The Fair trade movement has honourable intentions, but is it as fair as it claims to be?
Fair trade is an institutional arrangement designed to help coffee producers in developing countries achieve better coffee trading conditions.
The Fair trade (FT) mark is a well-known label across in the world, with an economic model that aims to improve the living conditions of rural coffee producers of the global south by facilitating access to the markets of the north, to guarantee them decent prices for their coffee and to eliminate the “unfair” middlemen exploiting them. The movement has honourable intentions, but offers too few benefits to coffee producers of the global south.
From the coffee producers perspective, they earn a decent living, gain necessary skills and knowledge, obtain access to credit, find technical assistance and market information, learn about trade and acquire experience in exporting.
However, the standards of community development have lapsed over the years as some of the poorest workers and farmers are completely priced out of the system. This means the Fair trade model may be driving certain workers out of business so it can support itself, which is contrary to why this model was started in the first place.
[Image: Photography By Erika Schultz | Workers with freshly picked Arabica at Badra Estates' Bettadakhan Estate in India.]
Fair trade cooperatives can do a lot of good for a community, but ultimately their success is naturally limited to the local population centers where workers are. This can create divides within a community because some workers may not qualify to be part of the cooperative and may not receive the many benefits that coop workers are able to receive.
High fees are also associated with this model. In order for an organization, an individual, or a cooperative to become certified as Fair trade, they must undergo a costly and rigorous examination period. There are joining fees that must be paid if accepted and there are annual fees that must be paid to maintain that certification.
These additional costs aren’t passed along to the cooperatives or the workers, they stick around the local community and pad the financial bottom lines of businesses who are selling the Fair Trade goods. That means worker exploitation is still occurring, but in a white collar way instead of a blue collar way.
[Artwork by Illustrator: Daniel Pudles]
Big buyers aren’t generally attracted to the Fair trade model because they are looking at the overall cost of their inventory purchase. This makes it difficult for Fair trade suppliers to get a real foot in the door and ultimately that harms the environment as well because profitable practices instead of sustainable practices are implemented. If there is a guaranteed minimum price, then there is no real motivation to improve the efficiency of production processes. Ultimately this means the consumer is paying more for something without just cause.
Meanwhile, small farmers in developing countries still find themselves getting pennies for products that sell for several dollars in the rich world's supermarkets. Even worse, their income fluctuates violently from season to season, sometimes from day to day, depending on commodity prices. Striving against other producers to keep up their revenues when prices are dropping can lead to collective impoverishment across the globe.
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[The diagram above shows all the current coffee supply chains, along with KaBu & Co’s re-invented supply chain through an open global marketplace.]