Fairtrade – the global success story
Fairtrade celebrated its 20th anniversary in October 2014. Growing from an obscure niche market to a globally recognized phenomenon, today the label is an established part of the UK commercial industry. Fairtrade International (or ‘FI’ – formally known as Fairtrade Labelling Organisations International or ‘FLO’) is the international body made up of the Fairtrade Foundation and its partner organisations around the world. It is 50% owned by the farmers and workers. FI is in charge of developing Fairtrade standards for products, supporting farmers and workers, and operating global certification and auditing systems.
Fairtrade has sought to readjust the terms of the North-South trade and to use international market regulation to support development efforts in the South. No longer the realm of a few progressive producers and elite consumers, Fairtrade is now the most well-known ethical consumer label across the globe (Fairtrade International, 2013). Nine in ten consumers in five leading Fairtrade markets recognize Fairtrade. The label is strongly supported by the ‘Generation Fairtrade’ - i.e. the young adults who grew up with it. Today more than eight in 10 UK teens (82%) say that they think companies need to act more responsibly (Fairtrade-UK, 2014).
Fairtrade also represents one of the fastest growing segments of the global food market – e.g. in the UK one in every two adults recognize the FLO logo (Fairtrade Foundation, 2005). In 2013, the UK sales of Fairtrade were 1.78 bln, up 14% on the previous year (Fairtrade-UK, 2013).
Fairtrade’s local questions – in the UK and in Africa
Yet tensions are rising together with the movements remarkable success. The discussion now focuses on two examples of such issues – exploring alternatively the supply and demand aspects of Fairtrade. The demand-side of the discussion explores the role of the large UK supermarkets by engaging with the research of Barrientos and Smith (2007). The supply-side analysis focuses on the African producers drawing on the scholarship of Cramer et. al. (2015).
Demand – Fairtrade and the UK supermarkets
Barrientos and Smith (2007), researchers from the University of Sussex study the demand side of Fairtrade, focusing on the ways in which large corporate actors, such as the UK supermarkets, engage with the label. The UK supermarket sector is characterized by growth and concentration; these features have given it enormous power over producers and agents within their supply chain (Vorley, 2004).
The researchers explore the challenges of main-streaming Fairtrade in some of the UK’s largest supermarkets, since Fairtrade is now growing most rapidly in the supermarket’s own-brand product lines. Customer demand, commercial opportunity and brand value have been cited as the three most important reasons behind the decision of TESCO to further engage with Fairtrade (Nicholls and Opal, 2005). Yet the authors question, if this process of main-streaming represents an expansion of the benefits. Barrientos and Smith point out that supermarkets are allowed to use the FLO mark on their own brand products, without having to become a FLO licensee. Since in this case the supermarkets are not necessarily bound by Fairtrade rules and regulations, their suppliers are potentially exposed to the types of practices and pressures that exist in conventional production networks.
As case studies, Barrientos and Smith explore the Fairtrade network sourcing cocoa from Ghana and fresh fruit from South Africa. One of the commodities – cocoa is processed into chocolate and marketed as part of the supermarket’s brand, while fresh fruits are sold as their own brand label. There is a difference between the perishable and non-perishable products. Cocoa, a non-perishable product. can have an independent route into the market and the potential of sustaining at least of proportion of Fairtrade sales even if a supermarket drops it as its own brand line. The perishable fresh fruits though have few retail options outside the supermarket sector and there are only a few supermarket chains to sell to. Consequently, the researchers argue that there has been a shift in fair trade - from being driven exclusively by development objectives and social justice towards including those actors, who see it as a commercial opportunity.
Barrientos and Smith also caution that there is mounting anecdotal evidence from both the supermarkets own brands as well as the branded product sectors that supermarkets are switching between Fairtrade suppliers on the basis of price, asking suppliers for price reductions in return for continued listing and pushing for sources of fair trade among suppliers, many of which are large farms of plantations (Barrientos and Smith, 2007: 117). Thus, the researchers summarize that Fairtrade producers may be guaranteed a minimum price and social premium for any sales they achieve on the Fair Trade market, but the long-term perspective important for achieving sustainable development objectives may be absent (Barrientos and Smith, 2007: 118).
Supply – Fairtrade and the African producers
A team of researchers from the School of Oriental and African Studies (SOAS) has conducted a detailed 4 year study on the issues of of the wages and working conditions of labourers hired by ‘smallholder tea and coffee producers in Uganda and Ethiopia, as well as an additional study on flowers focusing on ‘hired labour organisations’.
First, the scholars bring attention to the remuneration difference between the wages received by hired labourers and the incomes of the African coffee and tea farmers who are their employers (Cramer et al, 2014: S116). The researchers caution that selecting a Fair trade label at the supermarket does not necessarily address the issues of fair pay: ‘If a local bureaucrat employed by a Fairtrade-certified cooperative in Uganda earns 70 times the wage earned by a woman hired to pluck tea on the farms of the co-operative members, the Fairtrade lobby does not protest that this gap in earnings is ‘unfair’ (Cramer et al., 2014: S116). The SOAS team also brings attention to the fact that ‘few people know or protest about the gulf between the wages received by hired labourers and the incomes received by the African coffee and tea farmers who are their employers’ (Cramer et al., 2014: S116).
Next, the researchers discuss that the categories used by the Fairtrade label are misleading, as ‘smallholders is actually a diverse group of farmers. A certain group of farmers, ‘the rural elites’ dominates the local production and marketing, and in some cases it even acts as traders/transporters/intermediaries, selling coffee produced by others. As a result, the benefits and profits resultant from the Freetrade are not equally distributed among the farmers, with the poor farmers being excluded from the local cooperatives. More disturbingly, the rural elites have been found to also dominate the cooperatives, and use them to reinforce their influence (Cramer et al., 2014: S120). ‘The assumption of egalitarian distribution is unfounded,’ concludes the SOAS team (Cramer et al., 2014: S120), also adding that ‘members of certified producer organisations and the supermarkets conceal the fact that ‘smallholder’ coffee and tea is produced by wage labourers who earn a pittance’ (Cramer et al., 2014: S122).
Enjoy your fair trade coffee… Or not…
Fairtrade certification has acted as means of product differentiation and as a vehicle for ethical consumption, but new practices of some large UK supermarkets are causing serious concerns about the continued ‘fairness’ of fair trade. Creating and sustaining solidarity rather than competition among actors in Fair Trade Networks is critical to the achievement of the long-term development goals. On the producer side, issues with fair wages as well as with the rural elites’ dominance in the production process also ought to be taken into account. Thus, the paradigm of market-driven social justice clearly has limits and cannot be seen as the only ‘paved’ road to development.
Fairtrade is now a powerful label, but ethical consumption should also involve civic action in support of the interests of the producers. Positive social change will take place not only through the efforts of producers from the South, but also by the solidarity and support of consumers from the North. A researcher from Africa advised: ‘Fairtrade is an improvement, but we have walked only 10% of the road.’
Dr. Christopher Cramer from SOAS is gratefully acknowledged for his kind permission to use the photographs, illustrating this article. More information about the SOAS project can be found, if you would follow the link to the The Fair Trade, Employment and Poverty Reduction (FTEPR) project:
Barrientos, Stephanie and Sally Smith, 2007, ‘Mainstreaming Fair Trade in global production networks,’ in Fair trade: the challenge of transforming globalization, eds. Laura T. Raynolds, Douglas Murray, and John Wilkinson, Routledge: Abingdon, Oxon and New York, NY., pp. 103-122.
Cramer, C., D. Johnston , C. Oya & J. Sender, Fairtrade cooperatives in Ethiopia and Uganda: uncensored, Review of African Political Economy, 2014 Vol. 41, No. S1, S115 –S127.
Fairtrade-UK, 2013, Facts and Figures, http://www.fairtrade.org.uk/en/farmers-and-workers/facts-and-figures
Fairtrade-UK, 2014, Facts and Figures,
Fairtrade International, 2013, Consumers Favour Fairtrade as Ethical Label of Choice
Fairtrade International, 2013, Monitoring the scope and benefits of Fairtrade, http://www.fairtrade.net/fileadmin/user_upload/content/2009/resources/2013-Fairtrade-Monitoring-Scope-Benefits_web.pdf
Fairtrade Foundation, 2005, Awareness Research, https://www.ipsos-mori.com/researchpublications/researcharchive/460/Fairtrade-Foundation-Awareness-Research-2005.aspx
Nicholls A. and C. Opal, 2005, Fair trade: Market-driven ethical consumption, London: Sage.
Vorley, B., 2004, Food Inc. Corporate concentration from Farm to Consumer, London, UK Food Group.