We’re living through times that lead us to question our belief in the system of a market economy. The motor of that system, the banks, are collapsing in the two largest markets, the US and UK. Should we therefore be looking for inspiration elsewhere?

 

Fairtrade goods are those that are sourced from suppliers that work in a sustainable way and support the rights and welfare of their workers. In other words, companies that work with such suppliers will be willing to help fund initiatives that support sustainable development and a de-marginalisation of the work force. The idea is to create a partnership between the supplier and the buyer to achieve these aims.

 

Initiatives aiming to assist developing world growers in such a way began to appear in a limited fashion in the 1930s. However the Fairtrade movement really took off in the late 1980s when certification and labeling systems were introduced, such as Max Havelaar in the the Netherlands. This allowed Fairtrade goods to enter mainstream distribution systems such as supermarkets where a much larger population had access to these goods. Most of the goods in the Fairtrade system are agricultural goods such as tea, coffee, nuts and dried fruit.

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The Fairtrade movement has helped thousands of poor farmers in the Southern hemisphere maintain an acceptable standard of living and has enabled them to invest in their business knowing that they will sell their products at a fixed price.

 

What is the place of the fairtrade system in the future? Could and should it become the basis of a system where products would be sourced at a minimum price?

 

Some organisations believe that Fairtrade has its limitations and its downsides. Today around 50% of the volume of Fairtrade goods is represented by coffee. Since 1989 when a regime of price fixing for coffee collapsed, the price has been in freefall. Many farmers have been producing at a loss, which is clearly unsustainable and will lead to great poverty in coffee producing regions.

 

 

One of the world’s largest buyers of coffee is the Swiss giant Nestlé. Nestlé have argued that the reason that the price of coffee has collapsed is due to oversupply when Viêtnam entered the world market for coffee. Paying farmers an agreed price for their coffee could well entice new farmers to start growing coffee which would just worsen global oversupply.

 

Nestlé suggest paying a premium to its over standard market prices, cutting out the middle men who take a large cut and working with growers to help them grow smarter and move up the value chain. 

Fairtrade is not a panacea model for international trade and has its drawbacks. Yet it has proved itself capable of helping thousands of people move out of absolute poverty and see a future for themselves and their children.