Tag Archives: fair trade

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.