Legitimacy Issues with the Agricultural Fair Trade Label
Shallow Focus Photo of Coffee Beans by Juan Pablo Serrano is licensed under Pexel.
Most Canadians purchase consumer items based on personal taste, budget, and product quality. However, the source of these products is an increasingly important factor in our purchasing decisions. Purchasing items labelled as ‘Fair Trade’ affirms ethical production practices such as ensuring that plantation farmers receive a liveable wage, fraud is reduced, and human rights are respected. For example, coffee beans are produced by at least 30 million farmers around the world with more than ten steps, from planting to brewing, and many global exchanges before they reach a consumer in the Global North. In fact, coffee beans can be exchanged by up to 150 hands before it reaches someone’s coffee mug. Fair Trade ensures these steps undergo strict regulations to promote trade equity and livable wages for individuals at each step. As a long-term consequence of European colonialism, Western businesses possess strong control of most cash crops, which are agricultural goods traditionally produced in the Global South and streamlined to the Global North, such as coffee, sugar, chocolate, and tea. These products are specifically targeted by the Fair Trade label. However, due to the persistent imbalance of control, most plantation farmers remain essentially powerless in determining prices and the production process for their products.
The goal of the Fair Trade concept is to reduce the marginalization of farmers. By placing them into democratic farming cooperatives, they become part of a democratic and solidarity organization through which they can bargain for better prices, have access to a credit pool, and exchange knowledge and resources with other farmers. In spite of the ongoing exploitative relationship with the Global North’s economy, farmers engaged in the Fair Trade scheme are able to establish a price floor on their products to ensure a liveable wage and a respectable role in the export market. This financial security also reduces the chance of exploitative child labour. Additionally, Fair Trade aims to protect the environment by banning genetically-modified crops and frugal water usage. In the governing body known as Fair Trade International which links each global production and trade process associated with cash crops, each interest group has a substantive role, with producers making up around 50% of decision-making responsibilities, ultimately reducing exploitative tendencies in agricultural trade.
Today, there are over 30,000 Fair Trade items commercially available, and almost 1.7 million farmers integrated into this system. However, there still remains many discrepancies in Fair Trade’s legitimacy and enforcement measures. Many Fair Trade products are marketed at higher prices at the consumption level that do not truly reflect the increase in profit of marginalized farmers and do not contribute to additional gains for the farmer. Furthermore, the convoluted agricultural output system prevents the effective enforcement and transparency of Fair Trade regulations. Finally, Fair Trade as a Western system placed on the Global South can be considered unethical because it perpetuates a neocolonial economic model.
Little profit truly reaches farmers in the Global South
Fair Trade farmers must adopt many regulations and standards that can increase costs compared to traditional, non-Fair Trade methods. For example, Fair Trade pushes farmers to switch to organic and sustainable farming methods, and this incurred cost is often a barrier preventing farmers from breaking even with the extra profits. Similarly, since Fair Trade International is not required to investigate specific retail consumption prices of products, there is a lot of profit that goes unaccounted for, and it is difficult to determine specific profits sent to the plantation farmers. Some companies have also admitted to providing just 1% of extra profit to farmers within Fair Trade agreements. Fair Trade products have increased production costs due to stricter regulations and standards, making every step of the process expensive, and the lack of transparency and heightened corruption perpetuates this trend. Studies have shown that on average, as little as 1.6-18% of extra profits truly reach producers. Despite many comparative advantages that Fair Trade provides farmers, there remains a lack of transparency and increased production costs in Fair Trade practices which prevents deserving farmers from receiving livable wages. Although consumers may consider the inflated pricing of Fair Trade products to be the result of extra money sent to farming cooperatives, the lack of transparency and extra production costs placed by Fair Trade means this is often not the case.
Facilitating corruption in a system of overbearing regulations
Many common Fair Trade products are cash crops that require a long line of production and refinement before they reach consumers. These products are also subject to many weakly-enforced regulations and standards. As result, the many changes of hands can facilitate corruption; due to the various potentially corrupt exchanges that occur on the export market, this can contribute to 10% more related costs. There are many rather poorly-enforced regulations in the process of bringing a Fair Trade product to the market such as water usage and cooperative credit usage, which are often dishonestly followed. Since Fair Trade usually handles large and international exchanges, this creates space for error or fraud. For example, Peruvian farmers in the Fair Trade system were found to be paid below minimum wage, and some non-Fair Trade products have been found to carry the Fair Trade label in the past. Fair Trade standards are also often poorly-enforced, which is an inherent and widespread issue: even non-Fair Trade items have been found to carry the logo because products are locally labelled by corporations rather than by Fair Trade organizations. Fair Trade Canada employs a certification system similar to those placed on organic goods, where the responsibility to regulate each step of the process from production to consumption falls on farmers, corporations, and governments, instead of a neutral non-governmental organization, which has created opportunities for malpractice.
The ethical dilemma of enforcing Western policies
Fair Trade by nature is a political issue. Unequal trade practices are the direct product of historical European imperial conquest and the consequent exploitation of native resources for capitalist endeavours. This neocolonial system still exists today, as seen with the continued inequitable trade of agricultural goods from the Global South to the Global North. Whilst Fair Trade can be seen as a restorative policy empowering the actors who are traditionally exploited by unequal trade, Fair Trade is nevertheless fueled by Western consumerism and the Western capitalistic value of placing a monetary value on each step of production. Fair Trade critics have suggested that its widespread use is a lucrative marketing tool where average goods are priced higher than necessary. Furthermore, Fair Trade, unfortunately, does not tackle the deep-rooted exploitative issues related to streamlining cash crops from the Global South to the Global North. The idea of bringing farmers into the capitalist export market as competitive cooperatives further enforces the culture of the Global North economy. In this context, enforcing this westernized policy on the Global South can be considered unethical. From an economic anthropology perspective, instead of providing the Global South with resources to potentially formulate their own competitive export market, globalized Fair Trade creates a permanent cycle of trade inequity and corruptibility with corporations tightening their grip around the Global South.
The principle of Fair Trade stems from the goal of improving the livelihoods of farmers who have been traditionally marginalized by colonial and neocolonial trade exploitation. It has been successful in legitimizing itself in the world of global trade, and many individuals have been empowered from its practices. As a result of the Fair Trade label, many Canadians are also able to purchase a plethora of products with an ensign that symbolizes equity and ethical consumerism. However, there still remain critical ethical and transparency issues with Fair Trade, such as the lack of accurate wealth distribution to plantation farmers, and poorly-enforced regulations and standards. While this trade movement has attempted to make amends to those who suffer from oppressive Western capitalist economies, it has yet to address the systemic issues causing farmers to continue to direct their crops to the competitive Global North export market.