The Rise and Rise of Fair Trade
By Robin Murray
Fair trade has risen as a counterpoint to neo-liberalism. The term ‘fair trade’ was first used in 1988, a year that saw a sudden surge of new solidarity trading projects. They took a variety of forms and followed different economic paths. What has been common to them all is the attempt to re-socialise the market, to make it an instrument for the redistribution of power and resources and redraw the institutional architecture of international trade.
Initially the contacts were contingent and direct. Fair trade in Japan, for example, began with drama. A group of dispossessed sugar workers from the island of Negros in the Philippines were invited to Japan to perform their story to the members of a large consumer co-operative. As a result of their tour Altertrade was founded in 1988 to provide a market for whatever the sugar workers were able to produce. Initially they found artisan sugar a difficult proposition then switched successfully to an unusual local variety of organic bananas. Twenty years later they export $30m annually of these bananas.
The secret of Altertrade’s success has been the direct link between the producers and the consumer co-op. They refer to this as ‘people to people trade’ and support it with a programme of mutual visits and exchanges. Other products from neighbouring countries have since been added (notably shrimps and coffee). In each case the aim has been to provide export earnings to finance the development of the kind of self-reliant agriculture that La Via Campesina has campaigned for at the global level.
Such an approach requires three things: farmer co-operatives, some form of consumer organisation, and an accountable intermediary to organise the trade. Together they allow the trade to by-pass mainstream retail chains, the consumer network acting as a retail bridgehead for multiple fair trade products. Altermercato, the largest fair trader in Italy with a turnover of $48m, is another version of this model. Also founded in 1988, it is a network of 125 solidarity co-ops that run 300 ‘botteghe del mondo’ (world shops). They jointly own CTM, a co-operative wholesale importer, that sources the products sold in the shops and acts as a connector between its co-operative suppliers and consumers.
We could say that the shops carry within them the political economy of the world in 100 objects. The products each have their narrative - a bunch of bananas comes from a Costa Rican co-op set up after Chiquita’s closure of its plantations; a packet of spaghetti is produced by a co-op of people with learning difficulties on land confiscated from the Mafia in Sicily. The shops act as centres of such story telling – stories that those coming to the shops can then play a part in – whether simply as shoppers, or as champions of the products and their producers. Whether the visitors are schools, municipalities, local businesses, or simply passing individuals, the shops offer a site for engagement, and are run on the basis of enthusiasm, by 6000 volunteers with the support of 400 paid staff. Altermercato is a movement that takes the form of shop-keeping.
In North America, such direct trade originated with religious groups like the Mennonites and the Church of the Brethren, who had for some time been selling crafts through churches, bazaars and third world shops. Oxfam and Traidcraft had similar craft origins in the UK, and Traidcraft also established a mail order catalogue (on similar lines to Pueblo to People in the US). Initially at least, these were alternative traders, independent of the mainstream.
Robin Murray at the Kerala Seed Festival, 2015
Kelakam Kerala Seed Festival, 2009
As fair trade took root, there was pressure – not least from the producers – to engage directly with the mainstream. One path, exemplified by Twin Trading in the UK, has been to develop fair trade brands. The economic rationale was that it was in branding that the main surplus was to be found and producers therefore needed to have their own brands. Twin Trading had been founded in 1985 to help post revolutionary countries in the South, but in 1989 switched direction to support Mexican coffee co-operatives hit by the collapse of the International Coffee Agreement and the slump in prices.
After two years of successful green coffee trading, Twin and the producer co-ops decided to establish their own coffee brand. In co-operation with other fair trade sales networks, they formed Cafedirect, which became a flagship for fair trade in Britain. It was sold predominantly through mainstream supermarkets and coffee shops and by 2005 had become the sixth largest coffee brand in the UK. The brand’s profits meant that Cafedirect could pay upto three times world market prices and fund an extensive programme of technical support for the producers. It was a model aimed at reversing the direction of power in the supply chain, and Twin extended it into cocoa (Divine), fresh fruit (Agrofair UK), and nuts (Liberation) all of them, including Twin itself, co-owned by the producers.
Robin Murray and Elaine Jones at the Kuapa Kokoo AGM, Ghana
Kuapa Kokoo AGM, Ghana, with Sophie Tranchell MD of Divine
Branding lacked the direct connection with consumers but it widened the market. Its products range, however, was limited for it took 7-10 years to establish a successful producer led brand. The major market widening came through another channel, the generic mark. The first fair trade mark was established in Holland in 1988 by the liberation theology group Solidaridad and a Dutch priest, Fritz van der Hoff, who had been working with small coffee farmers in Mexico. It was an immediate success. It could be carried by any coffee that met set criteria, and over the next nine years the idea spread to many products and countries. In 1997 the national marks combined to form the Fair Trade Labelling Organisation (FLO) – an international body that ensures the consistency of the criteria and the main lines of the mark’s global expansion.
Robin Murray with TWIN producers from South and Central America visiting a Kendal farm in Cumbria, UK, 2008
TWIN producers from South and Central America visiting a Kendal farm in Cumbria, UK, 2008
Robin Murray with TWIN producers from South and Central America visiting a Kendal farm in Cumbria, UK, 2008
Robin Murray and Rachel Wallace with TWIN producers from South and Central America visiting a Kendal farm in Cumbria, UK, 2008
While solidarity groups had pioneered the concept and the practice of fair trade, and continued to grow, (their current turnover is some $200 million), the mark radically extended it. FLO registered sales rose from €220m in 2000 to €3.4billion in 2009. Of the total, a third is in the UK, where all the main supermarkets carry fair trade products and 70% of consumers recognise the mark.
Has the mark diluted fair trade by its engagement with the mainstream, or significantly changed the mainstream by drawing it into fair trade? This is the point of tension. On the one hand there are pressures to weaken fair trade criteria. Rival labels like Rain Forest Alliance and Utz Kapeh have sprung up which lack the small farmer focus, the price guarantees and advance credit requirements of FLO. They have come to dominate some continental European markets and put pressure on FLO. Transfair, the US fair trade label, has sought to modify the FLO criteria to meet the requirements of major multinationals. When multinational brands like Nestle, Cadburys, Starbucks and even Chiquita register some of their products as fair trade, it threatens to drain the concept of its meaning.
On the other hand, fair trade has expanded its own autonomous economy. In the South it has strengthened small farmer co-operatives against the forces of the world market. Some have developed joint marketing organisations, as well as their own processing capacity. They are increasingly providing each other with consultancy and advice. There are international co-operatives of small farmer co-ops in coffee, fresh fruit and nuts, and regional groups of small farmer co-ops in Latin America, Africa and Asia. The principles of ‘commercio justo’ have now been taken up by Latin American governments through the Bolivarian Alliance for Peoples of the Americas (ALBA) that provides for minimum price guarantees, advanced credit, and development financing for small farmer co-ops exporting within the 10 country Alliance.
In the North, fair trade has spilled over from the check out. In Britain, trade justice campaigners declared the small town of Garstang a fair trade town in 2000. The idea spread with the force of a fire. There are now nearly 500 fair trade towns in the UK and 336 in other countries including Costa Rica and Brazil. In Britain there are also 60 fair trade universities, 1500 fair trade schools, and 4,000 fair trade faith groups. Wales has even announced itself as the first fair trade country. They are drivers in the growth of ethical consumption – in the proposition that there is a politics in what you buy.
The core idea of fair trade remains strong. It represents a form of globalisation from below. Its extension into the mainstream market and now via ALBA into government policy is a mark of its success. Many of the studies of its impact focus on the economic gains for producers. But its significance goes well beyond that. It has enhanced the power of producer co-operative organisations. It has developed institutions that provide markers for new forms of global economic governance. And it has issued a general invitation to look beyond the appearance of commodities and inquire into the conditions of their production – part of a wider trend towards a new era of economic transparency.
This was first published in Robin Murray, “Global Civil Society and the Rise of the Civil Economy” in Helmut Anheier, Marlies Glasius, and Mary Kaldor (eds.) Global Civil Society 2012, Palgrave Macmillan, 2012.