The Limits of Fair Trade

“Our teachers have said: If all the troubles of the world are assembled on one side and poverty is on the other, poverty would outweigh them all.”

-Midrash Exodus Rabbah 31:12

My original idea for Chocolate Moses was well intentioned but the initial solution to modern slavery was naive. Alongside background educational material, I planned to create and offer Fair Trade, sculpted chocolate figurines of Chocolate Moses that embodied the positive Jewish ethic conveyed by the material. Imagine a chocolate Easter Bunny, but better: The purchase of a Chocolate Moses would help free slaves because proceeds would go towards efforts to educate and advocate for an end to slavery in our time.

While this idea remains integral to my long-term vision and I continue to believe in the power of informed consumer choices, I became convinced that Fair Trade is only a very limited solution and just a small piece of a much bigger puzzle of global economic justice. Advocating for Fair Trade as the solution turned out to be a mistake we can learn from. Here then is a brief introduction to Fair Trade: the history, parameters, limitations, and how Fair Trade impacts the cocoa industry in the Gold Coast of Africa.

Fair Trade seeks an equitable and just commercial, cooperative partnership between marketers in developed countries and producers of both raw and finished goods in the developing world, including countries in Latin America, Africa and Asia. It is a way of doing business grounded in dialogue, transparency, and mutual respect and seeks to foster better equity in international trade,[1] working to provide marginalized, low-income farmers, artisans and other producers a living wage for their work. Fair Trade was established to assist in poverty reduction, enabling producers to earn more money for their businesses, and to aid in local community development. Fair Trade prices paid to producers cover the cost of sustainable production and an improved quality of life and, upon producer request, partial advance payments are made available.

In the United States, Fair Trade began in the late 1970s, as entrepreneurs started to meet with international producers. These informal relationships gave birth to the Fair Trade Federation (1989) and the World Fair Trade Organization (1994). These organizations were founded as global networks of committed Fair Trade organizations with the intent of improving the lives of producers in the developing world and providing forums for the exchange of information and ideas.

In 1988, a Dutch NGO farmer organization named Solidaridad created the first Fair Trade certification initiative. The label initially applied only to coffee in the Netherlands, but within a few years similar independent initiatives began across Europe. In 1997, these organizations created Fairtrade Labeling Organizations International (FLO) to set fair trade certification standards and to support, inspect and certify farmers in the developing world. In 1997 TransFair, a FLO affiliate in Canada, opened and in 1999 TransFair USA (now Fair Trade USA) opened. In 2011 Fair Trade USA separated from the international system. In the US market there are now several Fair Trade certification systems including Fair Trade International USA, Fair Trade USA, and IMO Fair for Life.[2] In the new millennium Fair Trade sales have continued to keep pace with increased consumer demand, leading to a wide expansion in the offering of Fair Trade merchandise. From its early focus on coffee, products made under Fair Trade certification now annually surpass $2.6 billion in sales.[3]

But ambitious Fair Trade growth has not been without challenges and controversy, as unscrupulous businesses became increasingly aware of their opportunity to capitalize on the demand for Fair Trade products. Not all corporate buyers live up to their Fair Trade promises. Corporations that seek a share of this multi-billion dollar industry can be undisciplined in their efforts to follow the full length of supply chains to ensure they are free of forced labor. This abuses the public’s trust and exploits our willingness to pay an inflated sale price for the option of including ethical considerations in our purchases. Because capturing the power of the free market to reduce the demand for slave-made products is an imperfect measure against slavery, at best it complements collaborations between governments and ongoing legal efforts to arrest and prosecute traffickers. Fair Trade is not a substitute for governmental efforts to prosecute and punish those who enslave and traffic others.[4]

While each one of us may make a small difference to the lives of producers and their communities by choosing Fair Trade products and the best practices they encourage, Fair Trade does nothing to address global production and distribution. These are the real roots of poverty, underdevelopment, and slavery. World production and distribution follow a pattern of developing countries providing raw materials, agricultural products and minerals while concurrently serving as markets for goods from the developed world. Fair Trade does nothing to address this imbalance.[5]Never does Fair Trade challenge the underlying structure of the global economy nor does it address historical roots that began with force, conquest, colonialization and the original slave trade.

In today’s cocoa industry in West Africa, Fair Trade is beginning to grow. Co-ops such as Kuapa Kokoo in Ghana successfully increased business transparency and the overall welfare of the local community and have aided in the economic and political empowerment of cocoa farmers, including women. However, in addressing slavery and trafficking, since few chocolate bars are made from a single village or cocoa producer, it is impossible to ensure that no children were exploited or enslaved in its production. Hundreds of thousands of small farms cover the countryside and individuals or families, not chocolate companies, own the farms. These small producers sell cocoa beans to middlemen who pay them in cash, who in turn sell the beans to the government. Because of this arrangement, it is next to impossible to absolutely guarantee slavery-free chocolate.[6]

In Ghana, democratic elections have been more economically impactful than the role of Fair Trade. The government remains responsible for setting cocoa prices; this is what brings better stability to farmers, of which only approximately 40,000 participate in Fair Trade business. Once the Ghanaian government realized the farming lobby was a powerful force in the country, this lobby was able to effectively advocate for a continually rising floor to the prices paid to cocoa farmers. The price for cocoa now easily surpasses the minimum prices established by Fair Trade.[7]

Fair Trade may successfully set a marketing agenda, but the success of sustainable farming and the ultimate welfare of producers have been more greatly aided by democratic forces that surpass ethical initiatives.[8]

Unfortunately, Fair Trade oversimplifies the roles of government, free elections and world markets. Instead, it focuses on only a single relationship: the relationship between the consumer and the farmer. In this insufficient narrative, the farmer’s central concern is only which chocolate the consumer buys. Fair trade did not bring democratic changes to Ghanaian villages. Rather, it grew as a result of democratic advances in Ghana. Farmers are not only producers of cocoa. They are voters, too.[9]

On the consumer side, a relatively small percentage of shoppers are willing to pay premiums for ethically branded items. This presents another complexity in the Fair Trade response. Simply too few people can or will prioritize this choice to significantly impact producers. Further, when considering the real impact of Fair Trade, savvy consumers must question who actually earns the profit on a higher priced Fair Trade product. Grocers and other retailers are not magnanimous. They are in business to enjoy a profit. Why does the retailer enjoy a reward for supplying ethically sourced products? Why should the consumer pay the retailer an extra premium for the privilege of making an ethical choice?

It is not clear what we accomplish when we purchase Fair Trade. While our actions state that we care about the ethical origins of our consumer products, we may be fulfilling a personal obligation to live more ethically conscious lives without really making an impact on the lives of producers. Fair Trade is not the solution. It is a statement. We have little influence on free and democratic elections or on sustainable farming practices in other countries, and the conundrum of Fair Trade forces us to accept the limits of our impact on global economic justice.

As limited as our impact may be, Fair Trade remains a positive practice. Its initiatives aim to prevent modern slavery and human trafficking and attempt to address root causes of poverty. Although we have to resist the oversimplification that our purchases free slaves, when possible we have a duty to choose Fair Trade products as a statement of our ethical values. In this case, humility demands we make the best decision we can to create a better world, but the complicated reality of Fair Trade and global capitalism make absolute moral certainty impossible.

 


[1] Fair Trade Federation website: “What is Fair Trade?” http://fairtradefederation.org/ht/d/sp/i/2733/pid/2733

[2] Fair Trade Federation website: “History of Fair Trade,” http://fairtradefederation.org/ht/d/sp/i/19528/pid/19528

[3] Fair Trade Federation website: “History of Fair Trade,” http://fairtradefederation.org/ht/d/sp/i/19528/pid/19528

[4] 2012 U.S. State Department Trafficking in Missing Persons Report, p. 20

[5] van den Anker, Christien, ed. Political Economy of New Slavery, Palgrave Macmillan, New York. pages 220, 232

[6] Ryan, Orla. Chocolate Nations: Living and Dying in the Cocoa Fields of Africa. p. 52.

[7] Ryan, Orla. p. 117.

[8] Ryan, Orla. p. 118.

[9] Ibid.