There's been a fire storm in the Fair Trade world in the week preceding Fairtrade fortnight, as a UK-based policy institute this week slammed Fair Trade, saying that the practice distorts the market and traps some of the world's poorest farmers in a cycle of poverty. The report 'Unfair Trade' issued by the Adam Smith Institute, says that the fair trade movement does little to drive the momentum of the global food chain.
The report's author Marc Sidwell claims that consumers who buy Fair Trade products end up spending more money on poorer quality goods, due to the fact that the Fair Trade system pays farmers a fixed price. This leads to farmers not being pushed financially to improve the quality of their products, and they may even hold the best of the crop back to sell on the open market Sidwell said. The only solution to market distortion is therefore global trade, he added, and countries in Africa should instead remove the restrictive trade barriers currently keeping their economies in chains.
The author even goes so far to accuse Fair Trade organisers of manipulating consumer judgement. "Even assuming Fairtrade goods are all they claim to be, their merit would still deserve to be weighed against the rival schemes or against the possibility that the money might be better spent in other ways," Sidwell said. He goes on to say that by sustaining uncompetitive farmers, Fairtrade holds them back from the processes of diversification and mechanization, depriving them the chance of improving their professional life.
Several Fair Trade organisations were quick to respond to the Adam Smith report, citing a number of inaccuracies. In a statement on its website, the UK Fairtrade organisation denied ignoring the poorest countries in the world. "Few people can doubt that the present outcome of world trade is unfair. Two billion people work extremely hard to earn a living but still earn less than $2 per day and the FAIRTRADE Mark enables British consumers to choose products that help address this injustice. As no-one is forced to join a fair trade producer organisation, or to buy Fairtrade products, you would think that free market economists like the Adam Smith Institute would be pleased at the way the British public has taken our voluntary label to its heart - and to the supermarket checkout - to the tune of nearly half a billion pounds worth of goods in 2007 alone. But their report instead applies totally inflexible dogma and outdated information to criticise Fairtrade producers, without offering any constructive alternative for development other than "leave it to the market".
Fairtrade UK also denied trapping the farmers it works, claiming that the money producers earn through Fairtrade help allows them to invest in diversifying their trade in a way that would not have otherwise been feasible.
Divine, the Fairtrade chocolate company co-owned by a farmers' cooperative in Ghana, pointed out that Fairtrade was established because the market was unfairly biased towards Western firms, not in order to hinder third-world farmers.
Labels: Fair Trade; Fairtrade
