Fair Trade is where companies and consumers pay more than the free-market rate for products to ensure that workers receive a decent wage for their products.
Typically this involves consumers in developed countries paying a higher price for agricultural products such as coffee, chocolate and bananas to the workers in developing countries.
The Fair Trade Foundation monitors the production of Fair Trade products, and to qualify for the Fair Trade label workers need to work for a company which ensures several conditions are met including:
- Workers have decent (safe) working conditions.
- Workers have the right to join a union and have a say in the process of production.
- Workers receive a wage that is sufficient to give them a decent quality of life in their country – this usually means enough to pay for the basics and some left over to pay for education for their children, for example.
- Production is sustainable and not harming the environment
The idea behind Fair Trade is that when workers have decent working conditions and receive enough money to ‘improve’ their lives, this means that trade can work effectively for development.
Fair Trade is very much in line with the principles of People Centred Development.
The Benefits of Fair Trade
The Fair Trade foundation says that 1.6 million farmers across the world are currently benefitting from Fair Trade and there are many, many examples of how Fair Trade is benefitting grass roots farmers in many developing countries.
Fair Trade Coffee…
Coffee is by far the largest Fair Trade export – the video below looks at an example of what I like to think of as ‘extreme Fair Trade’:
It outlines how Fair Trade Coffee importers in Europe work directly with coffee producers in Rwanda, focusing on empowering women into management positions especially.
And they export the coffee on a sailboat, meaning this is zero emission coffee, using a company called Timbercoast.
Fair Trade Cocoa and Chocolate…
Ivory Coast is the world’s largest cocoa exporter, most of it not Fair Trade, but the video below looks at how Fair Trade cocoa works in the country…
Fair Trade Cotton….
The video below outlines the story of Fair Trade Cotton
How Fair Trade can promote development
The main idea behind fair trade is that workers get paid enough to promote social development. The extra money they receive can be used to send their children to school, for example.
Fair Trade does not allow child labour, meaning children should be free to go to school and get an education.
Women and men are treated equally in fair trade projects, so working with fair trade can empower women and tackle traditions of gender inequality.
Finally the sustainability requirements of fair trade means that the process of production won’t undermine the local environment in the long term, promoting sustainable development.
If you’d like to read more about the general advantages of Fair Trade then this is a decent article:10 Ways Fair Trade Helps Advance the Millennium Development Goals
Criticisms and Limitations of Fair Trade as a Strategy for Development
- The Fair Trade Price Guarantee is a minimum income guarantee – if the market price of, for example, coffee, increases and so the price of the finished coffee increases, there is no guarantee that the workers will receive the higher price.
- It follows that workers working in regular non fair trade organisations might be better off if there are price spikes in the product they produce.
- Guaranteeing a minimum income may in fact keep workers trapped in primary product production and discourage them from diversifying into more profitable areas.
- In the grand scheme of things 1.66 million workers is NOT that many workers – there are BILLIONS of workers in developing countries, even if 10 million workers were benefitting from Fair Trade, that would be less than 1% of the workforce in the developing world!
If you’d like to read more, you might like this article from The Guardian (2017): Fair Trade only Really Benefits Supermarkets.
Relevance to A-level sociology
Fair Trade is an alternative fo Free Trade and is a response to the many criticisms of how trade does not work for development.