FairTrade – bad trait?

After having told so much about Green Business it is now time to present you the model of FairTrade, from official definitions and videos to apps and criticism.

FairTrade is an alternative approach to conventional trade and is based on a partnership between producers and consumers. FairTrade offers producers a better deal and improved terms of trade. This allows them the opportunity to improve their lives and plan for their future. FairTrade offers consumers a powerful way to reduce poverty through their everyday shopping.

When a product carries the FAIRTRADE Mark it means the producers and traders have met FairTrade standards. The standards are designed to address the imbalance of power in trading relationships, unstable markets and the injustices of conventional trade.

“For producers FairTrade means prices that aim to cover the costs of sustainable production, an additional FairTrade Premium, advance credit, longer term trade relationships, and decent working conditions for hired labour.“  As can be read on the homepage of FAIRTRADE INTERNATIONAL.

If you like visualization, watch this wonderful video of “fairstory”

Let’s take the popular example of coffee. A usual farmer will receive only a few cents of the 3 € you pay for a premium cup of coffee. In many coffee-growing countries large percentages of the population live below the poverty level. Education is not a topic because of the lack in infrastructure and children will end up with the same future as their parents. FairTrade helps to fund programs which provide schools for their children, health care and other social benefits that in years past were not available. A FairTrade farmer will receive a minimum price per pound of coffee. This eliminates the fluctuation of the price of coffee due to speculation and the world economy markets. FairTrade helps to fund and implement better processing facilities, recycling practices, reducing soil erosion, education and healthcare for both children and adults.


Ethical Consumer, UK’s leading ethical and environmental consumer magazine is an independent co-operative. For over 20 years, they have been researching brands, products and companies, and rating them against 19 animal welfare, environmental and human rights criteria.

Based on these findings Ethical Consumer publishes buyers’ guides to everyday products and services from baked beans to bank accounts, helping to make informed choices about what to buy and what not to buy.

Over the years, they have created an extensive database which is now used to serve a powerful application made for everyone who wants to buy ethically.

Everybody has their own unique set of ethics and beliefs and in just a few simple steps you can personalize the buyers’ guides to produce a shopping list that reflects the issues that are most important to you – from animal testing and climate change to GM crops or nuclear power.

Unfortunately, the perception of FairTrade is not always positive.

The use of is name and logo is possible for a fee, which is quite high for a company like Starbucks and lower for coffee farmers in the developing world.

Scholars at the University of Hohenheim in Germany have followed closely the growth of FairTrade and its competitors. Lawrence Solomon, owner and founder of GreenBeanery, a roaster and coffee shop in Toronto, presented the study, which followed hundreds of Nicaraguan coffee farmers over a decade, concluded that “farmers producing for the fair-trade market “are more often found below the absolute poverty line than conventional producers. Over a period of 10 years, our analysis shows that organic and organic-fair trade farmers have become poorer relative to conventional producers.”

The study suggests that the certification fees are the prime reason for this result and it gets worse, says Solomon:

“… it’s an open secret that the certification process is lax and almost impossible to police, making it little more than a high-priced honour system. Although the certification associations have done their best to tighten flaws in the system, farmers and middlemen who want to get around the system inevitably do, bagging unearned profits. Those who remain scrupulous and follow the onerous and costly regulations … lose out….”

We will see how the business of FairTrade is going to develop in the future. The idea behind all this work is good but the implementation isn’t well-done, actually, I was shocked as I read the study of the University Hohenheim. Hopefully, this situation will improve so that we can buy with piece of conscience.


About SparklinGesine

20 year-old girly girl from the eastern part of Germany, now studying at the Berlin School of Economics and Law. Loves music, cinema and this fancy invention called "internet". View all posts by SparklinGesine

2 responses to “FairTrade – bad trait?

  • domwoj

    Hey Gesine.
    I did know about the Fair Trade Program before, but I did not know about the negative aspects. I totally agree that the situation should be improved, at the moment it seems like farmers, working under “Fair Trade,” are worse off which means a failure of the program. I think you have stated lots of good sources in your post and supplied enough information to make building an opinion possible. I enjoyed it!

  • angiethiem

    Great discussion you introduced us to! Regulary I end up in discussions about FairTrade with friends or familiy. It begins with the choice of coffee type and ends up with buying close at H&H. Green business end ecofriendly production chases our conscience.
    To stay with your coffee example: one problem I see with the development of fair trade farms… they will stay minority for still a very long time. Though – their business and profit will grow! That again makes it more difficult more the majority (the non-fair-trade-farms) to survive the compition => this leads to again lower prices and connected to that => lower salaries. Sad reality, isn’t it? The net of business seems to be too complex to do good to everybody – we always have the losers.
    As Oxfam discusses (http://www.oxfam.org.uk/shops/content/fairtradefaqs.html#7) there is also still a difference between higher wages for employees and actual higher living standart (including health, human rights, …) etc.
    Its a shame that some companies want to make money out of the “green wave” and use the Fair trade – strategy to make even more profit – without changing anything….

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