Is Fair Trade Fair?

Dr. Iain A Davies19th June, 2008

Principles of Fairtrade in 2000 Figure 1.3: The Fairtrade Foundations Base Code

Fairtrade production conditions:

Small scale farmers can participate in a democratic organisation Plantation/factory workers can participate in trade union activities and have decent wages,

housing and health and safety standards No child or forced labour Programmes for environmental sustainability

Fairtrade terms of trading: A price that covers cost of production A social ‘premium’ to be used by the producers to improve their living and working conditions Advance payment to avoid small producer organisations falling into debt Contracts that allow long term planning and sustainable production practices

Stipulations of Fairtrade Foundation membership:

• Members or Licence holders cannot be major multinational organisations

• Members or Licence holders must purchase at least the agreed percentage of their product from certified and audited producers / importers

• The Use of the term “Fairtrade” may only be used with the express permission of the Fairtrade Foundation

Common Criticism

• Protectionist / price fixing– Market collusion

• Destabilising– Brings price down everywhere

• Not giving as much as is promised– Lies to consumers and to growers

• Collusion with supermarkets– Corrupted by capitalism

• Profiteering on morality– Exploitative of ethical consumers

• Sold out on its principles to avoid being out competed– Rainforest Alliance , Utz Kapeh and the coffee industry’s 4C

code

Well intentioned – but under researched?

Population growth in Ethiopia

01020304050607080

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Mill

ions

Year

Popu

latio

n

The Growth of Fair trade V

alue

1968 1978 1988 1998 2008

Introduction/ Craft Solidarity Era Niche Market

EraMass Market

Era

1968 Oxfam Introduce fair trade pin cushions from

Argentina

1978 Campaign Coffee and the

Edinburgh Exchange set up

1992 FtF

founded

1989 IFAT

founded

1991 Cafédirect founded

1993 Cafédirect gets its first supermarket

contract with Safeway's Scotland

1998 Divine

founded

1979 Traidcraft founded

2003 CRG Begin own label FT

2005 Nestle Launch

Partners Blend

1997/1998 Starbucks first buy

fair trade coffee

1985 TWIN

founded

Source: Davies, 2007

Possible value chain partner selection based of values of the case organisations

Dis

tanc

e fr

om fa

ir tr

ade

org’

s va

lues

Growers

Distribution ManufactureLogistics

MarketingRetailersAdvertising Joint Brands

Moral Curtain

P1

P2

Importers

Forbidden / Taboo Area

Allowed partners

Uncertain area

The Moral Curtain

Solidarity EraNiche Market EraMass Market Era

Source: Davies and Crane, 2003, Davies, 2005

The Future of Fair trade

Craft

FairtradeCompanies

FairtradeBranders

FairtradeAdopters

Source: Davies, 2007

2006 2010

Market Participants

Adopters

Branders

Companies

ATOs

Authorities

Ideology, business philosophy or sustainability?

• What has fair trade become?

• What is it going to ultimately be?

• Who is it supposed to be helping and in reality does it?

• Is it sustainable? And under how many definitions?