Fair trade certification is almost synonymous with ethical consumerism, social justice and environmental sustainability, but a closer look reveals some potential flaws.
Often touted as an instrument for poverty alleviation, worker empowerment and environmentally friendly agricultural practices, fair trade seems to be the market-based solution for achieving a balance between the need for sustainable development and the demand for commodities such as coffee, chocolate, teas, apparel and sugar, to name a few.
Only democratically run cooperatives may receive fair trade certification. To receive certification, those co-ops generally must also observe International Labor Organization standards for their employees, which entails minimum wage and a ban on child labor, among other things, and the cooperatives must demonstrate that their production methods are environmentally sustainable.
Fair trade guarantees its producers a minimum price per unit of whatever commodity or crop they supply. If market prices rise above the fair trade minimum, certified growers receive the market price. On top of the minimum price, the producers also receive a social premium that may be used to benefit the local community or to benefit the co-op itself.
That good reputation combined with an apparent increase in ethical consumerism has continually driven up sales of fair trade products. From 2004 to 2012, for example, sales of Fairtrade International products increased by 3.97 billion euros. American consumers, following this trend, have increasingly come to believe that fair trade certified products are worth the little bit of extra money.
Way down in Athens County you might find fair trade products at Village Bakery, or sip a cup of fair trade coffee at Donkey Coffee.
Fair trade seems practically ubiquitous, so follows that its effect must be fairly sizable and widespread. Critics of fair trade, Fairtrade International in particular, would argue otherwise. According to a rather outspoken critic, a growing body of literature suggests that fair trade efforts fail to improve the standard of living of the global poor in the long-term.
Not only does fair trade fail to improve the lot of its participants, but its policies exclude some small growers from participating. In order to gain access to the FLO network, producers are required to pay thousands of dollars in application fees, inspection fees and annual fees to retain certification. Certification is good for three years, after which continued certification requires the application and inspection fees once again. That fee prevents the poorest from gaining fair trade certification.
That issue manifests itself in distributional consequences. If the price of a commodity plummets, for example coffee, fair trade producers most likely to benefit the price floor are male owners of large tracts of land, or those who live in nations where the standard of living is already relatively high. Those are the producers best positioned to sell high volumes of their good to the buyers within the fair trade network.
So according to these critics, fair trade actually marginalizes the poorest nations. According to a book called The Fair Trade Scandal: Marketing Poverty to Benefit the Rich, 54 percent of fair trade certified producers are located in nations considered by the World Bank to be “upper middle-income.” Twenty-one percent of producers are located in “low-income” countries, and just 13.5 percent of producers are in least developed countries.
It seems, then, that fair trade may only benefit only the most capable producers, who tend to already be relatively well off, rather than those that most need its benefits. Further, some have found that most of the money accrued from the additional cost of fair trade products remains in the consuming nation rather than benefiting the producer.
Given those criticisms, it may be that the function of fair trade is actually very modest. It is more of a niche market whose design limits its benefits to a select group of producers, but it does not challenge the larger structures of poverty and inequality. We ought to ask, then, if fair trade is a long term solution to the aforementioned need to balance the need sustainable development with demand for commodity crops from the global south.
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Austin Miles is a senior studying biology. What do you know about fair trade products? Email him at am343011@ohio.edu.
