I’ve been in Cochabamba, Bolivia for just over 2 weeks now and although my research project isn’t designed around Fair Trade, it has come to mind that Fair Trade impacts Bolivian producers. So I feel this blog post to be of importance. Fair Trade covers a multitude of products grown throughout the developing world, including cocoa, cereals, fresh fruit, vegetables, herbs and spices, nuts, tea, and most notably: coffee. Coffee is the second largest traded commodity (by value) in the world, after petroleum.
Fair Trade has been an interest of mine for some time and, as most people would, found the concept of Fair Trade to be noble and important in protecting the rights of farmers in the developing world. The idea that farmers in developing markets could receive enough income to feed their families, be able to send their children to school, have enough income to pay their workers fair wages and be able to stand up for themselves so they are no longer taken advantage of by large, international coffee companies that used to hold more bargaining power.
However, this past spring I was reading a book by renowned economist, Jagdish Bhagwati, who made a negative connotation towards the fair trade practice. And it got me to thinking, why would this free trade promoter, who comes from an emerging country (India), take issue with fair trade? It led me to researching the pros and cons of fair trade, which has ultimately inspired me to question the entire practice.
I believe any compassionate individual would support the idea of fair trade and want to help disadvantaged farmers. I, too, wish to help in any reasonable way to eliminate global poverty and support opportunities for youth education. But upon researching the arguments of those against fair trade, I was disturbed by several facets of fair trade certification. First, Fair Trade USA not only certifies small farmers, but they do the marketing of fair trade products as well. In my opinion, this creates a conflict of interest. Since the certifying organization earns $.10 on every pound of fair trade coffee sold, it is only in its best interest to certify as many small farmers as possible. Remember: non-profit does not mean “no profit.”
However, my biggest issue with the Fair Trade certification process is that it is only for “small farmers”. There are a number of hurdles to jump through to become a designated Fair Trade producer. How it basically works is that the buyers of Fair Trade produced products must also be certified to purchase them. The small farmers can only produce a certain amount of their product each year and employ a certain amount workers. They must also pay fair wages and receive a specific price for their product from the buyers, often above market prices. At least for coffee, the small farmers MUST participate in a large cooperative with other small farmers who make decisions democratically.
This is a great idea, but I ask: What about the medium- and large-size farmers? What about the larger farmers who pay fair wages and follow the guidelines of the Fair Trade regulations? They cannot become Fair Trade certified. What this policy creates is exclusionary practices, not inclusionary. What is happening is that the medium- and large-size farmers are left out of the Fair Trade boom. They, in turn, must sell their products at market prices and are paid considerably less than the small, Fair Trade certified farmers. This certification process is nothing less than discriminatory.
And what about the small-, medium-, and large-size farmers who prefer to make their own independent business decisions not be driven by what other farmers in the cooperative want? Yes, a cooperative of 100 farmers can create more bargaining power when negotiating business deals, but it also binds farmers who want to make their own business decisions. Should the farmer choose to forego the cooperative, they cannot be designated “Fair Trade Certified.”
What I’ve found is that what started off as an honorable idea has come to create substantial problems for farmers in developing countries. I believe farmers deserve an income that affords them the opportunity to put food on the table and send their children to school. And I want to spend my money on products that help them do so. But I do not wish to discriminate against the larger farmers, who employ more workers, also have a family feed, want to send their children to school, and are responsible for their employees putting food on their family’s table and sending their own children to school. I want them, too, to see the fruits of the Fair Trade explosion. Hence, I believe large- and medium-size farmers should be allowed to participate in Fair Trade. I’d like to speak these farmers and see what they think and learn how they’re being impacted, because right now it makes for a difficult decision as a consumer.
What do you think? Do you have any additional thoughts or comments on how Fair Trade can be more inclusive?
You can find more information about Fair Trade and the debate here: