Tuesday, June 10, 2008

My take on fair trade

Fair trade is a concept I want to embrace whole-heartedly. But I have questions, and I have concerns.

Wikipedia defines fair trade as “a trading partnership, based on dialogue, transparency and respect, which seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the South. Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.”

OK, sounds good. Sustainable development, rights of marginalized workers, securing rights, these all sound like good things.

Basically the way that it works is fair trade purchasers work with producers to figure what it actually costs them to produce the commodity in question, and then set that dollar amount as the starting point for sales of the commodity. So it ensures that farmers don’t have to take a loss if there’s a year in which prices drop. If it’s a year in which the commodity is in high demand, they can still make a profit.

This is important for many reasons, but the one situation that immediately comes to mind for me is the suicides of cotton farmers in India, most particularly in the states of Maharashtra and Andhra Pradesh. There were many, very complicated, reasons that farmers began killing themselves, but to oversimplify, it had to do with the costs of farming versus the small income farmers were earning while the global prices for their product was falling. This led to a cycle of debt and despair, in which it was ultimately more profitable for farmers to take their own lives than it was to continue farming, due to government compensation packages that provided cash payments to the survivors of farmers who had taken their own lives.

Clearly, at least to me, determining what the actual cost of production is, and promising to reimburse the farmers at least that amount should global prices plummet, is a good thing. Why should poor farmers all over the world be taking a financial gamble each planting season just to offer us the chance to buy (or not buy) their goods?

Some critics have argued this creates an artificial subsidy for these products. First, this is a non-argument in my book, as long as we’re subsidizing our own agriculture in this country, how can we criticize a voluntary subsidy undertaken by individuals who make the choice to pay that subsidy each and every time they purchase a chocolate bar or a pound of coffee beans?

The second, and in my mind, more compelling response to this argument of an artificial subsidy is that it’s not the fair trade price floor that creates a price distortion, but rather that the current free trade system is, and has been, creating price distortions for years because of the unequal balance of power between the purchasers (global conglomerates like Nestle, for example) and producers.

Some actually criticize fair trade practices for not going far enough to right this distortion of power, arguing that as long as fair trade continues to negotiate within the status quo, for example, by selling to multi-national corporations, no real change will take place. I’m not convinced that this isn’t true.

I am concerned that fair trade organizations, by implementing a power structure that still leaves farmers and small producers in a position of subservience, have the potential to permanently disenfranchise small producers. In effect, power is being shifted from purchasers (seen as evil, multi-national corporations) to the fair trade labeling organizations (which are seen as much more benevolent) but fundamentally, I’m not sure that from the farmer’s perspective, there has been any actual change in the amount of power they wield – they receive a more equitable price for their crops, but to me, it doesn’t seem that they’ve actually been much empowered.

I hope that the steps being taken now are just the beginning of a journey towards new global economic models in which small producers all over the world eventually learn to bargain and negotiate for themselves rather than always working through North American and European based labeling organizations.

It seems to me that the manner in which this relationship has been established works simply to preserve a relationship that is still, at its roots, imperial in nature. Who will stand up and question whether the best thing for farmers in Ghana to produce is cocoa beans, when almost no chocolate is consumed in Ghana? Why is nobody questioning why Guatemalans are producing tons of bananas, but not eating any?

Maybe I want too much too soon. Maybe I should be glad that there are alternatives out there. I think this is closely connected to larger issues of greenwashing though. Buying a brand new set of organic cotton sheets doesn’t help the environment at all if you don’t even NEED new sheets in the first place. The point is, as long as Ghana is producing cocoa beans and Guatemala is producing bananas, yes, they should be paid fairly for their products – but that cannot be the end of the story. We then have to ask ourselves why it is that we get to decide what these countries produce in the first place. Those of us who make an effort to shop for and eat locally produced items whenever possible are, I believe, taking a step in the right direction. If you’re like me, though, you make an exception for items that cannot be purchase locally – like coffee and chocolate.

Another concern that I have also ties in to issues of imperialism. One area with which fair trade standards are concerned is child labor and education. In my ideal world, children would never have to work to feed themselves or their families. They’d play and go to school and enjoy their childhood. Unfortunately, we live in a world far removed from my ideal. The fair trade standards state that in the production of fair trade goods, it is verified that “The participation of children (if any) does not adversely affect their well-being, security, educational requirements and need for play.”

I think the sentiment behind this idea is lovely. What concerns me is who is deciding what the educational needs of a child are when there are real choices involved between a child’s school attendance and a child’s working to buy food for a hungry family, or to buy medicine for a sick family member? It is appalling that these choices have to be made, but that is the world we live in. Until we have addressed some much more fundamental issues like global hunger, health care, and education, it seems patently naïve to assume that a regulatory body located in North America or Europe is at all qualified to weigh real life or death needs against a child’s educational requirements or need for play.

I also find it a bit too idealistic that they state that “fair trade means that women’s work is properly valued and rewarded.” Again, I think it’s lovely that that is what they are working for, but I don’t believe that there is a place in this world where women’s work is REALLY properly valued and rewarded. But I guess that’s another dissertation altogether, so I’ll leave that one alone for now.

Another concern I have is that fair trade producers don’t have to practice fair trade standards for everything they produce, just everything they produce to be sold under the fair trade label. I have fearful visions of women being sent to pick coffee from the non-fair trade coffee plants so that the farmers can get away with paying them less. I guess I really am cynical, but I don’t see the point in enforcing a standard like equal pay for equal work when it only applies to a portion of the total output.

Lest I sound like I hate the idea of fair trade, now that I’ve aired all my reservations, I will say that in the context of what is available on the current market, I will continue to purchase fair trade items. There are very few things in this life which are perfect, and there are a lot of things that are right about fair trade, not least of which is the sentiment behind the idea. In fairness to the spirit that first inspired the creation of the fair trade labeling system, however, I believe we must acknowledge what work we still need to do in pursuit of a more just and equitable world for all its citizens, and then do that work.


Connie said...

Great well considered posting. It sounds as if you've given an even assesment to the situation, given the information available. I didn't know that about the Indian farmers.

I really agree with your opinions on the situation.

Jen said...

I came to say thanks for your comment on my blog and...wow! I honestly hadn't thought that much about fair trade labeling before, but your arguments make a lot of sense. It's funny how the colonial rubric is so pervasive that fixes to inequities are automatically done without attempting to fix the underlying system.
Better than nothing, sure, but I think you're right in thinking that it probably doesn't do much for the people it's supposed to help.

ruchi said...

Melissa, I just saw this post! What a great thought provoking piece.

I have a few questions. The first is, do you have a good book on fair trade? This is something I'm trying to learn more about and it sounds like you've done some research on the subject.

Okay, other questions. I understand your point about why do we believe chocolate is more important to produce in Ghana than other things. But I guess the question is, do we think, in a global world, that commodity products or specializiation is valuable? My instinct is to say yes, mostly because to a certain extent, we have to work with the world we have. We are already interconnected, and hurtling towards more interconnectedness, and frankly, there are a lot of benefits to that. And you and I are both testaments to the benefits of globalization, no?

Would the world be a better place if no one in the US or Europe ever had access to chocolate or coffee or tea? I know my personal world would be worse, though perhaps that's selfish.

As for how people in Ghana don't eat chocolate, I think that's why fair trade is valuable. The more we are able to elevate the lives of the people of Ghana, the more likely they are to be able to afford chocolate, right?

My uncle works in rural India in Madhya Pradesh in the drylands. The focus is basically on watershed devlopment, and they teach the farmers ways to produce cash crops and food for themselves. But they also have a women's group that produces fair trade goods. These women feel incredibly empowered to be producing goods that are commercially valuable.

As a final point, I completely see your point as to, "Why do we get to say what people in Ghana grow?" It does feel imperialistic. OTOH, we don't really get a say in the fact that cars aren't really produced in America anymore. What America produces is mostly determined by a global market. The market has determined that America produce the ideas, China the iPods, and India the tech support. So in a sense, it's not imperialistic because no one (and everyone) has a say. The market simply dictates where to produce things based on where it makes economic sense. In my mind, the more that we level the playing field, the more that we elevate the conditions of people living in India and China, the sooner the cost difference becomes negligible, the better. Which is again why fair trade is important.

Melissa said...

first let me say my fingers keep typing "free" for "fair" and vice versa. Way too many letters in common!

thanks verde - it surprised me how little real info is actually available out there!

jen, glad you stopped by! I'm looking for more resources currently to try to assess the actual impact of fair trade in the countries where it's most prevalent.

arduous - thanks! I just read "No Nonsense Guide to Fair Trade" and found it boring and dull...you can check out the review from a few days ago if you want all the boring details, but I am currently looking for a good book too. I hope to get my hands on a copy of "Brewing Justice" which is supposed to look at the actual results achieved from fair trade.

You are right to a large extent, that we are where we are, and we have to move forward, can't change the past and all that. And yes, since you are forcing my hand, the selfish part of me is really really glad for both coffee and chocolate :)

As far as the woman's collective for producing fair trade goods, I feel as if there is somehow a distinction that should be made between fair trade commodities and fair trade goods...just sort of a gut feeling, but doesn't it seem like fair trade farming, although an improvement over non-fair trade models, still seems like it ultimately ends up benefiting those in a position of relative power (land owners) while doing less for paid laborers. Collectives of women who produce fair trade goods, however, seems to offer more of a paradigm shift, and somehow therefore seems more promising...if that makes sense.

I see what you are saying about nobody getting to decide anymore where things are produced. I think that is true to a large extent, but one reason I think fair trade is a good impulse is that I think it's getting more and more difficult to distinguish what "the market" dictates and what is dictated by large multi-national corporations. I hate to even say it because it sounds so cliche, but still.

Maybe we should write our own book :)