EcoChic Fairtrade

In the coming months EcoChic will be featuring a series of articles on trade & environmental  issues, by our features writer Alex Bradbury. We’d love your comments. 

Free V’s Fair Trade
Profit V’s Progress
Alex Bradbury

Whilst contemplating these two questions it dawned on me that in fact they are one and the same. Therefore after some explanation I hope you will agree with me and decide which group you belong to… the profiteers or the progressionists?

On face value the principles of the Free Trade market seem fairly innocuous; The ‘laws’ of supply and demand determine the price paid for to the producer for their product. Organisations are free to trade with whoever they choose in seeking to pay the cheapest possible price for the products.

This encourages healthy competition you may think; more competition leads to lower prices which means more money in the consumer’s pockets due to bigger savings. You would be correct, this is how it works.

However… competition it may be but healthy it is not, or at least not for everyone. It’s only when you begin to follow the supply chain back to the producer can you see the devastating effect this kind of trading has on marginal, small holder producers.

The “healthy” competition encouraged by the Free Trade market means that small producers become squeezed by their larger competitors who can afford to sell their product at a cheaper price. In the developing world, this results in the small producers selling their product for often much less than production costs. This not only perpetuates poverty but as you can probably tell, makes it increasingly more difficult for producers to feed their families, school their children and increase their standard of living. This glaringly obviously unsustainable way of trading is one of the key factors which is preventing the developing world from serious economic advancement and why such swathes of populations still live in such abject poverty.

This is a result of the ‘free’ trading profiteer market whereby millions of small scale producers throughout the world are neither free to trade or to make a profit due to this acclaimed “healthy” competition. This, far from being free, makes sure these small producers remain locked in their poverty shackles.

This brings me nicely on to Fair Trade and how Fair Trade makes such a significant difference to those marginalised by the Free Trade market.

The fundamental principle of Fair Trade is that the price paid to producers should provide a reasonable standard of living and allow for social advancement. Fair Trade works specifically with small scale producers who have been or are at risk of being squashed by the “healthy” competition of the Free market.

The benefits to producers of Fair Trade products are countless. Organisations have long term commitments to producers which provide stability and the opportunity to plan ahead. It allows them to focus on their standard of living without the worry of where and when the next pay cheque will be coming in. This long term commitment means producers can acquire loans from specific co-operatives with low interest, in the safe knowledge that they will be able to pay them off.

The price paid for the produce is paramount; not only does it feed families but also means that any children in the family can afford to go to school, hence ultimately breaking the perpetual cycle of poverty.

Unlike many workers of this type in the Free Trade market, Fair Trade suppliers are obliged to allow their workers to join trade unions and fight for their rights, thus putting an end to poor working conditions and exploitation.

Fair Trade labelling organisations, such as the Fairtrade Foundation have strict quality criteria. This means that for a product to be certified as Fair Trade, not only does it have to abide by the main principles it must also be a high quality product. In turn, for the producers, this means they must work hard to understand their craft and indeed develop their skills in producing it, thus making them more competitive. This is often facilitated by the Fair Trade cooperatives themselves, who will help the producers to advance their knowledge and make processes more efficient to maximise profit.

So, Free or Fair Trade? Profit or Progress?

Hopefully I have demonstrated that free trade is neither free nor profitable for millions of small producers throughout the world and especially in the developing world. It benefits only large scale producers who can rely on large scale, low quality production to make a profit. It allows for their progress at the detriment of the already marginalised small scale producers.

Fair Trade on the other hand is exactly that… Fair! It allows for both profit and progress of the small producer. The profit earned gives them a chance, a real chance to increase their standard of living and allow their economic advancement. The irony in the title of this piece is that Free Trade, for millions, is a life of being trapped in poverty, whereby Fair Trade allows producers the freedom to make a better life for themselves and their families.

This entry was posted on Tuesday, October 7th, 2008 at 10:26 am and is filed under blog. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.