Ship of Fools: Fair Trade

Thread: Fair Trade Board: Oblivion / Ship of Fools.

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Posted by Hairy Biker (# 12086) on :

I’m sitting at my desk eating a kitkat – bad day!
In the top right hand corner of the wrapper there is a “Fairtrade” logo. On a KitKat?!!

I remember as a student in the 1980s we boycotted KitKats because Nestles were selling baby milk to poverty-stricken mothers who should have been breast feeding. Now are they such paragons of virtue that they trade fairly with cocoa farmers? Have we really come this far since Margaret Thatcher walked this earth?

In Sainsbury’s the bananas are all Fairtrade. They cost about 50p/kg. That’s got to be a loss-leader – you couldn’t pay a decent wage and ship them half way round the world for 50p/kg. Is that “fair” trade, or is it putting local independent retailers out of business? (Can you even buy bananas at independent retailers?)

Has the Fairtrade brand become so cheapened by overuse that it’s no longer of any value? Or does the widespread use of this brand demonstrate how valuable fairness is in global trade?

Posted by Alan Cresswell (# 31) on :

It wouldn't surprise me if Sainsburys' can buy bananas at a decent price, ship them around the world and package them for significantly less than 50p/kg. They may make a little bit less profit per bag of bananas than they would if they were selling bananas without the Fair Trade brand, but they won't be making a loss and if they sell more bananas (and, other stuff if people frequent their stores more because they're seen to be 'ethical') they may even make a bigger overall profit. Of course, they also stock a smaller range of bananas - loose, packed, packed 'kids size' and a value range (all Fair Trade) rather than all those (without Fair Trade logo) plus at least the normal and kids banana packs Fair Trade. Smaller range means they sell more of each stock item, they reduce the shelf space and stock level needed (they'd 'need' to make sure that each range had a clear, well stocked, shelf space) which cuts their costs - and probably reduces the number of bananas that go to waste (yay!). It's all hard economics, with a significant consumer demand driving it. Very little with being genuinely concerned with the welfare of primary producers. Thatcher would be proud.

Posted by Og, King of Bashan (# 9562) on :

quote:
It's all hard economics, with a significant consumer demand driving it. Very little with being genuinely concerned with the welfare of primary producers.

I guess the important question for me would be, does it actually improve the welfare of primary producers? If so, I'd say that is a good thing, regardless of the company's genuine concern, with the caveat that should the demand for "fair trade" products drop as something less expensive comes along, I realize that it would be bad for the primary producers.

Posted by seekingsister (# 17707) on :

Fairtrade companies have to comply with standards. There is a premium to the market price that's set once a year by the Fairtrade association, and that premium must go into a separate account for the benefit of the employees of the farm.

So while their wages might not be all too high, there is a pot of money that accumulates with every bunch of bananas sold, and they have to be used for things like education, healthcare, transportation, etc.

Posted by Arethosemyfeet (# 17047) on :

Nestle still have faeces for ethics, but the Fairtrade mark is about certain standards, not passing holistic judgements on individual firms (I still don't buy Nestle, for the record). It tells you that the primary producer got a fair price for their goods and a premium was paid to support their local community, and that these things have been verified by the Fairtrade Foundation. Of course that's not going to cover everything, but it's an improvement on not having the Faitrade mark.

Posted by lilBuddha (# 14333) on :

Cadbury, which offer fare trade Dairy Milk bars, only purchases some of their chocolate fair trade. Better than none, but does not guarantee all their practices are fair.

Here is a link which speaks to some of the deficiencies of Fare Trade.

[ 18. September 2013, 18:15: Message edited by: lilBuddha ]

Posted by Arethosemyfeet (# 17047) on :

If I'm reading it right, lilBuddha, the link is more about the withdrawal of the USA portion of the movement from the Fairtrade standards, which is appalling but not an indictment of the standards or the FLO.

Posted by iamchristianhearmeroar (# 15483) on :

The dilemma I frequently face of a morning is where to get my coffee. Do I choose to buy a fairtrade coffee from one of several large multinational chains, or choose to support a small local coffee shop at the station which doesn't say anything about the coffee being fairtrade?

Posted by Leorning Cniht (# 17564) on :

quote:
Originally posted by iamchristianhearmeroar:
The dilemma I frequently face of a morning is where to get my coffee. Do I choose to buy a fairtrade coffee from one of several large multinational chains, or choose to support a small local coffee shop at the station which doesn't say anything about the coffee being fairtrade?

Which sells better coffee?

Posted by Mudfrog (# 8116) on :

If everyone only bought Fairtrade coffee what would happen to the poor farmers who don't work in a Fair Trade farm?

Posted by Arethosemyfeet (# 17047) on :

quote:
Originally posted by Mudfrog:
If everyone only bought Fairtrade coffee what would happen to the poor farmers who don't work in a Fair Trade farm?

If there was no market for non Fairtrade coffee then all producers would be forced to convert. That seems like a positive outcome to me. It's like asking what happened to the slaves producing sugar in the Caribbean after British consumers started refusing to buy sugar produced by slave labour.

Posted by Alan Cresswell (# 31) on :

quote:
Originally posted by Arethosemyfeet:
If there was no market for non Fairtrade coffee then all producers would be forced to convert. That seems like a positive outcome to me.

The biggest issue being that a founding principle for the Fair Trade movement is that the Fair Trade mark only applies to small producers, usually through some cooperative organisation. For the large producers to be able to gain Fair Trade certification would require a relatively small reworking of the system (eg: large producers adopting responsible use of pesticides and other chemicals, pay workers above a living wage, more responsible environmental policies etc) but a substantial shift in the underlying philosophy - the link lilBuddha posted earlier is, in part, a reaction from some of the organisations and people most committed to Fair Trade to a shift in the working of the system to bring larger producers into the Fair Trade scheme.

Posted by frin (# 9) on :

quote:
Originally posted by iamchristianhearmeroar:
The dilemma I frequently face of a morning is where to get my coffee. Do I choose to buy a fairtrade coffee from one of several large multinational chains, or choose to support a small local coffee shop at the station which doesn't say anything about the coffee being fairtrade?

Or tell the local station coffee shop that this causes a dilemma for you, and that fair trade is an important feature in your coffee choices. That's one of the ways change happens.

Posted by the giant cheeseburger (# 10942) on :

quote:
Originally posted by iamchristianhearmeroar:
The dilemma I frequently face of a morning is where to get my coffee. Do I choose to buy a fairtrade coffee from one of several large multinational chains, or choose to support a small local coffee shop at the station which doesn't say anything about the coffee being fairtrade?

Just to make it that little bit more complicated, remember that it's possible to trade fairly without going through Fairtrade®, which is of course the end goal of the exercise. You should ask the independent about their coffee, maybe they are using fairly traded coffee but don't feel good about having a cut skimmed off the top for the perpetuation of the Fairtrade® institution, or as a small independent they can't afford to pay for the Fairtrade® certification like a big chain can.

As suggested above, if your comparing local independents with multinational corporations (with franchised outlets sitting somewhere in the middle) could make it a dead heat with the quality of the product and service given the casting vote.

I remember it took our church some years between the resolution to switch to Fairtrade® certified coffee because the quality of what was available didn't match up, only when the range widened did we switch. I agreed with that move, because it's trade we're talking about, not just a new form of handout.

quote:
Originally posted by Arethosemyfeet:
If I'm reading it right, lilBuddha, the link is more about the withdrawal of the USA portion of the movement from the Fairtrade standards, which is appalling but not an indictment of the standards or the FLO.

That sounds like Fairtrade® is experiencing the standard problems you always get when a movement gets too large, stops moving and morphs into an institution. Of course, it's hard to tell what is actually happening without hearing all sides of the story, so I would advocate keeping an open mind and refusing to trust any group uncritically.

Posted by Alan Cresswell (# 31) on :

quote:
Originally posted by the giant cheeseburger:

quote:
Originally posted by iamchristianhearmeroar:
The dilemma I frequently face of a morning is where to get my coffee. Do I choose to buy a fairtrade coffee from one of several large multinational chains, or choose to support a small local coffee shop at the station which doesn't say anything about the coffee being fairtrade?
Just to make it that little bit more complicated, remember that it's possible to trade fairly without going through Fairtrade®, which is of course the end goal of the exercise. You should ask the independent about their coffee, maybe they are using fairly traded coffee but don't feel good about having a cut skimmed off the top for the perpetuation of the Fairtrade® institution, or as a small independent they can't afford to pay for the Fairtrade® certification like a big chain can.

I would be very surprised if a station coffee shop was sourcing their coffee directly from small producers. They'll be buying from a local wholesaler or similar supplier to trade. So, assuming their wholesaler supplies stuff with the Fair Trade logo, it's a question of which products they buy and whether the very small extra cost of FT products is something they want to pay (and, if it gets more customers in their door they'll probably want to do that, providing they have enough customers wanting FT products). Would they need to pay to make a statement on their menu (or somewhere) like "where possible, our tea and coffee is ethically sourced"? I guess they may need to pay to display the FT logo, though.

Posted by Alan Cresswell (# 31) on :

quote:
Originally posted by the giant cheeseburger:

quote:
Originally posted by Arethosemyfeet:
If I'm reading it right, lilBuddha, the link is more about the withdrawal of the USA portion of the movement from the Fairtrade standards, which is appalling but not an indictment of the standards or the FLO.
That sounds like Fairtrade® is experiencing the standard problems you always get when a movement gets too large, stops moving and morphs into an institution. Of course, it's hard to tell what is actually happening without hearing all sides of the story, so I would advocate keeping an open mind and refusing to trust any group uncritically.

I think the biggest problem is that it isn't an institution, it's still a federation of independent organisations - (relatively) small traders, producers, aid organisations. For many they started with a "small is better" philosophy that saw big business as a big problem that was forcing small producers out of business, to the detriment of the whole of society (at least, the local society those farmers were part of). The same people were, and largely often still are, concerned about supermarkets and other chain stores driving local shops out of business on the high streets of the UK and other countries.

Two things have happened, it seems to me. The first is that younger generations are less inclined to see the local, family run shops to be intrinsically better than the supermarkets. Hence, the underlying "small is better" philosophy is losing it's appeal.

The other thing that has happened is that Fair Trade concentrated on primary producers, if the small farmers got a fair price for their produce plus a little extra for their community then that was what the FT people were concerned with. There was less concern about end products. When multinationals like Nestle and Cadbury, supermarkets and the chain coffee shops etc started to sell own-brand FT products it changed the dynamics of the movement compared to the time when FT was the preserve of small companies fighting to get space on supermarket shelves. If it's now OK for the big companies to make FT products, why not extend the scope of primary producers to include larger producers?

Posted by iamchristianhearmeroar (# 15483) on :

The issues of scale-up for the Fairtrade movement are also highlighted in this article from the Freakonomics guys.

I'd heard about the practice of FT commodities being dumped back into the regular market if there isn't enough demand in the West African cocoa market too. Rev Robert Beckford did a series of programmes about trade practices a while back which brought up that issue. Not sure what can be done to avoid that other than reform of the whole way we do trade between nations.

Posted by leo (# 1458) on :

quote:
Originally posted by Mudfrog:
If everyone only bought Fairtrade coffee what would happen to the poor farmers who don't work in a Fair Trade farm?

Nescafe et al would go out of business, there would be a shortage fo coffee and the other traders would get signed up by fairtrade and earn more.

Posted by iamchristianhearmeroar (# 15483) on :

The other thing to bear in mind is that fairtrade should be about absolute minimum standards. Who knows whether the big purchasers pay above the minimum or pay that much and no more.

Posted by Arethosemyfeet (# 17047) on :

quote:
Originally posted by iamchristianhearmeroar:
Who knows whether the big purchasers pay above the minimum or pay that much and no more.

Are you kidding? The big purchasers pay the market price, which has often been below the fairtrade price. It's pretty much the big purchasers who set the market price. If they could be trusted to pay a price above the minimum they can get away with we wouldn't have needed fairtrade in the first place.

Posted by lilBuddha (# 14333) on :

quote:
Originally posted by iamchristianhearmeroar:
The issues of scale-up for the Fairtrade movement are also highlighted in this article from the Freakonomics guys.

I'd heard about the practice of FT commodities being dumped back into the regular market if there isn't enough demand in the West African cocoa market too. Rev Robert Beckford did a series of programmes about trade practices a while back which brought up that issue. Not sure what can be done to avoid that other than reform of the whole way we do trade between nations.

I do not think it a matter of scale, but practices. There is no reason the farmers cannot be fairly treated and paid and still have manufactures make a profit.
Fair Trade is a beginning, without movements such as this, would anyone know or care about the farmers?

Posted by no prophet (# 15560) on :

There needs to be fairtrade standards for eveything. Clothing, appliances, technology. But so long as the aim is to sell volume at the cheapest price possible, we get stuff like this: http://www.globallabourrights.org/alerts?id=0297 and this http://irregulartimes.com/2009/03/30/apparel-factorys-livable-wage-not-enough-to-afford-a-slum-flat-in-lahore-pakistan/

Posted by dv (# 15714) on :

I'm sceptical about many Fairtrade practices. Genuine freetrade would be better IMHO.

I remember the days when the Co-op (sorry 'The Cooperative'), here in the North West of England, used to be the primary supermarket for poor working class folk. It sold goods cheaply in local neighbourhood shops. Having lost ground in the 80s, with increased competition, it has now repositioned itself to sell expensive goods emblazened with Fairtrade logos that are sometimes double the price of those in Aldi and Lidl. Its branding tool - the Fairtrade logo - and prices positions it for a middle class market while its ethics still permit it to stitch up local dairy farmers (it was found to be part of the supermarket cartel paying British farmers less for milk than it costs to produce).

How Fairtrade is it to price yourself beyond what ordinary folks can pay?

How Fairtrade is it to play holier than thou when it comes to coffee and chocolate but act shabbily to British farmers?

Has anyone done any research on how big the certification and monitoring organisations are for the various Fairtrade schemes? Do we have another parasite class here?

Posted by iamchristianhearmeroar (# 15483) on :

Arethosemyfeet - I should have clarified that I meant the big purchasers who sell FT coffee, the big roasters of this world. If all fairtrade achieves is farmers receiving the minimum fairtrade price it won't have done enough. Of course the fairtrade price is better than the regular market price, but it should be a start rather than the finishing point.

Posted by no prophet (# 15560) on :

quote:
Originally posted by dv:
I'm sceptical about many Fairtrade practices. Genuine freetrade would be better IMHO.

I remember the days when the Co-op (sorry 'The Cooperative'), here in the North West of England, used to be the primary supermarket for poor working class folk. It sold goods cheaply in local neighbourhood shops. Having lost ground in the 80s, with increased competition, it has now repositioned itself to sell expensive goods emblazened with Fairtrade logos that are sometimes double the price of those in Aldi and Lidl. Its branding tool - the Fairtrade logo - and prices positions it for a middle class market while its ethics still permit it to stitch up local dairy farmers (it was found to be part of the supermarket cartel paying British farmers less for milk than it costs to produce).

How Fairtrade is it to price yourself beyond what ordinary folks can pay?

How Fairtrade is it to play holier than thou when it comes to coffee and chocolate but act shabbily to British farmers?

Has anyone done any research on how big the certification and monitoring organisations are for the various Fairtrade schemes? Do we have another parasite class here?

Genuine free trade would put many European farmers out of business. Free trade means that products from other countries enter your market on a level playing field, and then means the farm subsidies would be discontinued or also given to the importers. Large mechanised farms are far more efficient and can produce profits without subsidy. Farm subsidies have become a social program, like welfare payment or corporate handouts, done for a social reason. The freetrade model would see much larger farms, run on a corporation basis.

Posted by iamchristianhearmeroar (# 15483) on :

We have no idea what genuinely free trade would look like as it's never really been tried. I doubt it would be pretty.

Posted by Horseman Bree (# 5290) on :

I've noticed that quite a lot of Costco (the big "antiWalmart" chain) house-brand coffee carries the FairTrade logo while still being in the competitive range on price.

Maybe they have found some efficiencies in their supply network, or maybe they've managed to get the volume up to the level where the economics of scale cut in. Whatever, seems to be working.

So your Co-op example may show something about needing a rethink on their purchasing process.

Posted by lilBuddha (# 14333) on :

quote:
Originally posted by no prophet:
Free trade means that products from other countries enter your market on a level playing field, and then means the farm subsidies would be discontinued or also given to the importers.

What does free trade have to do with fair trade?

Posted by the giant cheeseburger (# 10942) on :

Genuine free trade may actually be more fair than Fairtrade®, but as it's never been properly tried we don't know either way.

Posted by iamchristianhearmeroar (# 15483) on :

I disagree. With genuine "freetrade" you have no competition law protecting people. So nothing to stop dominant entities flooding the market with underpriced goods to drive competition out of business and having done so jacking up prices. Nothing to stop price fixing by cartels. Nothing to prevent the equivalent of economic "darwinism" which is bound to have as many losers as winners.

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