How fair is Fairtrade?

The Fairtrade label is increasingly common. But while shoppers seem keen to pay a little over the odds for fair trade products, some observers question how effective it really is in helping developing world farmers.

The Fairtrade label is increasingly common. But while shoppers seem keen to pay a little over the odds for fair trade products, some observers question how effective it really is in helping developing world farmers.

Fairtrade coffee, from bean to cup

Fair trade products are popping up everywhere.

Gone are the days when you had to trek to an off-the-beaten-track shop that smelt of hemp in order to buy a fair trade woolly jumper or bar of chocolate. Now you just need to visit the High Street.

Topshop, once a bastion of cheap and cheerful garments, sells fair trade tunics, bubble tops and racer-back vests. And Marks and Spencer works with more than 600 fair trade cotton farmers in the developing world, using their cotton to produce chinos (for men), jeans (for women), hooded tops (for the kids), and a host of other fair trade fashion items.

 

 
Sainsbury's sells fair trade chocolate and coffee, and recently announced that the only bananas it will sell in future will come from fair trade producers.

BananasThere are more than 2,500 product lines in the UK that carry the Fairtrade mark. Last year we spent £290m on fair trade food, furniture and clothing - an increase of 46% on the previous year.

It is currently Fairtrade Fortnight, organised by the Fairtrade Foundation. Events at schools, colleges, universities and workplaces up and down the country consist of everything from makeovers (swap those ordinary store-bought clothes for fair trade threads) to food exchanges (bring along your favourite brand of tea, coffee or jam and swap it for a fair trade alternative).

The aim of fair trade is clear - to get a better deal for Third World farmers.

In order to win the Fairtrade tag, the application of which is monitored by Fairtrade Labelling Organisations International, companies have to pay farmers higher than the market price for their products. This means fair trade farmers are not at the mercy of the market's whims, and have extra money to invest in education for their children and other social needs.

Poverty trap

But not everyone is convinced that fair trade is a good idea.

Some critics claim that by focusing on achieving a fair price for poor farmers, the movement doesn't address issues of mechanisation and industrialisation - radical changes that might allow farmers in the developing world to stop doing back-breaking work and break out of the poverty cycle.

Worker on fair trade coffee farm in Uganda
Sorting coffee by hand
So how fair is fair trade? Is it about getting Third World farmers to accept their lot, or, at best, a little bit more than their lot?

Eileen Maybin, a spokeswoman for the Fairtrade Foundation, says it does help to improve farmers' lives.

"Fairtrade focuses on ensuring that farmers in developing countries receive an agreed and stable price for the crops they grow, as well as an additional Fairtrade premium to invest in social projects or business development programmes.

"Typically, farmers' groups decide to use the premium on education, healthcare and clean water supplies, or the repair of roads and bridges, and to strengthen their businesses, improve the quality of their crop or convert to organic production."

Ms Maybin says that those farmers involved in fair trading are happy with the results.

"The farmers and workers involved in Fairtrade always talk about how much they, their families and their communities benefit."

How can a few extra pennies a day from Fairtrade be celebrated as an outstanding achievement?
Steve Daley, of the Worldwrite charity
Yet others argue that fair trade can end up being a trap for farmers, tying them into a relationship of dependence with charity-minded shoppers in the West.

Madsen Pirie, of the right-leaning think-tank the Adam Smith Institute, says that in protecting the market for certain producers, the movement effectively makes farmers "prisoners to our market".

 

"They become dependent on us continuing to pay premium prices for their goods."

Many tens of thousands of people escaped poverty last year, most of them in India and China, but he says that was done through real market developments rather than small-scale fair trade deals. They were lifted out of poverty because they could sell their products on the open global market, rather than being sectioned off in the fair trade market.

Extra pennies

In the charity world, too, there are critical voices in the fair trade debate.

Steve Daley, who works with the education development charity Worldwrite, argues that fair trade's horizons are dangerously low.

Progresso cafe, opened in 2004
Oxfam has opened fair trade cafes
"How can a few extra pennies a day from Fairtrade be celebrated as an outstanding achievement for the poor?" he asks.

He cites a report from the Financial Times last September, which revealed that some fair trade coffee farmers in Peru were being paid 10 soles a day (about US$3) for working from 6am to 4.30pm. This is more than the conventional coffee farming wage of eight soles a day, but not much more.

Mr Daley is concerned that the fair trade movement is reshaping the debate about underdevelopment, so that the main concern today is with increasing farmers' wages by fairly small amounts rather than really transforming poor communities through development, modernisation, even industrialisation.

"Fairtrade seems to be rooted in a conviction that 'small is beautiful'," says Mr Daley, who argues that the movement does not focus enough on developing modern agricultural methods, which is "surely what farmers in the developing world need".

Mr Daley says that fair trade is more about "flattering Western shoppers" than transforming the lives of Third World farmers.

Self-sufficient

Justin Purser, the commodities manager for Trade Aid Importers in New Zealand, disagrees. He has witnessed some of the big changes fair trade can make.

"It is very common for fair trade coffee co-operatives to seek to build infrastructure which will cut down on the amount of labour required to process their coffee, and will also enable them to improve their coffee quality and, thereby, the higher prices they can command in the market."

He gives as an example Prodecoop, a coffee cooperative in Nicaragua that he has worked with.

"Prodecoop has grown, with the aid of a longer history of fair trade sales, to the size where it is now constructing wet mill facilities for its smaller member co-ops. And to help them along, Trade Aid is supplying an additional US$7,000 in funding this year."

Fair trade helps to "promote self-sufficiency" among Third World farmers, he says.

 
Guidance on pilot waste schemes

The Government is seeking views on draft guidance for local authorities to pilot schemes to cut household waste through financial incentives.
In response to requests from local authorities, Defra announced in November 2007 that it would allow up to five local authorities in England to pilot incentive schemes. Powers to enable the pilots to go ahead are currently being debated as part of the Climate Change Bill. The first pilots, which will be subject to approval by the Environment Secretary, could start from April 2009.


Waste incentive schemes can charge or reward people according to the amount of unrecycled waste a household produces. Schemes could be rebate-only, offering rewards to those producing the least waste, or could be charge-and-rebate based, levying charges on those producing the most waste and using these to reward households which generate the least. Schemes must be ‘revenue neutral’, so any money raised through charges is paid back as rewards. Local authorities would not be able to keep any of the revenue themselves.


Environment Minister Joan Ruddock will be writing to local authorities, inviting them to come forward with proposals for pilot schemes. The deadline will be 8 weeks after Royal Assent to the Climate Change Bill.


Joan Ruddock said: Evidence from countries where these schemes already operate is that charges and rebates of around £50 are enough to change behaviour and deliver real benefits for waste reduction.

“The shape of any pilot scheme will be for local authorities to determine - they know what is most likely to work for them in their own local circumstances. But there are some important principles to observe, for example the need to have a good recycling service in place already, and the need to take account of vulnerable households. This draft guidance will aim to support authorities through the process of delivering a pilot scheme, whatever their ideas may be.

“We want to share our thinking about how waste incentive schemes could work and hear the views of others. I encourage everyone with an interest to contribute to the informal consultation. This is draft guidance at this stage and we will look to revise and improve it in the light of the comments we receive.”

Further information

  • The draft guidance is available from This e-mail address is being protected from spam bots, you need JavaScript enabled to view it and will be published shortly on Defra’s website.
  • The deadline for comments on the guidance on a Good Recycling Service is 11 July; and for the rest of the guidance 25 July.
  • Comments and any queries should be sent to This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Updated versions of the guidance will be published once the Climate Change Bill has received Royal Assent.

 
Green target 'to hike fuel bills'

Businesses and consumers will pay for EU's 2020 green targets.

UK households could see their annual energy bill rise 20% to pay for the cost of meeting the EU's 2020 emissions target, Ernst & Young has predicted.
The accountancy firm's report estimates that the UK would have to stump up £100bn for the capital investment needed to satisfy Europe's green goals.

The EU wants European countries to cut carbon dioxide levels by 20% by 2020. It also wants member states to raise the proportion of renewable energy they use to 20%.


The report, called Costing the Earth, says UK households could not easily afford higher energy bills at a time of record food and fuel bills. The potential rise in utility bills would push more consumers into fuel poverty, according to one of the report's authors. Customers face a triple whammy - rising fuel and oil prices, the cost of climate change mitigation, and on top, the additional investment required to become more energy efficient, for example by insulating the home," said Simon Harvey, of Ernst & Young.

Apathy
The survey also found that despite headlines about rising fuel bills, customers were not aware of the impact the EU's green targets would have on their finances. Half of those polled said they would not be prepared to cut energy consumption, even if they faced higher bills. There seems to be a worrying degree of apathy among consumers to reduce energy consumption," he added.

The 2020 plan set out by European Commission President Jose Manuel Barroso has been criticised by business groups who fear the switch green power will cost more and hit company profits. n the UK, the government recently announced its strategy to meet Mr Barroso's ambitious target.
Energy Minister Malcolm Wicks said Britain would undergo a £100bn "green revolution", with plans to fit a quarter of British homes with solar heating panels and erect thousands of new wind turbines.

Britain currently gets less than 5% of its electricity from renewables, mainly wind.

 
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