Fair trade?
Fair question

Paul Vallely
charts the success of the fair trade movement, but asks whether it is an agent for change or merely a diversion from the real issues

At first sight, fair trade seems to be booming. Worldwide sales of fairly traded foodstuffs are expected to top $320 million for 2002, a slow but steady increase on the previous year which itself saw a 22 per cent rise in tonnage over the 2000 figure. In the United Kingdom – which now sells more than 100 different products sourced from 36 countries and produced by 4.5 million growers and their families – sales were up even more significantly. The revenues of its largest fair trade organization, Traidcraft, have risen by 40 per cent in the past two years.

And yet there is a feeling that the fair trade movement is at a crossroads. The question is being asked: ‘Has “fair trade” had its day?’

Two interesting developments in the United Kingdom at the end of last year offered cause for reflection. First one of the country’s largest retail chains, the Co-op – with 2,400 stores nationwide – announced that it will switch its entire range of own-brand chocolate bars to fairly traded sources following a deal with the Ghanaian cocoa co-operative Kuapa Kokoo. At a stroke the amount of fair trade chocolate sold in Britain will double. Only a few days later, by way of counterpoint, Traidcraft published research which showed that though nine out of ten people say they would be happy to pay more for food if it would help people in poor countries, only 20 per cent actually took this option when faced with it on the supermarket shelf Does this reveal enormous potential for growth? Or the reality that, once their purses are out, most customers think only of themselves?

Part of the reason that Traidcraft’s sales have risen is that Oxfam has stopped buying produce directly from producers; it sells its customers Traidcraft products, or else directs them straight to the organization. This decision caused outrage at a recent meeting of IFAT, the International Federation for Alternative Trade, a global network of over 160 fair trade organizations (95 of them in the developing countries) from more than 50 nations. Delegates sent an urgent fax in protest to the Oxfam Board of Trustees. But Oxfam was unmoved. It had based its move on a study commissioned from McKinsey Consulting which examined a sample of 18 producer groups supported by Oxfam in seven countries across Asia, Africa and Latin America. It concluded that Oxfam had the most impact through capacity-building and market access work rather than by through buying things.

This change in emphasis reflects a shift which has long been fiercely debated throughout the fair trade movement. The roots of the tension were there from the outset. The early days of fair trade were ones of high idealism. In the United Kingdom the first import of developing world goods at ‘fair’ prices came in 1974 when an entrepreneurial hippy had the brain wave that an aid plane returning from Bangladesh did not need to come back empty. He filled it with handicraft goods, which were largely bought by churchgoers pledged to live a simpler lifestyle. After early successes the movement faltered because there was a limit to the number of plant hangers even the most committed household could buy. But then came the breakthrough into foodstuffs. The first fairly traded coffee was exported into the Netherlands from Guatemalan small farmer cooperatives.

Fair trade fans in Europe came from similar backgrounds, though they were more politicized than church-based. In countries like Belgium there were lots of small support groups, in solidarity with socialist ‘idylls' like Nicaragua or Tanzania. For decades there was debate inside this movement over whether fair trade needed to increase the volume of sales or remain the exemplar of an alternative economy and worldview – as a model organization in every respect with, for example, all staff paid the same wage.

The change-through-volume faction won. In the United Kingdom a consortium of agencies, including Traidcraft, launched a fair trade supermarket ground coffee named cafédirect in 1992 . Three years later they launched cafédirect instant, and after another three years – a crucial step in Britain – came teadirect. They also set up the Fairtrade Foundation, to monitor fair trade products sold by high-street retailers. Today nearly 350 coffee companies work to standards set by the Foundation and its 16 equivalents in other rich nations. Sales of fair trade coffee grew by 23 per cent in 2001 to an estimated retail value of $30 million. It has 14 per cent of the United Kingdom retail roast and ground coffee market. Cafédirect is now sixth in the market, way ahead of big names like the Italian brand Lavazza.

It is not just coffee; more than 100 fair trade products are now available including chocolate, orange juice, tea, honey, sugar and bananas. Total sales for fair trade products in Europe topped $260 million, with $4 million in the United States (where fair trade has never really taken off in the same way) and $9.9 million in Australia, New Zealand and Japan. The merging of the imprimaturs of the 17 different fair trade national groups – Max Havelaar in France, Belgium, Denmark, Norway and TransFair in Germany, Austria, the United States, Canada, Italy, Japan – under a single label in October promises even stronger growth.

In global terms, these are minute levels. But they are having an impact, as one of the world’s four giant coffee firms, Kraft, conceded when they acknowledged: ‘The demand for “fair trade” ... products so far is only moderate ... This has created only minor business but major image problems for the traditional coffee industry as a whole.’ However, the key question being asked within the fair trade movement is whether traditional fair trade purchases – and the alternative exemplar – are as effective a way of bringing change in unfair trade practices as other methods.

Oxfam has already decided to shift. Others argue that there are better ways to lead mainstream companies into better practice – using consumer pressure and boycotts, codes of conduct, and the tools of corporate social responsibility to arrive at sustainable social and economic values. Above all, they argue, far more disadvantaged producers would benefit from time spent lobbying for change in international trade rules – reducing rich nations‘ practices of subsidy and protectionism, and introducing appropriate levels of regulation to manage trade and foreign direct investment – so that they make an important contribution to poverty reduction (instead of their present litany of exploitation, displacement of livelihoods, environmental degradation, balance of payments problems, and the undermining of local cultures).

The big question remains: is fair trade merely a diversion from these issues – or is it a great way of raising public awareness of the injustice of trade and/or of setting the pace in the hope of dragging mainstream business along in its wake?

In one sense fair trade has an obvious justification. It is better to light one candle than curse the darkness, as the Chinese proverb has it, or, in the words of Edmund Burke, ‘nobody made a greater mistake than he who did nothing because he could only do a little’. There are several million men, women and children whose lives would be far worse without fair trade. Buying their produce may just be another way of giving to charity. That, of course, is worthwhile in itself. But whether fair trade is the best tool to do the bigger job remains an open question

Paul Vallely was a trustee of Traidcraft from 1992-1995 and chair of Traidcraft Exchange from 1995-1999.

PHOTOGRAPH: Chris Cypert/www.chriscypert.com

This issue:
Contents | Editorial K. Toepfer | Looking through new lenses | Development with a human face | Trade can transform | Achieving win–win–win | People | Promises to keep | As precious as gold | Expanding the circle | At a glance: Globalization, poverty, trade and the environment | Acting local | Cooperation is catching | Books & products | Getting through the bottleneck | Investing in the environment | Bishkek Mountain Platform | You can’t breathe money | We will succeed | Fair trade? Fair question


Complementary articles in other issues:
Anita Roddick: Multi-local business (Beyond 2000) 2000
Issue on Poverty, Health and the Environment, 2001
Issue on Production and Consumption, 1996

AAAS Atlas of Population and Environment:
Population and natural resources
Population and Land Use