Fair trade branded 'unfair'

from the Guardian

A report by the Adam Smith Institute says fair trade offers a better deal to some producers at the expense of the great majority of farmers

Rebecca Smithers,

The burgeoning fair trade movement which allows consumers to buy ethically sourced products such as tea, coffee and bananas is little more than "marketing hype" which benefits a minority of farmers in developing countries at the expense of all the others, a leading thinktank claims today.

At the start of the annual Fairtrade Fortnight, a highly critical report by the Adam Smith Institute (ASI) warns that it is little more than a marketing exercise intended to maintain fair trade's predominance in an increasingly competitive marketplace. It says fair trade is "unfair" because if offers only a very small number of farmers a higher, fixed priced for their goods. These higher prices come at the expense of the great majority of farmers, it says, who - unable to qualify for Fairtrade certification - are left even worse off.

Fair trade products will be showcased by retailers in the coming fortnight, as new figures show that British shoppers' interest in fair trade has more than doubled in the past five years. Analysts IGD report that nearly a quarter of shoppers claim to have recently bought fair trade products, up from 11% in 2003. IGD predicts growth in annual fair trade spending will average 11% over the next five years to total £585m by 2012.

Gerardine Padbury, senior consumer analyst at IGD, said: "People are taking a renewed interest in where their food comes from and how it is produced." She said fair trade sales were likely to remain strong in an economic downturn, with only 6% of shoppers saying they will cut back on ethical purchasing because of a tighter household budget.

But the ASI report, Unfair Trade, by Marc Sidwell, says there are many "inconvenient truths" about the movement. It says many of the farmers helped by fair trade are in Mexico, a relatively developed country, while few are in places like Ethiopia. It claims that four-fifths of the produce sold by Fairtrade-certified farmers ends up in non-fair trade goods, and typically just 10% of the premium consumers pay for fair trade actually goes to the producer.

The ASI's policy director, Tom Clougherty, said: "At best, fair trade is a marketing device that does the poor little good. At worst, it may inadvertently be harming some of the planet's most vulnerable people.

"If we really want to aid international development, we should instead work to abolish barriers to trade in the rich world, and help the developing world to the same. Free trade is the most effective poverty reduction strategy the world has ever seen."

But Harriet Lamb, director of the Fairtrade Foundation, said: "Fair trade is already making a big difference to the lives of more than seven million people in the developing world, but there are millions more we'd like to reach. 2007 was a phenomenal year of growth for fair trade bananas, for example, with one in every five bananas bought from supermarkets now Fairtrade certified. On the other hand, this means four in five bananas still aren't fair trade, and we're determined to change those odds."