Friday, January 6, 2012

"Fair Trade Proving Anything But"

In a long and in-depth look at the fair trade movement, Bloomberg discovers that the movement's not all it's cracked up to be.  Color me... unsurprised:
The push to increase sales of goods deemed to be free of child labor and other practices has divided the [fair trade] movement, raised questions of whether going mainstream will undermine the cooperative farmers it was created to help and, most of all, strained the integrity of the certification systems that vouch for the fair-trade stamps that allow companies to charge consumers more. 
“The fair-trade movement has profoundly lost its way,” said Aidan McQuade, who has advised Cadbury on cocoa buying as director of London-based Anti-Slavery International, a human rights organization founded in 1839. “Its focus on volume -- unless they have got all their systems in place to address fundamental issues like ethical trade, child labor and child slavery -- is problematic.”... 
Fair trade is increasingly becoming a marketing strategy where the farmers’ poverty is a necessary ingredient to make consumers feel good about themselves, said Bill Fishbein, who founded Coffee Kids in 1988 to provide health and education services to poor coffee growers.
“We are way overpromising and under-delivering,” Fishbein said. “Those farmers have become a sales tool.”... 
The disagreement over how best to boost fair trade recently led to the departure of Fairtrade International’s U.S. affiliate. Paul Rice, an American who helped farmers during the Nicaraguan Sandinista revolution in the 1980s, wants his Fair Trade USA group to work much closer with large companies. He proposes certifying coffee grown on estates, rather than just on cooperatives.... 
Certifying larger coffee producers would cut small farmers off from international markets, said Merling Preza, president of the Latin American and Caribbean Coordinator of Small Fair Trade Producers, an association of cooperatives selling coffee, fruit and cocoa. Buyers will switch to larger, lower-cost farms able to invest in higher yields and deliver larger volumes than farmers who in some cases live on $2 a day, she said. 
“When someone big competes against someone very small, what we say in Nicaragua is that it’s a competition between a tethered donkey and a loose tiger,” Preza said. “It’s a threat for everyone. It would distort the fair-trade system.”... 
Juan Carlos Lopez, 24, an adviser to the Caf√© Guerrero Maya cooperative in Chiapas, said he can quantify the cost to farmers if big companies win the day. The difference between the market price for coffee and prices paid for Arabica beans by intermediaries buying for Ecom’s Mexico unit, known as Amsa, amount to at least 30 percent of a farming family’s revenue, he said. 
“All they do is buy it cheap and sell it at a high price,” said Lopez, now an economics student at a university in Mexico City.... 
For Lopez, whose family depends on coffee for its only cash income, cutting out middlemen like [fair-trader] Esteve is key to improving living conditions in Chiapas.

“We have to find the best profit, which is through selling directly to the consumer and not some intermediary that pays whatever price they want,” he said.
Looks like plenty of trouble in :fair trade" paradise, but on the bright side it's further support for my (admittedly crass) rule that, in the trade world, "fair" is just another four-letter word that begins with "F."

Be sure to read the whole thing here.

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