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DEVELOPMENT-WORLD: What Is So Fair About Fair Trade?
PARIS, Sep 15 (IPS) - Fair trade is held up as promoting fair prices for producers and guaranteeing social and environmental standards. These ideas are neither new nor controversial. But the recent boom in fair trade has drawn attention as standards and models multiply while authentication mechanisms lag behind.

Artisans du Monde (``Artisans of the World''), a federation of 170 French fair trade outlets, estimates that Europe accounts for 60 percent of the fair trade market. In 2000, it reckons, one in 10 French consumers had heard of fair or equitable trade.

In 2007 the figure jumped to eight out of 10. In 2006, 42 percent of French consumers in fact purchased a fair trade product.

According to the French Platform for Fair Trade (Plate-Forme pour le Commerce Équitable, or PFCE), a collective of 39 organisations, the sector's European turnover amounted to 1.25 billion euros in 2006, and fair trade sales have jumped by 20 percent every year since 2000.

At the other end of the chain, Artisans du Monde estimates that fair trade benefits 1.5 million small producers, the vast majority of whom are from developing countries. But what makes fair trade so fair to them?

Most fair trade organisations, whether buyers, importers, distributors or certifiers, operate under a self-imposed charter. Respecting a number of criteria will earn producers the right to use a network's label and grant their product access to a fair trade distributor's shelves.

But charters are as diverse as operators. Umbrella organisations such as the International Fair Trade Association, which claims 300 members, have a hard time unifying operational standards.
by afew (afew(a in a circle)eurotrib_dot_com) on Sun Sep 21st, 2008 at 03:43:35 PM EST
[ Parent ]
... and not only fair-trade: it is common to many NGO areas of activity...

DEVELOPMENT-WORLD: What Is So Fair About Fair Trade?

But, whatever the definitions, the charters and the organisations' role in the chain, both the PFCE and Minga admit that certification is the weakest link in ensuring that trade is indeed fair.

Both networks rely on self-evaluation. There is no independent verification that producers do in fact abide by a network's charter and principles.

In order to join Minga and have its products sold by the association's outlets, a producer must fill in a questionnaire with about 400 questions.

``We also encourage a participatory system of verification where a member organisation visits another and evaluates economic, social and environmental practices,'' says Besson.

For Maisonhaute, it is unthinkable to systematically verify production standards on the ground in developing countries: ``Given the number of producers and the distances to cover, the cost of travelling to each location would be unbearable.''

This allows the Adam Smith Institute, a British think tank that promotes free trade and is one of fair trade's harshest critics, to denounce what it sees as a marketing initiative rather than a new model for economic justice.

``Just 10 percent of the premium consumers pay for fair trade actually goes to the producer. Retailers pocket the rest,'' the Institute claims in a report titled ``Unfair Trade''.


Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire
by marco on Mon Sep 22nd, 2008 at 03:41:52 AM EST
[ Parent ]
Still and all, what have the free-traders of the Adam Smith Institute got against "marketing intitiatives"? What are they complaining about?

Oh, that everything "distorts" markets... Except for the wealthy and powerful dominating trade on their own terms?

I can't rid myself of the impression that, if producers were getting, not 10%, but just 1 or 2% more for their products through an "undistorted" market system, we'd be hearing a lot about how global free trade with added trickle-down is "lifting millions from poverty".

by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 22nd, 2008 at 04:33:49 AM EST
[ Parent ]
i hear you.  i think it comes down to fear.  the free-traders are afraid of the potential of fair-trade to displace them.  so they'll use any specious argumentation to knock other models of doing business.

the best ways to respond to the accusation are to (1) make verification thorough, (2) provide evidence that fair-trade producers, even if they are only getting 10%, are still getting significantly more than what they would otherwise get through "free trade", and (3) convert as much as the supply chain from "free trade" to "fair trade", and do it verifiably.

Point n'est besoin d'espérer pour entreprendre, ni de réussir pour persévérer. - Charles le Téméraire

by marco on Mon Sep 22nd, 2008 at 05:38:48 AM EST
[ Parent ]
I quite agree. I'll add that the restriction of fair trade contracts to cooperative-type structures (as exemplified by one of the French groups mentioned in the article) is also an important point (imo) in favour of fair trade, and a further guarantee that producers are reasonably more likely to be getting a fairer deal as well as being part of a structural process that will offer them a better future.
by afew (afew(a in a circle)eurotrib_dot_com) on Mon Sep 22nd, 2008 at 07:22:50 AM EST
[ Parent ]
Well, I don't know if any of Artisans du Monde's salespeople is paid. But I know at least that a great many AREN'T.

So it already means that more of the value stream goes to the producer.

Now, they say that 10% of the extra price goes to the producer (that may be, I have no idea). Any guess as to how much of the price goes to the producer in a standard distribution ? I can't remember (I did read it once) but I reckon we are talking around 1-2%. So if they get 10% of the difference, it probably means they double or treble their income. That's quite major -and the true metric for the effectiveness of such schemes.

So what they are saying is that retailers that can't have the kind of economies of scale, or pressure on all intermediate actors as major stores (and therefore probably higher costs), still end up giving hugely more to the producer, while more or less ensuring that workers are treated decently and that crops are grown in a reasonably environmently friendly way.

I guess that, from them, it counts as criticism.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Sep 22nd, 2008 at 05:42:55 AM EST
[ Parent ]
Thats a pretty bad article on fair trade. Leaving aside the singular focus on France, a large part of fair trade products do work under unified operational standards and do not "rely on self-evaluation."

My girlfriend (who some of you met in Paris this weekend) currently works for the certification organisation for the Fairtrade brand in Bonn, FLO-CERT.

She has also been talking about the problem with certification, but with a slightly different take on it. FLO-CERT do send inspectors to all producers and traders applying for Fairtrade certification, as well as yearly inspections of everyone after certification.

The problem thought, is that to keep all the actors in the system "fair", rules and regulations are constantly sharpened and the size of the control apparatus is growing. Which increases cost.

This again increases the certification cost, driving down wages at the production end and increasing product cost at the consumer end. So their constant challenge is to make an "airtight" certification and control system that ensures their standards at the lowest possible cost to producers and consumers.

Personally I don't think fair trade is the magic bullet to solve world inequality, but I am pretty sure it helps. But I also would be very uneasy about trusting any fair trading standard that only relied on self-evaluation.


For Maisonhaute, it is unthinkable to systematically verify production standards on the ground in developing countries: ``Given the number of producers and the distances to cover, the cost of travelling to each location would be unbearable.''

This allows the Adam Smith Institute, a British think tank that promotes free trade and is one of fair trade's harshest critics, to denounce what it sees as a marketing initiative rather than a new model for economic justice.

This "he said. she said"-pieces is unfair both to the Fair trade organisations as well as to the Adam Smith Institute. (Unless the "institute" is unaware that a significant portion of fair trade actors are actually inspected regularily.)

by Trond Ove on Mon Sep 22nd, 2008 at 08:13:46 AM EST
[ Parent ]

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