Fair Trade

A Drop of Coffee in the North, a Drop of Sweat in the South?

A serious situation
Why do such imbalances exist?
Disastrous consequences
An alternative to unfair trade
Your only guarantee of a "fair trade" product
Voting with your pocketbook
What you can do
Bibliography

By Joëlle Rondeau, 16 - Collège St-Alexandre, Gatineau, QC

The skin is tautly stretched. The tree trunk is skilfully carved. A light touch…the sound echos and stirs the blood; it is a masterwork. Senegalese craftsman Mala carves djembés. A djembé is a goblet-shaped wooden drum, with a goat's skin stretched over it and tied down with rope or cord. It is carved from a single piece from the trunk of a Cordyla pinata tree.

Mala's craft is a noble one. Yet he earns only 10 percent of the price when his drum is sold in Europe. Every day, he must venture a little farther into the bush to cut down Cordyla pinata, the raw material for the tom-tom. The resource is becoming more rare. Clear cutting is bringing about desertification. Mala faces an unfair and imbalanced market that widens the gap between rich and poor and puts the poor at a disadvantage.. Personal story told to Jean-François Bélanger for a Radio-Canada news feature (see bibliography)

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A serious situation

Markets, such as the djembé market, are an alarming problem. They go against the Declaration Universal of Human Rights, which states, "Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity …"

It is currently estimated that 1.3 billion people live below the poverty line. It has also been noted that 20 percent of the poorest countries produce 1 percent of the global gross domestic product (GDP). Conversely, 20 percent of the richest countries produce 86 percent of the global GDP.

The gap continues to widen. Some even say that, since the late 1970s, declining terms of trade have cost sub-Saharan Africa the equivalent of 50 cents for every aid dollar received.. Statistic from the Oxfam report Rigged Rules and Double Standards (see bibliography)

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Why do such imbalances exist?

Before you've finished your breakfast this morning, you'll have relied on half the world. -Martin Luther King Jr.

The state of international commerce is such that with the opening of global markets, we are all interdependant. However, poor countries depend more and more on exports, especially in sub-Saharan Africa, where exports now represent 30 percent of the GDP.

Some accuse globalization of creating only injustice, but we must not let ourselves be deceived. True, globalization strongly encourages some poor countries to open up their markets, when their economy is too weak to allow such penetration without a protective tariff wall. Yet opening up global markets also brings enormous economic benefits. Think China's flamboyant development. Globalization is thus not wholly to blame for the injustices resulting from international trade.
Let us consider two main types of factors that create inequality: local factors and international factors. From the local point of view, the poverty that faces producers in developing countries is often the result of their isolation. Most sell their produce on local markets, or else to intermediaries, wholesalers, and exporters who fix their prices according to the global market. They do not seek to ensure a minimum price that would allow producers to make a decent living. Thus, with seven intermediaries - sometimes more - between coffee producers and consumers, the distribution channel absorbs more than 80 percent of the price paid for the finished product.

Given that producers remain unable to organize themselves and unite in order to benefit from a sufficient quantity of produce to use as leverage in negotiating with a buyer, a cartel of very powerful buyers in developed countries thus often imposes and controls prices on agricultural markets in developing countries. Four multinational corporations control more than half of the coffee market. Local institutions are unable to protect or to support their producers, because of lack of resources.

Internationally, global commodity markets fluctuate wildly. These variations result in very low prices for the vast majority of agricultural commodities, and sometimes even cause important plunges in the stock market. The price of coffee has declined by 70 percent since 1997. These fluctuations have major impacts on developing countries in the South, where agricultural commodities make up 80 percent of their exports (with the exception of certain countries, notably petroleum producers). These impacts are disastrous, since there are many one-crop farms.

If producers in northern countries are able to make a living from their produce, despite these fluctuations, it is because most of them receive government subsidies. Obviously, producers in developing countries suffer. Lacking the resources to equip themselves with new technology, they find it hard to be productive and compete against farms in wealthier countries. Production costs are higher than commodity prices. Producers get poorer and go into debt, with no hope of changing the situation.

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Disastrous consequences

To be more productive on highly competitive markets, some producers must offer their workers lower salaries and poorer working conditions. Social regulations are reduced and sometimes even suppressed. Workers must bear all this in silence. In many cases, moreover, education is hard to obtain, and health conditions are pitiful. With a meagre income, many suffer from malnutrition. They may contract serious diseases. Producers find themselves at the mercy of all kinds of political, social, economic, and climatic upheaval.

To escape their problems, some decide to leave the land, hoping for better days in the city. Most of the time, they find themselves in overcrowded slums.

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An alternative to unfair trade

As we become more and more aware of these injustices, we realize to what extent our everyday purchases have an important impact on the lives of our neighbours. Happily, a more responsible alternative has been proposed to us as consumers and also as global citizens. That alternative is fair trade.

Fair trade is meant as a development tool, not as charity. The four fair-trade federations define it as "a trading partnership based on dialogue, transparency and respect, that seeks greater equity in international trade. Fair trade contributes to sustainable development by offering better trading conditions to marginalized producers and workers--especially in the South-and by securing their rights".

Fair trade does this by reducing the number of intermediaries and by aiming to organize disadvantaged producers and workers into community-based cooperatives. Fair trade seeks to diversify production and enable producers to stand on their own, notably by giving them access to credit.

To promote fair trade, a guaranteed purchase price is set, normally below global prices. Crops are pre-financed and suustainable medium- and long-term contracts are signed. A fair price is thus paid for produce. This price includes production costs and even allows for investment in the community.

Fair trade also considers social and environmental criteria. At the social level, cooperatives must make decisions without discrimination, on a democratic basis that also favours freedom of expression. Businesses must have an active labour union. Child labour is tolerated only in rare cases, such as during transition periods. Workers must have access to medical care. Moreover, if the cooperative makes a profit, the cooperative must invest this profit in public, health, or educational facilities for the good of the community.

On the environment level, activities must be carried out in harmony with ecosystems and must provide sustainable protection for natural resources. As a result, fair trade requires producers to reduce their use of chemical fertilizers and synthetic pesticides. Cooperatives are also encouraged to diversify their crops, to reforest to prevent soil erosion, and to develop organic farming.

Fair trade is a balanced alternative that now benefits more than a million families in about 50 developing countries. More than five million people can finally live and not merely survive.

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Your only guarantee of a "fair trade" product

Fairtrade Labelling Organizations International (FLO-International) is the organization that regulates fair trade. This organization makes sure that all fair-trade criteria are met before a product can carry the "fair trade" label. There are 19 certification organizations, all grouped within FLO-International.

In Canada, only Transfair Canada can authorize the labelling of certified products. When buying a "fair trade" product, you must make sure that it has been certified by the organization, by means of a logo carrying the words Fair Trade Certified or Certifié équitable.

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Voting with your pocketbook

As an international movement based on pressure from consumers, fair trade generates products that are as good as, and often better than, those found on the market. By purchasing these products, responsible citizens are voting for human dignity, equality, and solidarity. They lend their voice, not out of charity but in a quest for social justice, to producers like Lawrence Seguya of Uganda, who has a loud and clear message: "I would like to tell people in your country that the drink from which they benefit [coffee] is the cause of all our problems. We grow the beans with our sweat and sell them for next to nothing". Free translation of a personal story told to Oxfam International

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What you can do

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Bibliography