I saw an ad for Fairtrade products in the supermarket the other week. It told a little story, something like:
Miguel works on a citrus farm in the Dominican Republic. Thanks to you buying Fairtrade, he gets a good wage and decent working conditions. Fairtrade guarantees a better deal for third world producers.
Let me first state that I have no disagreement with the motives of Fairtrade. It’s a moral and decent thing to want to see humanity lifted out of poverty, quality goods produced and sustainable practices developed. The question, however, is whether Fairtrade actually is a reasonable means to achieve these motives.
Let’s look at Miguel – and not in the limited way that the ad portrayed him. Why is Miguel working on that citrus farm? Why isn’t he working a desk job in the US in an air-conditioned office and making $40,000/yr instead of, say, $2,000/yr? Well, Miguel doesn’t have the skills, education and abilities to justify an employer investing thousands of dollars in capital to make his job easier. If Miguel’s current boss built him an air-conditioned break room, increased his pay arbitrarily by $1,000 a year and changed his methods to be more environmental, then his profits would evaporate, his business would go under and Miguel would be worse off.
But also, apart from charity, Miguel’s best option is the citrus farm. If he isn’t working his job on the citrus farm, then he is making less money doing harder work. He might be begging, working in a sweatshop or selling drugs. His current job is sustainable because his skills and education have earned it – it was not given to him unmerited by a benefactor. He is producing real wealth for himself, a profit for his employer and a product for consumers. This is how wealth is created – albeit at the slowest rate for Miguel.
Preferring Miguel – Hurting Others
Actually, Miguel is not getting a raw deal working on the citrus farm. Miguel’s alternatives are not as good as what he gets in monetary and non-monetary compensation. By making Miguel’s deal more “fair” – we are effectively tying up more scarce resources in supporting Miguel and forgetting completely about Dawa, Marcus and Hugo on the margins.
When Fairtrade producers get a higher distribution of wealth for the same essential product (less the pseudo-moral feelgoodery of the Fairtrade logo) as non-Fairtraders, then those less-connected producers on the margins get less and slide closer to poverty. In other words, for every Fairtrade product bought for a higher price than the actual product deserves – that is extra wealth diverted from those producers most on the margins.
Fairtrade doesn’t guarantee a better deal for all Third World producers – it guarantees a better deal for some, richer and specially connected Third World producers and, in fact, a very unfair deal for others – again those even poorer than the ones being helped by Fairtrade.
Fairtrade benefits go only to those producers large enough and rich enough to pay the nearly one thousand dollar a year certification fee, as well as a premium per unit of product and also must be able to afford the expenses of Western labour standards. They also just have to be plain physically large enough to justify the attention of Germany’s Fair Labelling Organization (FLO)- which certifies some Fairtrade products. The FLO and certifiers like it just aren’t interested in smaller producers.
You Bought Fairtrade? Give Yourself a Pat on the Back!
Why, then, do people buy Fairtrade? A few people might argue that it tastes better, looks better or is otherwise of a higher quality than non-Fairtrade. However, this is subjective, and there is no quantifiable way to demonstrate that this is the case.
What we need to admit is that we like attention. We like to look moral. We like to be gracious benefactors. We like to be owed something. Look at Fairtrade’s marketing efforts – they don’t say it tastes better or focus on the quality of the product itself. Rather – they are selling the feeling of being a benefactor. By paying an extra 5% for your coffee, you – YES YOU! – can be a righteous and moral person – a footsoldier in the crusade for human justice and fairness.
We see the same thing with Global Warming products. By paying KLM Airlines an extra £15 when you purchase a ticket, you can have your emissions offset. This, despite the fact that there is no proof that the cost of your flight is doing £15 of damage to the environment, or that KLM will use this £15 in such a way that gives, quantifiably, the same return to the environment. Can’t we just write the check to “the environment”(ala “Santa Clause”) and bury it in the garden?
The only benefit that is created by going Fairtrade, is the same benefit some of us get from giving change to the homeless or running laps for cancer – we feel just a little better about ourselves and the world we live in.
But we shouldn’t feel better about buying Fairtrade. All we’re helping are the better-off Third World producers – and we’re actually setting up serious financial obstacles for smaller, poorer farmers.
You may also be interested in:
But if I buried a check to Santa Claus, how could he cash it? Maybe I should bury some cookies and milk instead.
By making Miguel’s deal more “fair” – we are effectively tying up more scarce resources in supporting Miguel and forgetting completely about Dawa, Marcus and Hugo on the margins.
How’s that again? I assume that a Fair Trade product will cost a bit more, and that extra cost will offset the cost of higher wages and better working conditions for Miguel. That’s the idea, right? Allow companies to still be competitive while treating their workers a bit better. How does that hurt Dawa, Marcus, or Hugo?
WOW! Terrific, someone who knows so little making such a big noise.
If you want to understand Fair Trade talk to someone. There are plenty of producers listed on this site and some of whom now have email and web connections (and market access). If you want to understand why Fair Trade is necessary, take a few moments to think about the 1500 farmers who just committed suicide because they couldn’t handle their debt. Think about the race to the bottom and how that pans out. Look into the foundations of Fair Trade which are built on environmental and social sustainability and entirely for marginalized producers – yes people in huts on hillsides who organize themselves into businesses, cutting out middlemen and traders, educating themselves, building infrastructure and learning, bring in democracy and equality, starting to deal with the haemorrhage that is migration. But really, really seriously, do not imagine an air conditioned office in the US is anyone’s idea of heaven. In fact do the world a favour. Switch off your aircon and do some research. You have every right to be hacked off by a label that makes you feel bad. And many people will share your point of view that fair trade is a long way from fair. Ut it is making extraordinary progress and I promise you this. Visit an organized producer business and you will refine your attitude. Good stuff is happening. You have every right to ridicule the 60 years of hard work by millions of people who are building themselves a new future under their own steam – but it makes you sound like a weirdo, because you are so wrong. The British Library are running a seminar entitled the Kick-Staring the Sustainable Economy, it’s speakers are all Fair Traders, it’s backed by a huge bank. Fair Trade is in growth, conventional markets are in decline. The benefit of Fair Trade (Transparency, Accountability, Respect could turn out to be a future for us all. http://www.worldfairtradeday09.org/index.php?option=com_wftdft100&Itemid=77&lang=en or http://www.wfto.com/
Robin, Colin’s whole argument is that giving “better wages” to some farmers accelerates the race to the bottom for all other farmers. From my point of view, however, it reeks of postcolonial narrative that “we need to help those poor people because we can.” Look at places like Africa where colonial interruption of their lives has, in many cases, caused the poor conditions it set out to fix. It’s like invading a country under an oppressive rule and forcing democracy because “it’s what civilized people do.” Oh wait, we’ve done that…many times over….and still haven’t learned from our mistakes.
It hurts Miguel’s competing workers (on non-fairtrade farms) because money is being diverted from them which otherwise would go to them and now is going to Miguel. People are submitting to a “voluntary tax” on their Fairtrade products and are buying less regular products. This hurts competing businesses. This is all well and good if there is something better about the fairtrade products – but there isn’t, except that people get to spend more money on them and feel good. This is not a sustainable solution. It hurts Miguel’s competitors in the short run and will end up hurting Miguel in the long run.
Robin, thanks for your comments. I have “talked to someone” and I have done plenty of research. Fairtrade is not sustainable. It is as sustainable as any charitable or redistributive act – it will boom for a time and then more wealth will be needed to support it. This is because it is artificial. Unless government steps in to mandate Fairtrade and Fairtrade standards (or there is enough disposable wealth created to patronise these projects) – this movement will be dead and gone within a decade or so.
Let me add that I think fairtrade motives and goals are excellent. However, this has to happen in a sustainable way. Charity is a step towards that but we can’t delude ourselves into thinking that charity = profitable business. People paying more money for the same goods which they could buy cheaper (because they can competitively be produced cheaper) is not sustainable.
Miguel’s better standards, higher pay and working conditions are an illusion. He’s not demanding them because of the wealth the product of his labour can generate. They are a handout – a cleverly disguised handout – but they are still a handout.
I know nothing about Fair Trade other than what is portrayed in this article. That said, the “inflated prices” part doesn’t really sound like something that is SUPPOSED to be sustainable. This is a charitable donation. People who buy something like Girl Scout cookies or Fair Trade aren’t TRYING to maximize the goods they receive for their dollar, they are trying to subsidize an activity they value. In the case of Fair Trade, that activity they are subsidizing is paying wages higher than what the labor market requires to third world workers. This seems preferable to some donars than “normal” charities that pay wages to people who do nothing.
Does Fair Trade hurt competing farmers? Absolutely. Like any certification program, if customers begin to demand the certification then those without it will suffer. The small farmer who owns his own land will not be able to sell his food, and even if he does he will be competing with Miguel (who makes an inflated wage) to buy local goods and services. On the other hand, its goal is to allow purchasers to know the conditions of the workers making the product. Personally, I don’t want a product produced by slave labor no matter how little it costs. If violations of workers fundamental rights to life, liberty, or property are being committed, I don’t want to participate in these violations by making them economically profitable. So what are the standards for “Fair Trade”:
Wikipedia states:
I agree with many of those requirements. Even if the worker fully understands the risks and agrees, I don’t want to buy products that were produced in a dangerous manner. I don’t want products produced by workers who were not allowed to negotiate their own contracts, or who were otherwise coerced into employment. All of these MIGHT apply to our poor farm owning third world small business owner, but without a certification program I can’t know. It is sad that this person might be hurt by their inability to afford a certification which they could pass, but then this is the problem with any commercial certification that requires the organization being certified to pay cost of certification.
To summarize, if you don’t care about what a certification means, disregard it when making purchasing decisions. Last weekend I went to a farmer’s market, and I joked to my wife that I should go around and issue my personal seal of approval to those stands I liked best. Those stands could then advertise that they had my seal of approval. Most people would probably not care though, because they don’t know what criteria I care about. If they began to notice a correlation of my seal with good prices and quality though, they might start to care. Any certification is only meaningful to the level that the consumer cares about what it means. If you dislike the practices of Fair Trade, perhaps it is even a disincentive to purchase.
Regardless, all the certification does is provide more information to the buyer. I have a really hard time seeing how providing more information to a buyer can ever be a bad thing for the buyer.
I’m no expert on Fair Trade, but I watched a documentary piece on this a few years ago. And based on that alone, I don’t know whether the Fair Trade farmers actually do an substantial damage to their local competitors.
In this documentary, these coffee connoisseurs went into Central or South America and met with farmers to help them distinguish between qualities of coffee so they would be able to sell their produce at a higher price. Of course, it was a win/win situation for both parties. It wasn’t charity; it was a business transaction. All farmers in the area were able to meet with the American coffee experts; as far as I could tell no one was being excluded. Essentially the farmers were only able to benefit if they could produce the superior product. Either way they had business with someone, but the better product was worth substantially more. I mean you have Folgers quality (which is still marketable) and then you have premium beans. And believe me, there is a difference.
Not all Fair Trade coffee is the best, but it is generally among the best with a few exceptions. People aren’t going to shell out money for bunk coffee even if it makes them feel better. And where I buy my coffee Fair Trade isn’t always more. Or if it is, the difference in price isn’t worth mentioning.
Chris, clearly there are farmers who can’t get the “Fair Trade” logo, or they would all have it. Any farmer whose end product doesn’t end up with the logo is hurt by the existence of the logo, since it can result in people not buying their product. Does “Fair Trade” even assess product quality as part of its certification policy? If not, any correlation between certified products and quality is entirely coincidental (though if they provide training to their members, perhaps Fair Trade products have a higher likelihood of being high quality). Again, I never heard of them before today, so I may be completely wrong.
Atanamis,
Enjoyed the comments and generally have no problem. One thing I would stress however, is that Fairtrade has gotten you just a little bit with their marketing scheme. They list all of these things that they require to certify and the implication is that non-Fairtrade producers don’t/won’t do those same things. The fact is that many do. If capitalism is allowed to act naturally, it WILL elevate the living standards, practices and sustainability of the third world. Moreover, it will do it because of the self-interest of all parties – not out of charity, pity or patronage. Whilst Fairtrade admirably desires these things – I am afraid that they way in which it is set up to achieve them is not the best way to go about it.
Moreover, they seem to implicitly demonise non-Fairtrade products – I highly doubt that much of the non-Fairtrade products are made with “slave labour.” They are made by Third Worlders who have no merit to demand certain standards that we in the west take for granted as entitlements. But having significantly less than the wealthiest nations should not be surprising in a world with scarcity. It definitely does not equate to anything like forced involuntary servitude.
I’ve never heard their marketing scheme, and before you mentioned them had never heard of them. I simply took what you said, looked up in google what the “fair trade label” is supposed to represent, and wrote my post.
I disagree. If I go to the farmer’s market and issue random stands with “Atanamis certified non-poisoned”, there really shouldn’t be the expectation that stands without this certification have been poisoned, they simply haven’t been tested. This is particularly true in an environment without government regulations. Toys certified lead free have presumably been tested, and if they are later found to contain lead the certifying body should be held liable. And this really isn’t an irrational fear. Toys have been imported with lead paint, diamonds have been imported that were used to finance genocide, and food products have likely been imported that financed brutal acts. There is PLENTY of reason to suspect moral abuses may have been committed to provide the product (especially to someone who counts taxation as a moral abuse!).
I haven’t researched “Free Trade” to know whether they actually do anything to verify this isn’t happening, but I see no reason why desiring such a certifying body would be either irrational or ineffective. You might dislike the specifics of how they operate, but your post irrationally criticized the idea of a certification paid for by the seller which provides more information to the buyer. For all I care, every individual or corporation on Earth can issue certifications so long as they aren’t deceptive about what they are certifying. (Issuing a certificate for “tested lead free” to anyone who pays $10 would be fraudulent, and subject to damages if lead was later found in the product.)
Atanamis, I was referring to this statement:
Notice how your thoughts upon reading the standard was an elevated sense of fear about non-Fairtrade products. This is a tame response – no question – but it is, you must admit, coloured by what you just read about Fairtrade’s standards.
As you yourself admitted, you had no idea what Fairtrade was before the article. It is reasonable to posit that you probably didn’t give a second thought to the fact that your coffee, tea or whatever else you buy was produced in a dangerous manner or through coercion. I am not saying any of this is wrong – but I am saying you are affected by the marketing here – which desire to illicit this exact response (to varying degrees).
Regarding private certification – I’m all for it, of course. How many times have I said to people that we would be much better abolishing things like the FDA, FCC, AMA and other monopoly certification schemes in favour of competing agencies? My argument is that whilst Fairtrade is a private certification scheme (mostly) – it is not a very good one. I am not criticising “the idea of a certification paid for by the seller which provides more information to the buyer” – I am criticising Fairtrade specifically.
Fairtrade only certifies coffee when the producers are grouped into democratically organised cooperatives. There are a couple of problems with this:
- 95% of producers are not organised into cooperatives. So 95 out of 100 Miguels do not even have the oppotunity to supply Fairtrade. This seems somewhat unfair to me. Fairtrade has chosen to forward its political beliefs. If Miguel wants to sell fairtrade, he is going to have to agree with the assumption that he’s better of in a cooperative, because Fairtrade think so.
- Cooperatives in the developing world are as prone to coruption as any other organisation, sometime more so. In Africa and Central America, coop chiefs are often appointed by govenment departments, with all the patronage and nepotism that normally goes with such arrangements.
No-one could have an issue with the motives and aims of Fairtrade. Its the mechanism which is fundamentally flawed. And don’t get me started on the minimum price system and the impact this has on quality….
I could be wrong, but I think the concerns about Fair Trade adversely affecting those who are not part of Fair Trade might be being overblown – at least with respect to coffee.
This is how I see it: If Miguel cannot join the co-op he still gets to sell his coffee at the same fair market price (I don’t know if its “fair” or not, but you know what I’m saying) that he did before Fair Trade. He isn’t losing anything; he just doesn’t have the added advantage other farmers have.
I can’t see how Fair Trade is going to affect the general market price all that much. All of the Fair Trade coffee I’m aware of is for niche markets. Most of the coffee sold is the canned pre-ground Folgers type, because most coffee drinkers are not particular about quality. Then there is coffee of approximately the same quality sold as whole bean. But then you have premium beans. If you don’t produce premium beans, you’re not going to be able to come under the Fair Trade umbrella. There are a lot of premium beans that are non-Fair Trade; in fact, probably the majority of them are, which leads me to believe that the impact Fair Trade has on the market is minuscule. Admittedly my judgment is based on my limited observation.
As far as certifications go, I’d like to see a private non-GMO certification. But Monsanto and the US government are essentially one, so that will probably never happen. There are multiple people who have gone from Monsanto to government and vice-versa, and some of them back and forth.
Chris A wrote:
The intent is to have an effect though, or they wouldn’t bother with the label. What they intend is for people to see the “Fair Trade” logo, and assume that the product with the label is in some way superior to the one without it. This may cause me to buy a coffee grown by Miguel instead of Jose, where the only difference is that Miguel paid to have his coffee certified “Fair Trade”. According to wonderchops, Jose would not only have to pay a certification fee, but also join a coop that may not be in his best interests. Since the point of “Fair Trade” seems to be to ensure sellers aren’t being coerced, their behavior may be hypocritical by imposing the very coercion they claim to oppose. (Again, I speak only in the theoretical, having still not bothered to read about Fair Trade or what they actually do.)
Colin wrote:
I said that I applaud any effort to allow buyers to make a more informed decision, and that the goals as stated by Wikipedia sounded mostly acceptable. I can assure you that I wouldn’t make a purchasing decision based on a wikipedia synopsis of a certification. Before allowing a Fair Trade logo to have ANY impact on my purchasing decisions, I would want to investigate what the actual certification process entails, how likely it is that non-certified products also meet the standard, and whether I care enough to allow it to affect my decision making. Clearly since even knowing about the existence of Fair Trade I haven’t bothered doing this research, I either don’t care much if my food was grown by slaves or feel reasonably confident that it wasn’t. (I suspect the latter is more dominant, though I can’t honestly claim to care that much either.)
wonderchops wrote:
Then perhaps the free market should come up with an alternative. If people care enough about knowing the conditions of the workers who produced their goods, it would make sense for sellers to pay to certify them. Perhaps the “Fair Trade” certification is too stringent, but a “Safe and Free Worker” certification could be issued at lower cost to any provider who can demonstrate their product was produced by non-slave labor under safe working conditions. Some kind of certification that demonstrated the workers weren’t immorally defrauded might slightly impact my purchasing decisions (though probably not).
No-one ever said Fairtrade is the answer to world poverty but its at least reaching 7.5 million people in some way.
Perhaps you will argue that this means that it has sent 7.5 million in the wrong direction? But that’s the biggest (but far from the only)flaw with your diatribe. You offer no alternative.
So go on – having done the easy bit – what is the real answer to the issue – do nothing and have 15 million worse off than they would have been? Or have you a better idea?
The alternative offered was to purchase the highest quality product for the lowest cost, just like we do on most other purchases. If a “Fair Trade” logo doesn’t represent value to the buyer, there is no reason to factor it into my purchasing decision. The value that they propose to provide is the assurance that the workers who produced the goods were treated “fairly”. What Colin is arguing is that many workers who are treated fairly can’t afford to get “Fair Trade” certification, and that in fact Fair Trade coerces those workers into a potentially inefficient and less effective work method.
If Fair Trade’s methods really are better, it will be demonstrated by the cheaper and higher quality goods their affiliates produce, making the labeling of it as “Fair Trade” unnecessary. Although if their methods ARE better, a “Fair Trade” logo might imply cheap and good, which would definitely be a good selling point. I might be willing to pay more for a mark that meant “certified non-slave produced” if there was a high probability that goods not certified WERE slave produced. Fair Trade certification appears significantly more stringent than this though, requiring things like coops and unions that can infringe on individual liberty as much as they can support it.
You don’t need an alternative solution to point out the current one is more harmful than doing nothing, or that the current one fails to achieve its stated goals. So long as Fair Trade honestly reflects what their label on a product means though, I have no complaint about what they are doing. So far as I can tell they are not infringing on anyone’s life, liberty, or property through the use of force, and while they may be ineffective their end goal seems positive.
I’m a volunteer working with a Fairtrade cooperative of small banana producers in Ecuador (www.asoguabo.com.ec).
Although I’ve seen a lot of problems with the fairtrade system, those problems are nothing compared to the problems farmers outside fair trade are experiencing. And the benefits are huge for the fairtrade farmers.
Of course, it’s sad that not every farmer can be in fair trade, but that’s not fair trade’s fault. You can only sell as many bananas as people will buy at a higher, fair price. The only solution that would really help all the farmers in the third world would be market regulation. But as long as you work inside the market, you follow the rules of the market.
So for the farmers who are lucky enough to be in fair trade, the advantages are many. They get the same price for their bananas all year. Fair Trade guarantees a minimum level for that price. In Ecuador, it’s not much more than the cost of production, but at least it’s higher than the market price for most of the year. The fairtrade farmers get 5 dollars a box when the market price can go down to one dollar a box. Yes, sometimes the market price is 12 dollars a box, but only for a couple of weeks a year. The farmers say the stability of the price is the most important thing for them. It enables them to plan ahead and borrow money without fear of not being able to pay.
The importer also has to pay them one dollar a box in addition to the fairtrade price. This is called the fairtrade premium. It’s administered jointly for projects that benefit everyone. The cooperative where I work has invested the money in two clinics, health insurance for all farmers, paying the salaries for 17 teachers, monthly food baskets for all the workers, financial support for investments to comply with demands of quality certifications among other things.
Another advantage the farmers talk about is the fact that they’re organised into a cooperative. The cooperative gives them technical assistance in quality improvement and farm investments, courses and education and enables them to participate in the decisionmaking. The most important aspect of the organisation is the fact that it cuts out the middlemen. They sell their bananas straight to the importer.
However, there are problems. Farmers complain that the minimum price is too low. And in the case of the cooperative where I work, fair trade doesn’t protect the farmers from the demands of the market. The’res no room for really small producers even in fair trade. The supermarkets demand that the bananas be delivered with less producer codes (the codes used to trace the bananas to the farm of origin). Checking a lot of codes takes more time and work and is thus inefficient. So the cooperative is trying to make the smallest producers increase their production to a minimum of 48 boxes of bananas a week, and helping them with loans, technical assistance and development projects through the fairtrade premium.48 is not an arbitrary number, but a convenient one: the number of boxes that fit on a pallet on which the bananas are shipped.
In the world market there doesn’t seem to be room for small producers, not even in fair trade.
Also, the competition within fair trade is tough. As more and more farmers enter they compete with each other. As plantations are also accepted into fair trade, it’s hard for small farmers’ coops to compete with the plantations’ economies of scale. As multinationals like Dole and Chiquita with their global distribution machinery and even greater economies of scale are accepted into fair trade, the competition gets even tougher.
And the cost of production is different in different countries. For example, the tariffs on Latin American bananas in the European Union are higher than those of African or Caribbean bananas. The shipping from Latin America is more expensive, too. And there are fair trade bananas in all these areas. So the fairtrade market is a little world market inside the world market. The cooperative has to compete with other fairtrade bananas as well as with bananas that are not fair trade. That means a constant pressure to keep prices low and comply with the demands of international supermarkets.
Annika, thanks for your comments. It is good to hear from someone on the inside of this issue.
Interestingly, it seems to entirely validate Colin’s claim that the benefits to fair trade members come primarily at the cost of losses to small growers who cannot afford to become members. Like with minimum wage laws, those worth less than the minumum cost are simply ignored. Still, if Fair Trade provides benefits to their members worth the extra costs involved, it can still be a worthwhile investment to those members. There is no real reason though for buyers to seek out Fair Trade products though since they provide no special value to the buyer, not even the knowledge that you are having a better impact on low income producers (since the lowest income producers can’t even join Fair Trade).
I don’t see how fair trade is different from any other form of marketing campaign. For producers that can afford to pay higher wages and get certified, it allows them to access a market niche where consumers are willing to pay a premium price for the aspirational value of their product.
Smaller, poorer farmers who can’t benefit from economies of scale or buy into the fair trade system are economically inefficient and should be selling their farms and going to work for larger producers anyways.
nada, the argument being made by the article is that the Fair Trade label doesn’t provide the service it claims to provide to the buyer. The service it claims to provide is the guarantee that your purchase “helps” the third world farmer who created it. The article argues that in reality, buying Fair Trade products only helps the “elite” third workers, which likely isn’t what those intentionally buying Fair Trade products are intending. If your intent is to buy from the most effective producer, you’ll just buy the cheapest product of the quality you want, and ignore the label anyway.