Is Fair Trade Fair?
Dr. Iain A Davies
19th 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
•
The Use of the term “Fairtrade” may only be used with the express permission of the Fairtrade
Foundation
Members or Licence holders must purchase at least the agreed percentage of their product from
certified and audited producers / importers
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?
80
70
60
50
40
30
20
10
0
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
Millions
Population
Population growth in Ethiopia
Year
The Growth of Fair trade
1979
Traidcraft
founded
Value
1968 Oxfam
Introduce fair trade
pin cushions from
Argentina
1993 Cafédirect gets its
first supermarket
contract with Safeway's
Scotland
2003 CRG
Begin own
label FT
1992
FtF
founded
1978 Campaign
Coffee and the
Edinburgh Exchange
set up
1998
Divine
founded
1991
Cafédirect
founded
1989
IFAT
founded
Introduction/
Craft
1968
1978
1985
TWIN
founded
Solidarity Era
Niche Market
Era
1988
1997/1998
Starbucks first buy
fair trade coffee
Mass Market
Era
1998
2008
2005 Nestle
Launch
Partners Blend
Source: Davies, 2007
The Moral Curtain
Possible value chain partner selection based of values of the case
organisations
Niche
Market
Era
Solidarity
Mass
Market
Era Era
Uncertain area
P2
Forbidden /
Taboo Area
Allowed
partners
P1
Retailers
Marketing
Advertising
Importers
Distance from fair trade org’s values
Moral Curtain
Growers
Joint Brands
Distribution
Manufacture
Logistics
Source: Davies and Crane, 2003, Davies, 2005
The Future of Fair trade
Market Participants
Adopters
ATOs
Authorities
Companies
Branders
Craft
2006
2010
Fairtrade
Companies
Fairtrade
Branders
Fairtrade
Adopters
Source: Davies, 2007
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?