We’re midway through Fairtrade Fortnight (23rd February – 8th March), and so Lib Dem Voice is running two articles asking the question, ‘Should liberals back Fair Trade?’, putting two opposing viewpoints to our readers. Yesterday, Lib Dem MP John Pugh made the case for fair trade. Today Lib Dem member Julian Harris takes a critical look.
As liberals, we are internationalist in our outlook. I didn’t join the party to moan about a neighbour’s roof extension, and I doubt you did either. If you’ll excuse the clichéd sanctimony—we want to make the world a better place.
Hence many among us instinctively support Fairtrade products, and have been gleefully purchasing them during the current Fairtrade Fortnight. It seems to make perfect sense: we believe that trade is good, and this is even better, giving a helping hand to the world’s poorest people.
This is a noble sentiment, but how about the facts—is Fairtrade really helping the most impoverished and vulnerable?
According to a 2008 report, just one country—Mexico—produces a quarter of all Fairtrade coffee, and has the largest number of Fairtrade producer organisations in the world (over fifty). Mexico’s GDP per capita is around $15,000. Compare this with many African countries where it is under $1,000, such as Ethiopia ($871) and Burundi ($371). Burundi has no Fairtrade-certified producers; Ethiopia has just four, in spite of being home to over 60 million people working in agriculture.
But isn’t Fairtrade at least in theory a good idea that could be expanded beyond middle-income countries, and into the poorest regions?
Economist Tim Harford calculated that only 10 per cent of the Fairtrade premium makes its way to producers, most of it eaten up by retailers. Further, according to the international Fairtrade organisation itself, only one fifth of crops produced on Fairtrade-certified farms actually get sold at Fairtrade rates. And even when this fraction of a fraction is passed on, it benefits only land-owning producers, and not the underprivileged manual labourers who work on farms.
The Fairtrade idea is largely based on price fixing, with a minimum price guaranteed for the producer signed up to the scheme. When farmers can only shift one fifth of their crops into this scheme, it makes sense for them to keep the best produce to sell on the free market, where there are incentives for better quality products. The shoddy produce will end up in the Fairtrade section, which partly explains the brand’s reputation for mediocre goods.
On a grander scale this is why Fairtrade attracts low quality or inefficiently made produce—it guarantees prices irrespective of these factors. An agricultural economist in Costa Rica said in 2007: “Fair Trade directs itself to organisations … and regions which are not competitive”.
Fairtrade is therefore propping up prices for inefficient, labour-intensive cooperatives, providing a disincentive to technological development—or indeed any development, such as changing one’s product or changing one’s entire activity. There is no reason why the poor should be kept working the land yet this seems to be the scheme’s intention. In their own words, Fairtrade aims at “allowing more family members to stay in coffee production”. Widespread agrarian existence is not quaint or charming, it is a poverty trap, and one that people should be allowed to escape from.
One very tangible means of escape could be the processing of crops (such as coffee), but Fairtrade is designed only to pay a fixed price for unprocessed crops. Roasting of coffee beans, for example, occurs in wealthier areas—while the poor stay ‘in their place’, simply working the fields.
Yet it is possible for this part of the chain to develop closer to where the crops grow. A company called Café Britt roasts its coffee in Costa Rica, utilising local expertise to produce high quality coffee. Meanwhile, groups such as Technoserve aid technological development and encourage entrepreneurship among east African farmers.
These groups are just two of many alternatives to the proposed Fairtrade solution, offering alternative ways of assisting development, or sourcing produce by fairer means. In 2007 the Parliamentary International Development Committee noted the importance of competition and the “many other credible certification schemes with social and environmental objectives” [aside from Fairtrade]. Consumers, they said, should be allowed “to make informed choices”. They concluded: “It is important that fair trade organisations do not assume they have a monopoly on this”.
However, we are now witnessing a political entrenchment of Fairtrade that is very much monopolistic and unquestioned. ‘Fairtrade councils’ and even national governments pledge to promote this one brand, adopting targets for how much of its products people must purchase. And via its education programme for children, the state imbeds uncritical support for Fairtrade. For example, a Key Stage 2 assembly pack instructs: “Explain that more and more people are keen to support Fairtrade”. Explain indeed.
Harriet Lamb of Fairtrade Foundation has referred to Fairtrade as a “new tactic” to make a political statement. Fairtrade, she says, “helps give our governments a mandate to take the big, bold steps needed to change world trade rules”.
The origins of the Fairtrade brand were largely born from this anti-free trade section of the political spectrum, which is a shame, given that China’s part-liberalisation of recent decades has allowed 400 million people to lift themselves out of poverty. David Smith, economics editor of the Sunday Times, described China and India’s trade liberalisation as “the most effective anti-poverty programme the world has ever seen”.
Fairtrade, on the other hand, is at best a gimmick, and at worst an obstruction to the fight against poverty. Discerning liberals should challenge reactionary consensus and object to the political enforcement of this brand.
* Julian Harris is a Liberal Democrat activist with the Camden local party in London.
Follow @LibDemVoice on Twitter
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
Manuela Perteghella, Stratford-on-Avon and John Profumo
The "Just War" tradition
Our kids need a lorra, lorra, larffs!!
West End Ward Tuesday Surgeries #dundeewestend
Michael BG
Roland
Simon R
David Sheppard
Peter Msrtin
21 Comments
John Pugh’s rather incoherent ramble had already thoroughly persuaded me of the pitfalls of so-called Fairtrade.
But it’s revealing to see the actual numbers showing that Fairtrade doesn’t get aid to where it’s needed most.
Middle class guilt – however well-intentioned – has rarely been a useful motor in relieving poverty and I fear that’s really what Fairtrade is based on.
Yes, let’s all listen to Mark Littlewood and his entryist pals.
“The Cat Says:
3rd March 2009 at 8:48 pm
Yes, let’s all listen to Mark Littlewood and his entryist pals.”
Oh God, how tediously predictable.
Let’s hope that’s not what passes for argument on here from other contributors.
I’ve been worried for a long time that the Fairtrade Foundation with its branding, and its specific political agenda, has come to monopolise the meaning of “fair trade”.
And you’re absolutely right to point out that the Foundation’s influence has become entrenched even in public procurement policy, with no clear aims other than an uncritical wish on the part of these organisations to feel, and look, pious.
Great article.
This is an absolute shocker of an article. Very well written but a graceless confederation of straw people, conjecture, only partially referenced assertion and non sequetars. I’ve found the site “down” for most of the night and am off now but I will post a much more detailed rebuttal in the next 48 hours. However before i make a couple of general points lets just make an aside about Philosophy.
Julian Harris and Mark Littlewood. I don’t want to be in the same party as you. About 15 years after we get STV we can have a entirely amicable divorce and you can go off and found your British version of the FDP. I will wish you no ill and buy you a card.
However in the mean time you are in coalition with tens of thoasands of people whoes view of liberty isn’t entirely negative and that draw on wider notions of justice, fairness and a critique of globalisation. If you think you are taking over with this agenda anytime in the next few decades you are going to have to do better than this.
Back to the article. Fair Trade has three key elements.
1. A guarenteed price. You called it fixed. I’ll call it fairer.
2. Long Term contracts guarenteeing an income and incentiving investment.
3. A Social Premium. This is invested in community projects and communial facilities.
However the entire artcile never gets past point one. If you want the Jury to convict you’ll have to at least acknowledge all three lines of defence.
David Morton: your three elements of fair trade are all good things. To the extent that Fairtrade™ has been criticised, it is because it does not always live up to the aims of Fair Trade as a philosophy. Governments trying to lock in Fairtrade™ might even make the situation worse, in that the only commercial incentive Fairtrade™ has to actually be ‘fair’ is that it needs to convince ethical consumers of the genuine benefit to the producers. Governments are a lot easier to convince and a lot more likely to turn a blind eye to convenient breaches of fairness, so long as they can keep sticking the Fairtrade™ logo on everything and keep on telling everyone how ‘ethical’ they are.
Life really isn’t as simple as signing up to a few principles and trusting some monopoly organisation to always do the right thing in perpetuity. Fairtrade™ cannot be seen as the sole provider/labeller of ethical produce if we want to ensure that ethical standards are upheld. What we should really want is competition in ethical standards, with different organisations competing to be even more ethical than Fairtrade™. If we, as customers, are willing to pay the premium for these super-ethical services (and one of our social, if not political, campaigning goals should be to promote their uptake), they will flourish.
Don’t worry, though, I don’t think anyone wants you to leave the party just because you disagree with other people in it.
David, excelent deconstruction there.
David,
If you really don’t want to be in the same party as Julian and Mark, may I suggest that you take the only action that is open to you in a free and democratic party, and resign your membership?
Might I also suggest that rather than turn every debate in which either of them contributes into an opportunity to give voice to your personal animus, you focus on the matter in hand?
You describe Julian’s article as “a graceless confederation of straw people, conjecture, only partially referenced assertion and non sequesters” and yet I see specific figures, named economists, quotes from a parliamentary committee and from the Fairtrade Foundation itself, all couched in clear economic reasoning.
I look forward to your promised “more detailed rebuttal” with baited breath.
“… with baited breath”
You should probably see a doctor about that …
“you focus on the matter in hand?”
He did as well as fairly deconstructing the flaws in the piece.
There’s no point in discussing a subject following an article without referencing that article, flaws and all.
Let me make a start on the rebuttal for you, David.
“Economist Tim Harford calculated that only 10 per cent of the Fairtrade premium makes its way to producers”
Yes, we know that the costs of retailing the product, and paying first world wages to do so, are always much higher than anything the producer gets. For a non-Fairtrade product the producer gets even less than 10% of the total, for a Fairtrade product the producer’s share rises to (say) 10% of the total. But the first world retailing costs are unavoidable, and irrelevant. What would Julian say if the Fairtrade premium were higher, so that the producer was paid something a bit closer to the UK minimum wage? He would say that this was economically even more unjustified, a gross distortion of the market, featherbedding, etc.
So he’s got a nice little Catch 22 set up here. If Fairtrade offer a small premium, it’s too small to achieve anything. If Fairtrade were to offer a big premium, it would be an insult to free market theory. Either way, Fairtrade is rubbish.
“Mexico produces a quarter of all Fairtrade coffee” “Burundi has no Fairtrade-certified producers”.
Just how devastating an indictment is it that you can find, if you look for them, one or two poor countries that have no Fairtrade organisation, and one or two less poor that do?
“(The Fairtrade premium) benefits only land-owning producers, and not the underprivileged manual labourers”.
Well, the Fairtrade buyer, inevitably, buys from the farmer who sells his crop. What the farmer does with his receipts is a secondary question. He can pass on a share of the premium to his labourers. I don’t know if Fairtrade tries to ensure that he does so, or not. I’m sure that if they do, Julian will criticise Fairtrade for antimarket pseudomarxist practices. And if they don’t, Julian will criticise Fairtrade as being ineffectual. It’s Catch 22 time again.
Of course there is a case for globalisation, there are legitimate concerns about whether Fairtrade always operates well, there are bound to be imperfections in practice. Julian’s article avoids the serious analysis that could be offered. It is just a dishonest hatchet job.
John Pugh talked about slavery. The people in sweat shops who make clothes for our discounters are not far short of slaves. The economically viable wage is a starvation wage. If “Liberal Democrats” oppose all interference with the free market in such circumstances, then they are supporting the exploitation of the poor. They have no business joining a party whose explicit goals are the very opposite.
And of course what Julian Harris carefully _doesn’t_ mention is that Burundi is a tiny country with a population of only 3.5 million, and that 90% of its farming industry is at subsistence level.
My big problem with fair trade (among others outlined well in this article) is that fair trade certification status is actually very difficult to get, taking a good couple of years, a lot of forms, assessments, etc. Which is probably why the market is dominated by Mexican agri-business, rather than smallholders from Burundi, becuase most Burundian smallholders don’t have the high levels of literacy, access to internet etc, or time needed to get fairtrade certification.
Which is why I don’t buy fair trade and instead buy coffee coming from economies I want to support.
No! No no no no no no no! A liberal free market is just one where you have choice about what you pay and to whom you pay it. There’s no theory that says that there’s anything wrong with people choosing to buy Fairtrade™ for ethical reasons. There might be those who believe that, given the choice, people will naturally choose the path of exploitation and lowest cost, but the very existence of the – albeit imperfect – Fairtrade™ scheme disproves that point. Given the choice, people will often choose to be ethical. As Lib Dems we should be promoting this kind of behaviour. Whether we should be enforcing the practice of only buying Fairtrade™-badged goods is another question.
Julian raises some doubts about how effective Fairtrade™ really is at improving welfare, and I think he’s right to ask the question. What I think he’s arguing against is a situation where Fairtrade™ becomes the only standard that matters because, in fact, we can probably do a lot better than Fairtrade™ when it comes to helping producers. Privileging Fairtrade™ in law, and giving it a monopoly on approving goods for our consumption could, potentially, be rather dangerous, hence the need for competing bodies which would hopefully drive higher standards of ethics and welfare in response to our demand for those things. Settling just for what’s on offer now, and changing the law to enforce it, rules that possibility out.
Fairtrade is a voluntary scheme. Farmers can choose to join it. If Fairtrade wants to enforce wages for labourers, that’s fine because the farmers who join the scheme do so voluntarily. There is nothing Marxist about this and nothing that even the most wild-eyed anarcho-capitalist could disagree with. Fairtrade could do this right now and if they’re not doing it then that’s a failing of Fairtrade and not a conspiracy of right-wingers stopping them.
There’s a lot of wiggle room in that ‘not far short’. If these companies are breaking the law – international treaties, UNCHR, whatever – then they are, by definition, not participating in a free market manner. A functioning market requires the participants to respect the law. Liberal free markets are antithetical to any actions by governments designed to unfairly promote certain types of production, either by a) direct financial subsidy or b) passing of laws that give their own companies unfair advantages. Being able to dodge the UNCHR is one such unfair advantage, and anyone doing it should be stopped.
What we need is better enforcement of those rights and conventions. We shouldn’t be handing over that enforcement to some branding agency, we should be enforcing them through strong international institutions. Far from being on the ‘left’ of this argument, you’re actually arguing that, so long as the goods we – Western liberal types – buy are ‘Fairtrade’, you’re not terribly interested in the global institutions that might help those who aren’t directly employed in producing coffee, tea and biscuits for consumption in Europe. The counter-argument to your point is that we need strong international institutions which are capable of enforcing human rights across the globe.
If the data presented is correct – and I have no reason without putting in far too much work to say that it is not – then I believe there is a point to be made but am not sure it’s the one Mr Harris makes.
Fairtrade may well be a flawed brand and a product that fails to live up to its expectations, but the reason for its emergence wasn’t as simple as demagogic anti-trade protectionism salving its conscience. Of course there was some of that there, just as there were some radical Marxist Muslims marching against the Iraq war in London, and to categorise the whole in these terms is wilfully misleading.
Let us first set one term straight in the debate. There is no such thing as “free trade” in the early 20th century global economy. Mr Harris says that people in developing economies could roast their own coffee, but fails to mention that mostly they already do, and point out the very real reason why we do not see Costa Rican or Honduran or Mexican roasted coffee on European supermarket shelves: that the EU has an ongoing tariff regime of around 7-11% on Central American coffee. This is just one example of how the so-called “free trade” regime so loved of trade liberalists is anything but free, and I object strongly to the idea that trying to find ways of developing international wealth from within this flawed system must inherently be because we are “anti-trade.” If we were anti-trade, we wouldn’t drink tea or coffee at all because we can’t grow them in the UK. Rather, we recognise that the system in which the Fairtrade brand emerged was inherently flawed.
The arguments put forward by economists like Sen, Stiglitz and Chang – which Mr Pugh referenced but never really got to grips with for my money – are more nuanced and rational than simply “let’s all buy Cafe Direct and to hell with the rest”. Fairtrade is woefully insufficient – of course it is – but it is also better than the currently availablee alternatives. The thing about things that are necessary but insufficient is that they are still necessary, and saying that we should rip them up because the rest of the planks that would provide sufficiency are not in place is to be wilfully contrary, nothing more.
However, Mr Harris was not entirely without a point. A government that teaches children in KS2 that “more people prefer Fair Trade” without pointing out that the reason the brand exists is its own tariff regime is practising propaganda, pure and simple. While it can be argued that the British government cannot unilaterally impose a reduction in coffee or tea tariffs on the entire EU, it is nonetheless still no good for any government to support unfair tariffs at one end of the chain and then a voluntary tax at the other, locking in inefficiencies in the trade chain. FairTrade is something for consumers who wish to in some way bypass the ethical problems caused by government policies, but they are not for governments. Government is, by its nature, not required to bypass its own policies: if it believes something is wrong with them it can change them.
FairTrade is a bit of a gimmick, yes, but it’s one with a real and tangible if woefully inadequate effect. To say that it is better, however, to just throw off the shackles of “middle class guilt” and descend back into the “free trade” regime of tariffs and post-imperialist poverty lock-in is no answer at all. A rational liberal would indeed support FairTrade, for now, but with the caveat that once we wrested the reins of power from the protectionists that we would be in effect competing with the brand by working to construct a genuinely fair (which would by definition be more free) trade regime, allowing developing nations to protect their markets while they are developing and at the same time getting rid of the inefficient and destructive barriers to import of high value-added goods. Fair does not always mean equal, and if Free Trade zealots insist it does I advise you to ask them what their golf handicap is.
If FairTrade companies wanted to stick around, they might well find their premium prices could go more towards the “social capital” planks like school-building than before, but they should be forced to work hard to compete against a much fairer trade regime. If they fall by the wayside because there ceases to be necessity for their kind of social engineering then that is for the best. But until then we need them despite their flaws.
Early 21st century economy! I mean, there wasn’t one back then either but it’s hardly relevant.
Why do these things always only jump out after you’ve hit submit? Pshh.
Rob Knight,
Thanks for arguing straight. Pity almost nobody else on your side of the party does likewise.
But I don’t agree that it would help to create the Virgin Megabrand FairTradeWash (and/or greenwash) type of competitor to Fairtrade. That would get us back to the position we’re in with health foods, where almost any sort of gloopy industrial waste can be passed off as a health food, and the consumer can’t tell what is really healthy and what isn’t. Which suits the multinationals of course. Different suppliers can compete
with each other to sell Fairtrade products. Isn’t that competition enough?
If I can sum up McDuff’s excellent post, “The best is the enemy of the good”. Fairtrade is far from perfect, but it does create political momentum for global change. Wrecking it, whatever the motives, would be a step backwards. And if you think that making rhetorical gestures and mobilising popular opinion never gets you anywhere, look at Obama.
It’s pretty sad that so many responses here start by attacking Julian (and Mark).
Is he right to question the effectiveness of Fairtrade? Without doubt.
Is he right to point out the focus on producing raw materials (always the bottom of any supply chain)? Of course.
No matter what it is, Fair trade is not a serious alternative to genuine free trade. Trade tariffs imposed on non-EU countries are doing the real harm here. Isn’t that something we all agree with?
The problem as I see it is when people believe Fair Trade – a brand – can be a viable alternative to free trade – a system of trade. It’s like saying electronic voting machines are an alternative to democracy… no wait.. bad simile.
It is good so few responses in support of fairtrade have personally attacked those against, and so many have inteligently picked apart the arguments.
McDuff, I can think of very few libertarian commenters who would argue that there is anything like “free trade” at present, nor has there been a genuine fre trade movement since Labour, note, Labour, dropped it after Ramsay MacDonald’s government (though it i the reason ostensibly that L-G dissed the national government.
In fact that is mostly the libertarian argument, whether it be domestic or international – that it is the conspicuous absence of free trade, usually caused by governments even at low levels of surreptitious protectionism (but also by the likes of the global commodities TNCs with their seats on the IMF and World Bank), that continues to entrench poverty, at home and abroad.
As I said in my response to John Pugh – I notice, for example, that Ghanaian cocoa producers even who have FairTrade status still have to sell in the market, and only an average of 3% of their produce manages to sell at FairTrade rates. It certainly doesn’t mention that on the packaging!
I think what the anti-FairTradeTM angle needs to address is the widely held sense that we have some duty of care to people we are in an economic relationship with. I.e. if Bob is growing my coffee, and he is dirt poor, then I have some responsibility that I wouldn’t have if Bob were growing somebody else’s coffee.
If this sense of responsibility can be discharged with a charitable premium on the price of my coffee, I may be happy to pay it, and a bit of charity may do some good.
Paraphrasing brutally, Julian’s argument is that this is charity with strings, and these strings are doing some harm. The Davids are saying that the charity itself is doing some good. That’s not really a disagreement, at the core of this argument. There are of course some disagreements round the edges.