Markets working to support sustainable development

IIED logo

Does Fairtrade Really Work?

With rapidly increasing sales of Fairtrade products in UK markets, questioning whether Fairtrade really works might seem paradoxical. However as Fairtrade becomes increasingly mainstream with some large retailers converting entire product lines to Fairtrade, critics variously accuse Fairtrade of either distorting the market or not doing enough. As part of Fairtrade Fortnight,  Trading Visions organised for a panel of business leaders from across the Fairtrade spectrum to meet and discuss Fairtrade, its impact and the challenges it faces.

Fairtrade works: economic benefits for producers and increased consumer awareness?

Commercially Fairtrade has seen considerable growth in the last few years. In the UK the Fairtrade Foundation estimates  that sales equalled £1.32 billion in 2011, an 11% increase from a year earlier.

Sales of Fairtrade produce are deigned to bring economic benefits to producers through a guaranteed minimum price as well as a Fairtrade premium designed to be invested in social projects in producer communities. Rosemary Lalley, UK Fairtrade Commercial Manager for Univeg – an international fresh produce company active across 4 continents – cited the example of Fairtrade pineapples sourced from Ghana. Univeg owns 4 estates certified to the Fairtrade hired labour Standard. From these Univeg exports 1 container of pineapples a week. Alongside the guaranteed minimum price for Fairtrade produce, the ‘development’ premium brings in an additional US$960/week that is transferred directly to the worker administered social fund. This is then invested into a variety of health, education and social projects in the local community.

Part of the success of Fairtrade has been to shine a light on the issue of trade justice and social development in the global South. To this end Greg Valerio – recent winner of Observer Campaigner of the Year 2011 and pioneer of Fairtrade gold and jewellery – raised the issue of social and environmental sustainability of gold. Many people do not understand the numerous problems associated with gold mining, in particular the large numbers of artisanal and small-scale miners dependent on gold for their livelihoods. The challenge for him was to build the world’s first traceable gold supply chain, and then educate people about sustainability. Fairtrade, for him, was the obvious way to go about linking consumers and producers. To many of the panel and audience, this showed the campaigning power of Fairtrade.

But Fairtrade faces challenges: how to ensure it does not act as a barrier to entry for producers and maintains its rigour?

Despite being a self-admittedly ‘pro Fairtrade’ panel, each of the speakers raised concerns with certain aspects of Fairtrade. Across the board panellists agreed that for many the costs of Fairtrade certification pose a serious barrier to entry for producers.  The standard is regarded by the panellists as very  ‘rigorous’ which means a lot of work is often needed to help producers through the auditing process.

In an event that put Fairtrade pioneers such as Kate Sebag alongside Alison Ward (former global head of corporate social responsibility at Cadbury’s) it is no surprise that the topic of mainstream corporate interest in Fairtrade was raised. Many commentators and Fairtrade activists are concerned about the corporate involvement in Fairtrade, exemplified by the switch of Cadbury’s Dairy Milk bar to 100% Fairtrade cocoa. They fear that this represents a potential dilution of the standard and risks the reputation of the Fairtrade system.

However much of the growth in Fairtrade sales is because of  the involvement of major corporates and  retailers (e.g. Sainsbury’s only sells Fairtrade bananas now). Maintaining the rigour of the Fairtrade standard and system is regarded as key to avoiding any risks associated with mainstreaming – and all of the panel were keen to stress this point. The challenge is maintaining an inclusive system that helps to alleviate poverty and one that maintains its rigour and integrity. Reconciling this will no doubt be an on-going challenge for Fairtrade.  

As sales of Fairtrade products continue to grow, these challenges will only become more pertinent – it will be important to watch how Fairtrade respond and ensure there are not adverse impacts on the inclusion of small-scale producers.