The Fair-Trade Movement - Assignment Example

What aims and purposes motivate the fair-trade movement? To what extent do you think that the methods adopted by fair-trade organisations achieve those aims? Introduction: Fair-trade is a people’s movement that tries to offset the economic imbalances created by the profit making trade practices. The movement began with dawn of realisation in European countries in the early 60s of the 20th century to make trade practices sustainable, supplier friendly, transparent, accountable, equitable and anti-poverty. The movement focussed on improving the lot of the small farmers, artisans and labour in Africa, Asia and Latin American countries. The miserable living conditions, poverty, and extreme lack of facilities increasingly became a cause of concern in the developed world. The movement started by a few young enthusiastic social workers, students, religious and social activists now encompasses a wide range of 3000 fair-trade products including coffee, cocoa, rice, sugar, honey, bananas, apples, pears and avocados, herbs and spices, dried fruits, juice, and cotton products with an approximate annual global turnover of $2.3 billion. An estimated 800,000 small farmers are benefiting from fair-trade movement today (Peyser cited by Thoma, 2006). Fair-trade tries to ensure that poor and marginal farmers following environmentally sustainable practices get a fair price or an assured income for their subsistence irrespective of the market conditions. Definition: The most succinct definition of fair-trade has been developed by FINE—a group of four fair-trade organisations (FLO, IFTA, NEWS and EFTA) as a “trading partnership based on dialogue, transparency and respect that seeks greater equity in international trade.”(Smith, n.d). Others like Globalenvision.org (2005) toe a more a practical idea “Strictly speaking ‘Fair-trade’ is a brand of FLO. Nineteen member bodies also called the ‘national initiatives’, confer fair-trade certifications to new members and monitors their compliance. Some of these are Transfair,” in the United States, “Max Havelaar” in Denmark, and “Comercio Justo” in Mexico. The Church sees fair-trade as “Fairtrade a bit like Jesus’s overturning the tables in the Temple: it does not have the power to end the practices it finds objectionable, but it functions as a prophetic protest against their unfairness.”(Tucker, 2008). History The ideological history of fair-trade movement lies in the spawning of Alternative Trade Organisations (ATOs) across Europeans. The ATOs found a common inspiration in the views and ideologies of striving mass leaders like Martin Luther King Jr, Nelson Mandela and Julius Nyere. ATOs were supported by rights groups like Oxfam, Amnesty International and Cartias International. The movement further gained prominence as United Nations Conference on Trade and Development (UNCTAD) adopted the fair-trade motto of trade and not aid. As the fair-trade gathered momentum, the commodities traded under it grew in number and volumes. Today there are 3000 fair trade shops in Europe and 100 in the US. Later, conventional stores made their contribution to the movement by adding fair-trade products to their shelves. This necessitated the need for the third party certification of products. Max Havelaar, a certificating body came into being in Holland in 1988. Today Fair-trade Foundation and Transfair are leading certification and labelling organisations in the UK and the US. As the movement assumed a trans-continental character an umbrella organisation for third party labellers ‘Fair Trade Labelling Organizations (FLO) International’ came into being in 1997. Other prominent fair-trade organisations include International Fair Trade Association (IFTA), Network of European Worldshops (NEWS) and European Fair Trade Association (EFTA). Further to product labelling and organisation certification, these organisations and initiatives manage sourcing and supplies from particular communities according to their charters. Extensive product certification guidelines and fair-trade standards were set up under FLO. The FLO spans 80 countries and works with 632 producers from 58 countries and operates fair-trade markets in 21 countries of the developed world. Coffee is the largest food import of United States. (It is also world’s second most valuable traded product after petroleum). Hence its fair-trade movement is focussed around coffee, and its sourcing from Latin American countries. However, coffee sales hit an all time low in 2001 thus delivering a debilitating blow to small and marginal farmers though the retail prices remained the same. The coffee crisis of 2001 gave a big impetus to free-trade movement in the North and South America. In 2007, fair-trade retail sales in UK hit an all time high of ₤500 million. Fair-trade coffee sales registered an increase of 24% in coffee and tea and 130% increase in banana sales over the previous year. (Fairtrade.org.uk.). The UK has the largest fair-trade turnover in the world at ₤ 150 million (Reynolds cited at foodoncampus.manchester.ac.uk) Equally heartening is the commitment of retail chains like Tate & Lyle, Marks and Spencer, Waitrose, and Tesco in switching a share of their retail to fair-trade. Discussion As the Fair-trade movement grew, it earned commendation and criticism in equal degree. The proponents vouch by the ethics of the movement that strives to alleviate poverty and improve the living conditions, respect and dignity of the farmers in the developing world. Fair-trade pours more funds into local communities that can be used by people to improve their employment opportunities and lift them from poverty (Madeley, 2006). Another important aspect of fair-trade is that it bases the price of agricultural products according to sustainable wages of the source country rather than prevailing international procurement prices. However, a study of complexities and intermediaries in fair trade movement also paints grim picture all that goes in the name of fair-trade may not be that ‘fair”. Lindsey quoted by globalenviosion.org (2005) calls “Fair Trade as a “well intentioned, interventionist scheme...doomed to end in failure.” However, according to writers like Elsever, feel that “too many fair trade dollars wind up in the pockets of retailers and middlemen, including non-profit organizations.” (Elsever quoted by Thoma, 2006)”. The intermediary cooperatives managed by directors pass on only 70 to 80 cents a pound instead of instead of the entire fair trade price of $1.26. (Thorns quoted by Thoma, 2006). The proponents of free trade movement dismiss it as a “misguided attempt to replace one flawed system by another.” (globalenvision.org, 2005). The Cato Institute (quoted at globalenvision.org) dubs the free-trade as unfair protectionisms and the Adam Smith institute (cited by Madeley, 2006), considers it an obstacle in road map to development of free-market. The proponents of globalization and development of a barrier free world trade map also call free-trade movement as unethical subsidisation of a few communities. It is, they feel, a discrimination practised on those who produce and compete under open market conditions. Yet another critical angle of fair-trade movement is its adoption by multi-national corporations like Nestle, Wal-mart, Starbucks, Proctor and Gamble. While the proponents of this theory remark it as a small step in right direction, the detractors see it as a counter move of the corporations to cash in on the growing popularity of fair-trade. Analysis and Conclusion Like any other system Fair Trade too has its shortcomings. Chettero cited by Thoma, (2006) emphasizes that fair-trade movement is not the destination but a step towards making farmers self-sufficient. A lot else needs to be done. For example, Sherlock (2006) differentiates between the original coffee and a blended coffee. Original coffee can be bought cheap and then blended to create an expensive product. She reasons that consumers should develop a taste and liking for original filtered coffee. Only then she believes, the consumer is doing a service to cause of coffee farmer in Ethopia. Shah (2000) feels that an ethical movement like the fair-trade is endangered by the concept of free trade where international corporations manipulate trade pact and agreements to increase profits. Pessimists like International Trade Forum (quoted by Smith, n.d.) do not forsee free-trade making a significant impact on the life poor even if it were to expand by 20 percent. The forum feels that the market share of free-trade is too insignificant to carryout a meaningful outcome. However, there are others who do believe in the ideology of free-trade than its practical aspects. “Fair-trade is not a magic wand that will solve all global injustices but it is undoubtedly one key element in changing the complex and unjust trading realities for the better.” (Weinber quoted by Smith, 6). True to this belief those studying fair-trade movements should interpret it from an ethical standpoint than from sheer economic viewpoint. In light of the above arguments the responsibility of ethical conduct in the free-trade movement rests on the organisations who manage it. They need to make their own conduct more transparent and show evidence that the net results of their efforts go in promoting sustainable living of the suppliers. As long as the free-trade movement serves the cause of humanity, howsoever, small its extent and reach is, it will keep reminding those who wallow in wealth and prosperity land leading high energy consuming lifestyle that there are people in the world, who despite their best efforts go to be hungry, who lead an unhygienic life and live without shelter, who are deprived of basic health and education facilities. Free-trade movement will keep on stirring the conscience and intellect of the ‘better off’ sections of society to contribute their ‘significant little’ for the betterment of deprived lot. References: 1. Anon (2008) “Fairtrade sales reach half a billion pounds” www.fairtrade.org.uk The Fairtrade Foundation Website, Accessed April 30th 2008, http://www.fairtrade.org.uk/press_office/press_releases_and_statements/feb_2008/fairtrade_fortnight_launch.aspx 2. Smith, Katie Lasko (n.d) The Fair Trade Movement, www.capitalresearch.org The Capital Research Center Website, Accessed April 30th 2008, http://www.capitalresearch.org/pubs/pdf/v1204559280.pdf 3. Anon (2005) Nestle and global trade, www.globalenvision.org, Mercycorps Global Envision Website, Accessed April 30th 2008, http://www.globalenvision.org/library/15/905 4. Madeley, John(2008) Is Fairtrade fair? The Adam Smith Institute’s criticism of the movement, www.churchtimes.co.uk, “The Church Times Website, Accessed www. http://www.churchtimes.co.uk/content.asp?id=52922 5. Tucker, Richard( 2008) Is Fairtrade fair? The Adam Smith Institute’s criticism of the movement, www.churchtimes.co.uk, “The Church Times Website, Accessed www. http://www.churchtimes.co.uk/content.asp?id=52922 6. Sherlock, Sarah(2008) Is Fairtrade fair? The Adam Smith Institute’s criticism of the movement, www.churchtimes.co.uk, “The Church Times Website, Accessed www. http://www.churchtimes.co.uk/content.asp?id=52922 7. Thoma, Mark (2006) Fair Enough? http://economistsview.typepad.com, “The Economists View Website, Accessed April 30th http://economistsview.typepad.com/economistsview/2006/03/fair_enough.html Read More