Published on June 4th, 2008 | by Zachary Shahan4
Is Fair Trade Mere Hype?
Imagine an elderly man toiling under the hot sun to weed a crop of cotton in a remote African village. When the crop is harvested, a middleman appears in the name of free market trade and purchases it at a ridiculously low price.
Due to lack of information and access to markets, the poor farmer, like many others in his village, is left with little choice but to part with his crop.
Most likely, he will not be able to afford healthcare, or send his children to school, and all his sweat will go to fattening the purse of a huge conglomerate in the global north. The conglomerate will process the cotton (or whatever product it is) into a good that the poor farmer can only dream of purchasing.
In spite of all his toil, the poor farmer will live and die ragged, bequeathing his children a legacy of poverty. With the Fair Trade label, an elderly farmer growing cocoa in Ghana is able to carry a sack of her beans to a certified shop where she knows the scales will be accurate and she will be paid for the full weight of her crop.
Through that system, she is guaranteed fair compensation, access to the market and potential demand for her product. Also, she has as much of a say as her male counterparts in decision making processes associated with the Fair Trade label in her community.
Thus, the Fair Trade label has improved the lives of people who produce goods, such as coffee, tea, chocolate, rice, flowers and more by putting a humane face to the global trade system.
Fair Trade is an alternative model that combines poverty alleviation and market based approaches to correct anomalies which exist in conventional free market trade. The system tips the balance in favour of poor producers, enabling them to become secure citizens of the global society and in control of their lives.
Through influencing socially oriented changes to trading systems of major businesses and governments, the Fair Trade label has significantly contributed to helping poor people escape the clutches of poverty through access to an equitable share of revenue.
According to Wikipedia, in 2006, Fair trade certified sales amounted to approximately US$2.3 billion worldwide, a 41 percent year-to-year increase.
Approximately one and a half million disadvantaged producers worldwide benefited directly from fair trade while an additional five million benefited from fair trade funded infrastructure and community development projects.
Apart from fair compensation, the strengthening of community systems, gender equality and environmental protection through fair trade helps to build poor people’s self-sustenance and independence.
Contrarily, with free market trade, primary producers – often poor rural people – earn a negligible amount from the sell of their goods. Little attention is paid to the environmental impact of production processes or issues related to gender equality.
As a result, statistics show approximately two billion people a third of humanity work hard to support themselves yet still struggle to survive on US$2 per day or less. But through the Fair Trade certification system, poor producers and their families are able to earn respectable incomes which they can use to transform their lives.
Also products obtained from poor people are competitively branded and marketed, which creates potential demand. A key advantage is that the model is adaptable to different crops or products with the main goal being to create social capital essential for helping marginalized communities escape poverty.
With free market trade, huge conglomerates with access to lucrative world markets, mainly in the global north, benefit at the expense of poor people.
On the world market, poor people’s toil is unseen as well-heeled customers jostle to purchase nicely packaged products that do not reflect the source of raw materials. In a report titled “Tipping the Balance: The Fair Trade Foundation’s Vision for Transforming Trade 2008 -2012”, Fair Trade highlights how the label is increasingly gaining worldwide recognition.
“From being the preserve of a committed few, the Fair Trade Mark is now recognised by three out of five people, and appears on thousands of food, drink and clothing items as well as other goods. In this decade alone, the value of Fairtrade sales has grown more than tenfold reaching nearly 500 million in 2007,” states the report, which focuses on the label’s performance in the United Kingdom.
“Fairtrade is a response to failure of conventional trade to deliver a better deal to people in the poorer countries of the world. It has shown trade can be a powerful driver to reduce poverty and promote sustainable development if only it is clearly directed to those ends,” adds the report.
According to the report, in the Amazon rainforest straddling Bolivia, Brazil and Peru, among other projects in many parts of the world, the Free Trade label helps nearly 30,000 families earn a decent living from harvesting Brazil nuts.
“The fair and stable pricing and premium for investment at the heart of Fairtrade standards underpin sustainable development in these communities while protecting the precious natural resources of the rainforest,” states the report.
In addition, Fair Trade insists on democratically governed organizations in which men and women have an equal say on issues related to the use of the Fair Trade label premium.
This bottom-up approach has led to investments in health, education and small businesses, helping marginalized communities grow to their full potential.