As part of the shift to more ethical and eco-conscious consumption, many Western consumers seem to have bought into the fair trade movement over the last decade. Fair trade companies often promise to lift poor farmers in the Global South out of poverty while also offering something to consumers: the ability to make change through their purchases.
Consumers in the West have many choices for the products they buy: One can purchase many options for soap and choose from a wide variety of vegetables. But for the most part, these products might all be produced in similar, unseen and possibly unethical ways.
The production of these products is not visible to the consumer because companies often aren’t required to label where a product came from or explain how a food was grown. From this situation, the organic food and fair trade industries emerged and expanded.
Founder of Fair Trade USA, Paul Rice learned about rural land development and farming after years of traveling in China and Central America. While studying business at UC Berkeley, he used this knowledge to create a business plan for Fair Trade USA.
The foundation of the fair trade industry is based on research and a desire to have a more equal and ethical relationship between farmers and consumers. The idea is that the consumer can purchase a product knowing how it was produced and with the assurance that the producer got a fair price for their work.
We are told that fair trade products are produced under equitable terms through a mutually beneficial business partnership. Being fair trade certified and producing fair trade products should theoretically benefit growers significantly, more than if they produced for the general market. They are being paid more for their goods, hence the name “fair trade.”
Yet the main benefits of fair trade, as cited by growers, are the support and access to global networks they get by participating. Getting certified puts farmers in direct contact with fair trade organizations and businesses. They gain a better understanding of the supply chains and markets in which their products are being sold in — information not typically available to them.
They are given a higher price for their coffee or chocolate, yet this doesn’t always end up translating into a higher quality of life.
Making more profit isn’t something farmers mentioned because that isn’t necessarily the reality for many in the fair trade industry. Studies have shown that fair trade growers aren’t necessarily better off than other growers. They are given a higher price for their coffee or chocolate, yet this doesn’t always end up translating into a higher quality of life.
At first, it might not seem to add up. If a coffee grower is being paid above the world price for their coffee beans, then how are they not making higher profits? This is due to a number of reasons.
In the fair trade system, growers and producers sell their goods through a cooperative, which isn’t always able to buy and process the same amount of product as the traditional industry is. This results in growers selling less, even if it’s for a higher price. Becoming fair trade certified is also an additional cost to growers as the continuing audits and extra reporting are extra expenditures.
In one case study on Mexican and Central American coffee farmers, fair trade certification didn’t have any significant effect on poverty alleviation. There was a slight increase in credit and savings, yet no effect on other quality of life factors such as childhood education and emigration to look for better work.
So is fair trade really the ethical, poverty-reducing industry that it can be marketed as? It’s unclear. Buyers, however, continue to be interested in what fair trade can provide.
The fair trade industry has continued to grow since its inception, with U.S. retail sales alone reaching more than $1 billion in the 2018 calendar year.
To buyers, the consumption of fair trade products, however, is more than just making a purchase. It allows them to feel like a part of something and gives them the opportunity to make ethical choices.
In this sense, we are allowed to “vote with our dollar” and make an impact by supporting the industry and the products that we feel align with our morals and ideals. This can sometimes be the only way to influence industries and situations that are so far removed from the consumer.
Because the market can respond to consumer demands, buying fair trade may have some effect, even if it’s not the one promised on the back of the coffee container.
Critics of fair trade have claimed that the industry’s benefits are mostly for the corporations that can charge a premium for things such as fair trade certified chocolate bars or specialty teas, while growers themselves see marginal benefits, if any at all.
On the other hand, others insist that even though the benefits for producers might be disputable, the growth of the fair trade industry sends a message to other producers to adopt similar practices. Because the market can respond to consumer demands, buying fair trade may have some effect, even if it’s not the one promised on the back of the coffee container.
Many of us in Berkeley and in the West have the option to buy fair trade products, but not everyone has the same purchasing power. Although understanding both sides of the argument for fair trade can help consumers make decisions about their purchases, the benefits of the industry are hardly definitive. It’s ultimately up to the consumer to decide what to do about these uncertainties.