
There's certainly plenty to celebrate. More than a million developing world producers of everything from commodities, such as coffee, tea and fruit, to essentials, including herbs, spices and cotton products, to luxuries, such as ice cream and biscuits, are now signed up to the scheme.
To bear the Fairtrade mark, a product's retailer must be able to show that local farmers have been paid a higher price for the goods than local markets stipulate, and that workers involved in production have been paid fairly.
The fact that an independent organisation strictly polices the award of the Fairtrade mark - and beyond these two basic criteria, there are all sorts of other tests - has meant consumers in the West have been able to buy with confidence. As a result, business is booming.
Fairtrade sales have been growing at 40 per cent a year over the past three years. Market analyst Mintel estimates sales reached £230m in 2006 and predicts they will continue to grow to as much as £550m by 2011.
It helps that mainstream retailers are embracing the scheme. Marks & Spencer last year began selling a range of Fairtrade cotton clothing. Sainsbury's has plans to switch to selling only Fairtrade bananas.
But should consumers really be so confident they're doing the right thing when buying Fairtrade? Is the scheme, now a hugely powerful voice in many parts of the world, really as fair as it seems? There is no doubt that Fairtrade has helped many farmers in countries that have suffered at the hands of the inequities of a world trade system dominated by developed countries. But at the same time, there is a small but vocal band of Fairtrade critics who insist the scheme has many serious flaws.
Claire Melamed, the head of trade and corporates at Action Aid, the charity that works on a broad range of issues in developing countries, says: "The Fairtrade movement has worked wonders in making consumers think about world trade, but it is very much the start of a journey."
Action Aid's main concern about Fairtrade is that it does nothing to address the fundamental injustices in world trade systems. "While it's great for those farmers in the club, millions are left on the margins scraping a living," Melamed adds. "What Fairtrade does conclusively prove is that markets can be rigged in favour of poor people - and that consumers do care where their products come from."
Put another way, the argument is that Fairtrade is not sufficiently ambitious; it helps a few people to cope with an unfair system, rather than tackling the system itself. It's a point that is taxing French trade justice campaigners such as Jean-Pierre Boris and Christian Jacquiau. Both argue that by working within the current system, Fairtrade undermines the chances for radical reforms.
However, Ian Bretman, deputy director of the Fairtrade Foundation, is fiercely critical of such arguments. "It's too cynical to say that because you can't help everyone you shouldn't help anyone," he argues. "We do what we can and in any case, the system is changing, partly because Fairtrade has encouraged many people to become more engaged with the need for reform."
Bretman is concerned about other criticisms, in particular the arguments first put by Tim Harford, the populist academic who two years ago published The Undercover Economist. Harford says that by subsidising the price of commodities, Fairtrade is sending the wrong message to farmers. The fact that the price of, say, coffee is so low, he argues, is a sign there is too much of the stuff on the market. Rather than relying on a subsidised price, farmers should be diversifying into other markets.
Fairtrade itself says it agrees with this argument - to a point. "We recognise farmers need to make changes, whether it's improving productivity or diversifying or developing in another way," says Bretman. "But all of those changes require investment, which people can't do when their goods sell for below-subsistence prices."
Then there's the issue of who is really benefiting from Fairtrade. Consumers are prepared to pay a premium for Fairtrade goods because they like the concept. But how much of the premium ends up with the end producer? Are supermarkets charging higher prices for Fairtrade goods and exploiting consumers' good nature?
Harford, for example, believes that just 10 per cent of the premium that Fairtrade customers pay for coffee in a coffee bar ends up with the producer.
Bretman says it is impossible to say whether Western retailers are pocketing fatter margins on Fairtrade produce because prices vary so much. He believes the danger of this will recede as growing demand for Fairtrade goods encourages price competition among retailers. Even so, Bretman admits: "The scheme guarantees a minimum price for the producer, but we don't feel it's practical to set controls further down the road."
That represents a challenge for ethical consumers because they want the end producer to benefit. Many have deep-seated reservations about supermarkets, and would be reluctant to buy goods that swelled their coffers further. Nor does the moral maze end there. Nestlé, the food giant, is one of the most disliked and boycotted companies in the world by ethical shoppers, yet last year it launched Partners' Blend, a Fairtrade certificated coffee.
Bretman describes Nestlé's decision to seek Fairtrade certification as "a victory that shows a huge company is recognising this growing market". But is Fairtrade selling out to big business, signing deals with the sort of companies many people believe are responsible for trade injustices in the first place?
Ruth Rosselson, a director of campaigning group Ethical Consumer, remains a fan of Fairtrade. You don't have to buy Partners' Blend, she points out; there are plenty of other Fairtrade coffees to choose instead. Nevertheless, she says many people have been concerned by the Nestlé development. "There are a large number of consumers who wouldn't buy from Nestlé for all sorts of reasons and there has certainly been a backlash," she warns. "Fairtrade should not just be about whether a product qualifies for certification."
The final worry some campaigners now have about Fairtrade is an environmental one. While there are plenty of Fairtrade goods that British shoppers have no choice but to source from abroad - it's tricky growing cotton here, for example - there are others where local produce does exist. Should people support far-flung providers of honey or green beans, say, given the environmental costs of transporting the goods to this country and the fact they are already available locally?
Bretman says such issues are never black and white, but that ultimately consumers have to make up their own minds about any purchasing decision.
Nevertheless, he remains convinced of the power of Fairtrade - and that the brand will continue to grow. "There are more opportunities all the time," he says. "What I've seen over the past 10 years has been a move from us knocking on the door of businesses, trying to get a foot in, to them knocking on our door; that's down to the power of consumers."
How fair trade works
* The Fairtrade Foundation is an independent certification body that awards the Fairtrade mark to products that meet international Fairtrade standards. These are set by Fairtrade Labelling Organisations International.
* The label guarantees consumers that disadvantaged producers are getting a better deal. More than five million people - farmers, workers and their families - across 58 developing countries benefit.
* Fairtrade itself describes its mission as "addressing the injustices of conventional trade, which traditionally discriminates against the poorest, weakest providers".
* Producers must be paid above market prices for their goods, and workers involved in production must be paid minimum levels of wages.
* The organisation urges consumers to be sceptical about suppliers that claim to pay fair prices if they have not applied for Fairtrade certification.
* Full range of Fairtrade products: coffee, tea, chocolate, cocoa, sugar, bananas, apples, pears, plums, grapes, lemons, oranges, satsumas, clementines, lychees, avocados, pineapples, mangoes, fruit juices, smoothies, quinoa, peppers, green beans, coconuts, dried fruit, rooibos tea, green tea, ice cream, cakes, biscuits, honey, muesli, cereal bars, jams, chutney, sauces, herbs, spices, nuts, nut oil, wine, beer, rum, flowers, sports balls, rice, yoghurt, baby food, sugar body scrub, cotton products.
* In recent times, other such schemes have been developed, such as Equitrade, Rainforest Alliance and Utz Kapeh. All have different standards, to which Ethical Consumer (www.ethicalconsumer.org) publishes a guide.