fair trade not so fair?

Fair trade is held up as an alternative to free trade, which has caused so much havoc in Latin America over the past two decades. A recent summary of the current debate on fair trade appeared recently in the Vancouver Sun. A study by two academics has suggested that the concentration on certification, both fair trade and organic, has not helped farmers escape poverty. Instead they should concentrate on improving production and efficiency.

These are not the only concerns raised about fair trade. In the March edition of the Environmental Network for Central America newsletter (page 7), Clay Gordon raised concerns about fair trade cocoa. In particular, he says whilst a fixed long term cocoa price helps protect farmers from market volatility, in the long run it does more to protect the chocolate companies from high prices.

Similar worries have been expressed in the most recent Central America Report (pages 4 and 5). With the market price of coffee now at $3 a lb, compared with a low of around 50c a lb during the last decade, the lower fair trade price is going to make some farmers to think twice about joining the system. Alba Sud, a Catalan research organisation, found similar problems to the German research quoted in the Canadian newspaper.

The Wales Nicaragua Solidarity Campaign has visited fair trade coffee and sesame producers regularly since the mid 2000s. The benefits of fair trade were plain to see. For individual farmers, a better and more stable price, and greater control and understanding of their markets (vitally important, as sometimes a majority of their harvest was still sold through traditional ‘unfair’ trade markets). For communities, the social premium has helped support a range of projects – health, education, eco-tourism, amongst others.

Despite the valid criticisms, Nicaragua has been one of the success stories in fair trade. Many of the co-operatives have been based on old Sandinista co-ops, established in the 1980s. Many see fair trade as a political act, and have been active in ensuring the voice of producers is heard in the large international fair trade organisations. They have also been central to creating regional producers networks, which are being set up in Latin America, Asia and Africa.

One of Nicaragua’s contributions to the ALBA, the solidarity trading block in Latin America, is to share their experience of fair trade with their counterparts in Venezuela.

One of the places where fair trade started was in Nicaragua in the 1980s, when solidarity groups sold Nicaraguan coffee. If fair trade is to move to the next stage, where the producers take more control of the system, and receive more of the financial rewards, then Nicaragua will again probably be central to the process.

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