Is it time to rethink Fairtrade?

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This year millions of Americans joined in Fair Trade Month, where consumers were asked in October to “be fair” and buy Fairtrade products. However, a growing number of ethical producers and campaigners question how capable the Fairtrade system is of tackling the vast inequalities of the global commodities and labour markets.

Some even claim that ‘fairwashing’ – the use of Fairtrade certification to give the illusion of ethical commitment – allows companies to exploit the logo for commercial purposes.

“It’s a way of greenwashing. It disguises what else is going on in their business,” says Steve Macatonia, director of coffee sourcing and ethical trade at Union Hand Roasted Coffee, a multimillion-pound London coffee company which sources its coffee directly from small-scale farmers to ensure “sustainabie livelihoods”.

“They think consumers are hoodwinked into thinking that those with the Fairtrade certificate are always doing the right thing. But consumers are not fooled by it. I think people see what it is.”

Fairtrade pays farmers a minimum price for their produce – a crucial safety net, they say, for the hugely fluctuating commodities market. An additional premium paid to farmers and workers is used for environmental and economic developmental projects.

The approach has been hugely successful. Fairtrade’s global sales reached £4.4 billion in 2014, a ten per cent increase since 2013. Swedish and German markets increased by 37 and 27 per cent respectively. Fairtrade works with 1.5 million farmers and workers in 1,226 producer organisations in 74 countries worldwide.

Yet critics say certification is now inadequate.

The founders of Fairtrade have publicly distanced themselves from the brand. Dutch trade campaigner Nico Roozen helped set up what was to became Fairtrade in 1985, and now runs the Utrecht-based non-profit Solidaridad which works to bring about the sustainable production of commodities such as coffee, cocoa and cotton.

Solidaridad’s 2012 report outlines how even the best performing smallholders only manage to earn around US$3,200 a year, an income of less than US$10 a day.

“This confirms the criticism of Fairtrade that, in spite of good intentions and concrete improvements for farmers, the reality for small-scale farmers is a shift from poverty to certified poverty,” argued Roozen in a press release.

According to Solidaridad, better conditions for farmers rely on increasing the scale of production, farm organisation, processing, and new technologies.

“Certification and training alone won’t help African coffee farmers build a better future,” says Karugu Macharia, director of Solidaridad East Africa. “We need a broader strategy to ensure that coffee growing becomes more sustainable and to make it more attractive for young farmers.”


Commodity trap

A 2014 Solidaridad report outlines how East African Fairtrade coffee farmers receive only marginally more income than uncertified farmers, a claim echoed by a 2014 report from London’s School for Oriental and African Studies (SOAS), which couldn’t find evidence that Fairtrade had made a difference to the wages and working conditions of manual agricultural workers.

“Fairtrade may ‘work’ but it does not quite do what it says on most of the labels,” SOAS researchers said.

“It aggravates rural inequality and at best may do so by supporting the emergence of rural capitalist producers; and it fails to make a difference to the welfare of the poorest people involved in the Fairtrade chain.”

Many farmers are only able to sell a small amount of their produce as Fairtrade.

In 2012, 430,000 metric tons of certified coffee was produced but only 30 per cent was sold under Fairtrade conditions.

Instead, Macatonia argues, Fairtrade need to focus on improving the quality of its products. Union Hand Roasted Coffee is valued at around £10 million and it pays its 42 producers across Latin America and East Africa around 25 per cent more than the Fairtrade price, as well as a living wage. In return, consumers get a guaranteed high-quality product.

“It’s about farmers knowing the value of what they produce,” Macatonia explains. “You can say we are in a niche market. But we’ve seen how effective that we can be.

“We try and bring people out of commodity trap. We don’t see it as aspirational if it’s not going to lift the producer out of poverty.

“It’s a lot more complex that certification. To be ethical, we have to show how we source and work with producers. You can’t just stick that on a pack as a logo.”

Yet Fairtrade want their products to be available at all price points, from instant coffee to the high-end luxury market. They are proud of becoming mainstream. “All Maltesers are now certified, and Mars in the UK and Ireland are now made with 100 per cent Fairtrade cocoa,” a spokesperson says. “This is the kind of engagement we are looking for. We hope it is a starting point.”

Fairtrade does work with large farmers, certifying plantations, factories and estates producing tea, bananas and other fruit, cut flowers, herbs, vegetables and sports balls. But Fairtrade says it is crucial that cocoa and coffee production remain limited to small farmer’s cooperatives.

“The majority of cocoa and coffee production is done by small farmers,” explains Reykia Fick, media relations manager with the Bonn-based Fairtrade International. “Addressing the underinvestment they face globally is hugely important.”

But, Macatonia says, Fairtrade should have no limitations.

“Often small-scale farmers are not organised into legal entities or cooperatives. They lack the education.

“We worked with subsistence farmers in Rwanda in very high levels of poverty. In 15 years they have totally transformed their housing and levels of education.

“But we also work with plantation estate farms. One owner has a workforce of 200.”


Labour practices

Labour practices have also been a thorny issue. Anti-Slavery International describes the organisation’s response to a 2010 BBC documentary, which accused Fairtrade cocoa producers in West Africa of using child labour, as ‘very poor’.

They claim a meeting with Fairtrade International to press them to report instances of child labour was unsuccessful.

“When we have met with Fairtrade, they have said that their primary responsibility is producers and not children. That has been the attitude in the past,” says Anti-Slavery International Director Aidan McQuade.

He adds that child labour and even child slavery is common and culturally acceptable across Ghana and Cote d’Ivoire.

Fairtrade prohibits both direct and indirect employment of any child under 15. Yet their website acknowledges that they cannot provide a 100 per cent guarantee that a product is free of child labour – and that certification is only part of the issue.

“There needs to be third party public reporting looking with a rigorous human rights lens at what practices are and how they can be reformed,” McQuade argues.

“But it seems to be about protecting the brand rather than addressing the issue.”

Fairtrade International insists that certification is as robust as ever. They have recently strengthened standards for importers and exporters. Fairtrade traders now need to offer farmers pre-finance, and from February 2017, all traders will be required to comply with the International Labour Organisation Convention and national environmental laws.

Hired plantation and estate labour on certified farms are now guaranteed the right to freely organise and collectively bargain.

Fairtrade is working towards a living wage, and has researched income standards in rural South Africa, the Dominican Republic and Malawi and semi-urban Kenya.

These improvements have been welcomed. But for many, more needs to be done to protect the integrity of Fairtrade.

“Fairtrade have a view that all injustice arises from economic inequality. But there needs a broadening of the perspective,” says McQuade.

“Paying a good wage is just not enough.”