Is Fair Trade flawed and unethical? Part 2

Is Fair Trade flawed and unethical? Part 2

In Part 1 of this two-part series, we looked at the debate around the Fair Trade (FT) price floor, the FT premium, credit access, and overall income trends. We found that FT overstates, to quite a large degree, the efficacy of these measures by looking at the academia.  In this second part, we will focus on two more hidden parts of the system – FT certification, and the prominence of organic farming – to demonstrate why FT is ultimately unethical and, in some cases, detrimental.

The toll of organic farming:

Sadly, due to the affiliation with organic farming, FT farmers produce lower yields for increased labour.  A 2009 Finnish study (Valkila), which focused on northern Nicaraguan coffee, found that the pressure to turn to organic farming – such as weeding a plot rather than using herbicides, and paying for organic herbicides – was detrimental. [1] This has been substantiated by many other studies, and currently more than half of FT farmers are organic-certified. The increased management meant that farmers are increasingly at the mercy of  the external economy. [1] 

A 2011 study (Beuchelt and Zeller) found that “conventional and organic-Fairtrade certified coffee yields are more than 50% below national average, and yields from organic coffee on average are 43% lower”, due to lower planting density, and poor and mismanaged fertilization. This study, also in northern Nicaragua, revealed that coffee production for conventional farmers in the region only accounts for 60% of their earnings; therefore, due to the extra time spent tending their coffee, organic farming reduces the amount of time which can be spent producing other food and cash crops. Total income is therefore reduced for organic and many FT farmers. 39.7% of conventional farmers were found to live in poverty in the study, whereas 56.5% of organic farmers were, and 56.2% of organic-FT certified farmers were, based on the World Bank less than $2 dollars a day line. [3]

above a FT tea plantation in Kenya

The certification process 

Our attention now turns to the costs placed on farmers by FT in order to allow them to trade under the FT logo. In order to accredit certain environmental and democratic standards espoused by FT, each cooperative or plantation must be audited by a company called FLO-CERT. Since 2004, cooperatives have had to pay FLO-CERT to register for FT certification and renewal, which may be responsible for the increased negativity of more recent studies. [4] Using the calculator on the FLO-CERT website yields some interesting results. 

Let’s assume that we are a small scale producer, with a single subcontractor, one product, one processing plant, of whom the individuals are single farmers; as a cooperative we would have to pay €2600 in the first year, and then €1,600 in each subsequent year to FLO-CERT, whether our cooperative contained 2 farmers or 50. If we had more than 50 individual farmers, the price would rise to €3100 in the first year; it would rise at 100 farmers again to €3500, but to only €4300 for 1000 farmers. [5] It is easy, therefore, to see that certification gives larger cooperatives the edge; secondly, for many poor farmers, the cost (even if it is only $30, say, on an income of $500 per year) of the certification could quite easily cancel out the benefits of the premium.

Certification almost certainly harms producers

In order to comply with the environmental and democratic standards required by FT within cooperatives, farmers can be forced to to change their practices before certification is ever achieved, often to their detriment. For example, farmers must minimize their usage of agrochemicals, such as herbicides and pesticides, a practice of good intent by the Fairtrade Foundation, to reduce biodiversity loss. [6]  However, the productivity of a hand-weeded site is going to be less – at considerably greater expense in hot, humid conditions – than a site sprayed with herbicide. Griffiths (2010) further identifies that these same rules about agroecology are applied across 70 countries without regard for their differing climates, altitudes and ecology. [7]

Similarly, FT strictly prohibits genetically modified organisms (GMO) within its schemes [6][8]: yet, GMO offers developing farmers a myriad of choices with scientifically-backed safety to increase their resilience and to reduce the yield gap between high income countries (HICs) and low income countries (LICs). Drought-tolerant, insecticide-proof, disease-proof, and salt-tolerant plants, as well as improved nutrition, are just some of the benefits soon to emerge in the developing world surrounding GM crops. [9]

Nonetheless, positive environmental practices of the FT movement as a result of certification must also be raised: such as water conservation, planting trees to shade crops and to produce leaf litter, which helps to reduce soil erosion. [8] 

Whilst many of the non-environmental FT-certification practices may also appear ethical, Griffiths (2010) [pg. 25] points out that we should be careful to avoid forcing our own politics and values on producers. For instance, FT demands seasonal workers be paid more; it ignores the fact that this undermines seasonal FT crops by introducing a premium. [7] Ruben and Fort (2012) in their Peruvian study [see Part 1] found that FT farms used significantly less hired labour, removing both the benefit of increased pay for employees and farm productivity. [2]

Similarly, the Fairtrade Foundation prohibits child labour, refusing to employ anyone under the age of 15. [6] Yet this is an absurd way to reduce poverty: if children cannot work on the family farm, the mother cannot work as she must instead care: a whole sector of society, formerly part of the harvest, have now economically dependent. These farmers are already very economically dependent, with large families and high fertility rates: it is senseless and culturally imperialistic logic on the part of FT. [3] [10]

FT also compels farmers to continue producing the same certified crop, even when more lucrative ones appear, perpetuating poverty. The Institute of Economic Affairs (IEA) advocates that farmers focus on the quality and audience of the product rather than whether it is FT or not, because FT can be correlated, ironically, to a lower grade product as farmers do not have to improve their quality, theoretically, to access the higher price.  Niche coffee tastes, from obscure or sought-after beans grown in exotic areas, or at high altitudes, offer farmers a much better deal. The IEA points towards the difference between high street coffee chains: Costa looks at quality, whereas Starbucks seeks ethical consumerism from FT. Yet, because this ‘niche’ coffee is uncertified, the IEA points towards it having a lower consumer demand as it is seen as ‘unethical’, despite the contrary truth. [10]

So, after examining all the arguments, is Fair Trade ethical?

FT is not what it claims on the tin. Full stop. As the IEA summarizes in its report:

“It is striking that… no research… has been able to demonstrate the following:

  • That the benefits are in any way equivalent to the higher price paid by Northern purchasers so that Fair Trade is an efficient way for the better-off to help poorer producers.
  • That the benefits are substantial and greater than the general improvement in living standards that has taken place in recent years in underdeveloped countries – especially in Central America.
  • That there is no harm to poor non-Fair Trade producers that are not in the immediate locality of the Fair Trade producers – in particular, that there is no harm to those who take a decision not to participate in Fair Trade on grounds of cost and lack of organisational capacity, who may lose business from the expansion of Fair Trade.
  • That the benefits identified in specific case studies can be generalised.
  • That the benefits of Fair Trade cannot be realised in other ways.”  [10]

The Fair Trade system is broken for many reasons:

Like it or not, FT is not ethical consumerism; it is unethical, masquerading as fair without any independent reviews able to justify its claims. 

  • FT does not account for, or trace, the premium, such that it is often wasted by corruption and inefficiency in cooperatives;
  • the price floor no longer works;
  • the certification process is damaging and culturally imperialist;
  • overall income hasn’t risen, and some studies have shown it to decline due to organic farming practices, and the inability to diversify;
  • Western consumers are hoodwinked into paying extra money, the vast majority of which ends up as profit for supermarkets, although all financial claims are impossible to verify due to FT lack of transparency

If you want to have an impact when you shop, avoid paying extra for FT items, and instead donate the extra money you would have spent to a worthwhile cause, such as WaterAid, which can bring sustainable, empowering, and specialized development to an area, with full transparency. For that matter, here’s their website

References:

[1] Fair Trade Coffee in Nicaragua – Impacts of Certified Production on Cooperatives, Farmers and Laborers, Valkila

https://helda.helsinki.fi/bitstream/handle/10138/42569/valkila_dissertation.pdf;sequence=1

[2] The Impact of Fair Trade Certification for Coffee Farmers in Peru, Ruben and Fort

https://docs.google.com/viewer?url=http%3A%2F%2Fwww.ru.nl%2Fpublish%2Fpages%2F637421%2Fruben_fort_-_world_development.pdf 

[3] Profits and poverty: Certification’s troubled link for Nicaragua’s organic and fairtrade coffee producers

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.819.4883&rep=rep1&type=pdf

[4] The Economics of Fair Trade; Raluca Dragusanu, Daniele Giovannucci, and Nathan Nunn

https://scholar.harvard.edu/files/nunn/files/dragusanu_giovannucci_nunn_jep_2014.pdf

[5] https://www.flocert.net/solutions/fairtrade-resources/cost-calculator/

[6] https://friendsoftheearth.uk/living/articles/benefits-fairtrade

[7] Ethical objections to Fair Trade; Griffiths, 2012

https://docs.google.com/viewer?url=http%3A%2F%2Fwww.griffithsspeaker.com%2FFairtrade%2FEthical%2520Objections%2520to%2520Fairtrade%2520web.pdf

[8] https://docs.google.com/viewer?url=http%3A%2F%2Fwww.fairtrade.org.uk%2F~%2Fmedia%2FFairtradeUK%2FWhat%2520is%2520Fairtrade%2FDocuments%2FFairtrade%2520and%2520sustainability%2FFairtrade%2520and%2520sustainability%2520-%2520environmental%2520protection%2520and%2520climate%2520change.pdf

[9] http://nuffieldbioethics.org/report/gm-crops-developing-countries-2/benefits-gm-crops-developing-countries

[10] Fair Trade Without the Froth, Mohan

https://iea.org.uk/publications/research/fair-trade-without-the-froth

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