Tuesday, 27 February 2007

What is the point of Fairtrade?

This morning the UK Parliament’s International Development Committee held its first public session on “Fair Trade and Development”, the focus of its latest inquiry. Like most consumers in this country, I have developed a particular fondness for the Fairtrade brand, and am impressed by its apparently endless spread into new products and sectors – highlighted during the current Fairtrade Fortnight (26 Feb - 11 March 2007). But as an international development professional, the IDC inquiry has forced me to ask the difficult question: what difference can Fairtrade really make? Despite rapid growth, it remains tiny – stubbornly stuck outside the mainstream. For the vast majority of small scale producers, the cost and complexity of qualifying means that it remains far out of reach. It unfairly deflects attention away from the wide range of good business practices out there (not Fairtrade = unFairtrade?). And it could never substitute for real progress on world trade reform – making trade fair for all developing country producers.

But this should not obscure the important ways in which Fairtrade is already making a difference. Beyond the obvious direct benefits to the producers it works with, it has been enormously powerful in highlighting the importance of an enterprise-driven approach to poverty reduction – so often absent in discussions by donors and NGOs. Poor people don’t want charity – they want the opportunity to get jobs and grow their businesses. Fairtrade has also done a great job of raising public awareness – both about the broader inequities in international trade and the need for businesses to operate responsible supply chains – applying the principles of fair trade to their mainstream business. Fairtrade is not the panacea it is sometimes made out to be. But it has very real value in getting the right things on the agenda.


Richard Morgan said...

Excellent balanced blog

Priya said...

I have recently been battling this question with regard to the fashion industry. I founded an initiative called fashion4development, and recently held my first fashion show showcasing retailers, most of which were members of the Fair Trade Federation. The fashion show was the launch of DC Fashion week, and I am pleased to see so much attention on this in both London and Paris Week as well. LFW showcased 21 designers whilst Paris had 71 designers.

Although labeling initiatives like the Fair Trade Labeling Organization (FLO). have proved hugely successful in increasing sales of coffee and other food products, labeling fashion as fair trade is much more of a challenge due to the many steps in the production chain for a piece of clothing. It can be difficult for fashion companies to guarantee fair trade standards at every step in the chain, especially when the components of clothes may have been made in several countries and this is currently an ongoing challenge. The other challenge faced in making fair trade products mass market in the apparel is that most things are handmade and two products are rarely exactly the same in terms of stitching and size. This makes it difficult for stores to buy from fair trade producers in the same way they can from large scale manufacturers.

One of the biggest obstacles to producers in developing markets is market knowledge. Producers cannot know what is in demand and how much. It is upto the middlemen to address this issue, by consulting producers on what to make and how to make it. This is particularly true in fashion, African beads are all the rage today but will it be tomorrow?.

The danger of making Fair Trade fashionable is that it becomes a passing fad. Like everything else in fashion, ethical could become a passing "trend". In the UK, 1 in 4 people recognize the fair trade mark, in a few years this statistic will be a lot higher. The point is that people are already making more informed decisions, but this does not necessarily mean an increase in fair trade sales in the future. Helping the poor is only part of making fair trade successful, branding and marketing just like any other company is what is needed to really make this continue. Brands like Edun and PeopleTree are already doing extremely well in the UK in terms of sales, due to brand image. In the same way the success of fair trade coffee has been on the back of the perception of better quality as well as helping producers, in the end quality is what consumers will pay for.

Just to add on your comment about poor people not wanting charity. I would agree with you here in principle, however having recently done some work on the subject in Kenya, this may be a harder to prove in reality. The damage of a long history of debt giving and charity in Africa, has meant that begging and qualifying for money because you are poor is deeply rooted. Fair Trade needs to address educating producers about the short-term pain for long term gain issue. One initiative I studied actually taught people to save money, in the end producers can only hope to have successful and sustainable businesses if they understand the long term benefits. I believe that further work needs to be done in the area of changing this perception.