trade not aid “fairtrade”

Fair trade represents a strategy for fighting poverty.

Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries and promote sustainability. The movement advocates the payment of a higher price to producers as well as social and environmental standards in areas related to the production of a wide variety of goods. It focuses in particular on exports from developing countries to developed countries, most notably handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate and flowers.

Fair trade’s strategic intent is to work with marginalized producers and workers in order to help them move towards economic self-sufficiency and stability. It also aims to allow them to become greater stakeholders in their own organizations, as well as play a wider role in international trade. Fair trade proponents include a number of international development aid, social, religious and environmental organizations such as Christian Aid, SERRV International, Oxfam, Amnesty International, Catholic Relief Services, and Caritas International.

In 2008, Fair trade certified sales amounted to approximately US $4.08 billion (£2.9 billion) worldwide, a 22% year-to-year increase. While this represents a tiny fraction of world trade in physical merchandise, fair trade products generally account for 1-20% of all sales in their product categories in Europe and North America. In June 2008, it was estimated that over 7.5 million producers and their families were benefiting from fair trade funded infrastructure, technical assistance and community development projects.

History of Fairtrade

The concept of “fair trade” has been around for over 40 years but a formal labelling scheme didn’t get off the ground until the late 1980s.

1988 small producers in Chiapas, Mexico were calling for fair trading conditions rather than humanitarian aid. In response to their demands the Max Havelaar organisation was set up.

The name Max Havelaar came from a fictional humanitarian hero in a book written by Eduard Douwes Dekker. Eduard was a Dutch official in colonial Java in the 17th century.

The book he wrote called Max Havelaar or the Coffee Auctions of the Dutch Trading Company exposed the abuse of free labour in the Dutch Indies.

The Max Havelaar initiative was replicated in several other markets across Europe and North America “Max Havelaar” (in Belgium, Switzerland, Denmark, Norway and France), “Transfair” (in Germany, Austria, Luxemburg, Italy, the United States, Canada and Japan), “Fairtrade Mark” in the UK and Ireland, “Rättvisemärkt” in Sweden, and “Reilu Kauppa” in Finland.

In 2002 the Fairtrade Labelling Organisation launched the new International Fairtrade Certification Mark. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, facilitate cross border trade and simplify export procedures for both producers and exporters.

In the UK Fairtade has been very successful and accounts for around 75% of the fresh coffee market.

The FAIRTRADE Mark ‘Five Guarantees’

1. The FAIRTRADE Mark guarantees farmers a fair and stable price for their products

A main objective of Fairtrade is to increase producer incomes. This is achieved by payment of a guaranteed fair price and by reducing the number of intermediaries in the supply chain so that the growers get a larger share of the export price.
The Fairtrade minimum price is calculated to cover the costs of sustainable production and a sustainable livelihood. All stakeholders, including producers and traders, are consulted in the price-setting process. There is an additional premium for investment in social, commercial or environmental development projects. To take coffee as an example: the Fairtrade price for arabica coffee is 126 cents/lb. This comprises the Fairtrade minimum price of 121 cents/lb plus the premium of 5 cents/lb. If the international price exceeds the Fairtrade price, then the Fairtrade price comprises the international price plus Fairtrade premium. By contrast, the international coffee price fell to 45 cents in 2001, the lowest-ever level in real terms. It slowly recovered to average around 75 cents in 2004.

2. The FAIRTRADE Mark guarantees extra income for farmers and estate workers to improve their lives.

The Fairtrade premium is paid into the bank account of an elected committee set up specifically to administer the premium fund. The fund is reserved for investment in projects that are decided on with the agreement of coop members (or following consultation with the workforce in the case of plantations). The premium is invested in social projects such as building schools, clinics and community centres; funding scholarships; installation of electricity; and low-interest loan funds to improve housing or pay school or medical bills. Estate workers have used loans to start up small income-generating enterprises such as rearing animals and growing crops to sell meat, eggs, milk, vegetables, fruit and spices to local markets or traders.
Co-ops have used the premium for environmental protection or to strengthen their businesses by financing organic conversion or quality improvement programmes. Others have built processing facilities or cupping laboratories which enable them improve the quality of their coffee and hold coffee tasting sessions for buyers. These measures allow growers to add value to a raw commodity product.

3. The FAIRTRADE Mark guarantees a greater respect for the environment

Environmental protection and sustainability must be included in producer organisations’ management policies. They must comply with national and international legislation on protection of the environment (natural waters, virgin forest and other ecosystems of high ecological value), erosion, waste management and the use and handling of hazardous chemicals. The use of agrochemicals is minimised and reduced through the implementation of an Integrated Crop Management system and gradually replaced with organic fertilisers and biological disease control.
Producers are encouraged to work towards organic practices where practical.

4. The FAIRTRADE Mark guarantees small farmers a stronger position in world markets

There is a very big information gap that exists between farmers and the market. Most producers in developing countries do not know what the market wants and even if farmers have the best quality of coffee, they are not rewarded accordingly… The future belongs to the organized. Coffee farmers’ organizations are the engines of growth and sustainability in coffee production. They are vehicles and conduits for information dissemination.
Working together, they will achieve the economies of scale necessary to market their own coffee in a
competitive and cost effective manner, thus tapping into price incentives available for superior quality coffees. Fairtrade strengthens producer organisations – by dealing directly with Fairtrade partners and buyers, farmers’ organisations gain crucial technical information and market knowledge that can also help them get better prices in the conventional market.
By creating a specialist sector for their products, Fairtrade also helps producers overcome the barriers to accessing mainstream markets in developed countries.

5. The FAIRTRADE Mark guarantees a closer link between consumers and producers

More and more of us are concerned about the consequences of our purchases. We want to know where they come from, how they were produced, and that the people who produced them received a fair deal. The Fairtrade system is about trading as directly as possible with producer organisations within a clear set of standards: the result is a transparent audit trail from producer to shop shelf.
Why is there a need for fair trade? Fairtrade is a step to making the world a fairer place. You can show your support for developing world producers through what you buy. Two billion people – a third of humanity – survive on less than $2 a day. Unfair trade rules keep them in poverty, but they face the global challenges of food shortages and climate change too.
Fairtrade believes that developing world producers should be in control of their own lives, by getting a better deal for the work that they do. This is a different way of doing business. It’s a way that puts the poorest of the world first.
Small scale farmers and field workers in developing countries live with the constant pressures of world markets, fluctuating prices, and exploitation by local traders. The repercussions range from debt to unemployment and poverty. However, there are few alternatives to domestic production.

Unfortunately, they often include the cultivation of narcotic substances, prostitution, child labour, migration to the slums of major cities or emigration.

Fair trade offers more than a million people a way out of this downward spiral.