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The Fair Trade Movement in Historical Perspective

Explaining the “In and Against the Market” Predicament

 

SECTION 1.5: A SNAPSHOT OF FAIR TRADE’S SCALE AND IMPACT

Due to the movement’s diffuse nature, it is difficult to offer a complete picture of the scale or impact of fair trade, nor is such an undertaking the intent of this work. FLO only collects statistics about the products, producers, and traders which it has certified, meaning handicraft sales are excluded from its calculations. Groups like IFAT and NEWS, meanwhile, have many members which sell both certified and non-certified fair trade products (i.e., handicrafts) yet which often aggregate their sales figures, making it difficult to ascertain accurate breakdowns between commodity (or labeled) products and non-commodity goods. There have also been too few assessments of fair trade’s impact in producer communities, although recent years have seen increasing focus on such studies.[145]

However, from its modest beginnings in pincushions and needleworks, fair trade has grown immensely in the interim five decades. Before reporting any other statistic, it must be stated that fair trade still accounts for a miniscule fraction of total global trade: in particular product categories, it approaches 1 percent of total world trade, and in most categories it is closer to 0.1 percent of total trade.[146] In 2003, the strongest fair trade product—coffee—accounted for between 4 and 7 percent of the coffee market in several European countries, and about 3 percent of the U.S. specialty coffee market, or 1 percent of the total U.S. coffee market.[147] But despite its small market share, fair trade has been expanding impressively in recent years, averaging greater than 20 percent annual growth rates in sales for each year of the new millennium.[148]

FLO figures for 2005 indicate worldwide sales of fair trade certified commodities of €1.1 billion, an increase of 37 percent over 2004.[149] The number of FLO licensees in 2005 jumped by 29 percent over 2004, to a total of 1,483.[150] In 2005, there were 508 FLO-certified producer groups in 58 countries, representing one million producers (or some five million people including dependents); this translated to a 127 percent increase over the number of certified producer groups in 2001.[151]

While FLO-certified commodities now make up the bulk of fair trade sales worldwide, some semblance of the scale of non-commodity fair trade can be determined from figures collected by the Fair Trade Federation (FTF) and IFAT. These groups calculate sales figures that exclude sales of coffee, tea, sugar, and cocoa by their members in North America (Canada, Mexico, and the United States) and the Pacific Rim (Australia, Japan, and New Zealand). For 2004, FTF and IFAT members in these regions reported total non-commodity sales of $376 million.[152] Krier estimated the non-commodity sales of European world shops to be about €60 million for 2005, out of a total European fair trade sales figure of €660 million.[153] One other figure of particular interest—and of major strategic concern to the movement—is the potential for growth in the U.S. market. Nicholls and Opal have calculated that “if typical market shares in Europe could be replicated in the USA then the global Fair Trade market would increase by up to a factor of 20, perhaps approaching £20bn ($35.8bn) per annum.”[154]

In terms of the added income for producers, during 2004 FLO-certified products alone accounted for an estimated $1 billion in trade, which translated to about $100 million in extra income paid to producers over conventional trade rates.[155] In a 2003 study of coffee farmers in Mexico, Murray et al found that fair trade coffee averaged twice the street price available from conventional local buyers; in real terms, the Majomut cooperative’s members received $1,700 for an average harvest of 1,500 pounds of fair trade organic coffee, compared to $550 through conventional channels.[156] Parrish et al, in a 2002-3 study of Tanzania’s KNCU coffee cooperative, found that fair trade participation yielded an extra $607,480 in one season—a 38 percent differential over conventional rates.[157] For Ghana’s Kuapa, fair trade premiums received between 1993 and 2005 amounted to more than $2 million, equivalent to the annual primary school costs for 250,000 children.[158] In the Windward Islands, fair trade banana sales between 2000 and 2004 netted premiums of nearly $500,000, paying for everything from the construction of nurseries and the purchase of furniture and equipment for primary schools to the installation of street lights, the building of a community center, and the upgrading of facilities like latrines, farm access roads, and bus shelters.[159]

Among the more difficult to measure impacts, researchers have frequently noted that producer groups involved in fair trade benefit from improved access to credit, greater social and economic stability, stronger likelihood to obtain or maintain land titles, increased self-esteem and community morale, heightened access to education for children and training for adults, improved knowledge of business skills, and deepened relations with Northern partners.[160] To these positives must be added the critiques of fair trade that it presently involves only a small percentage of the world’s impoverished producers, that its sales volume is not high enough to absorb all of the production generated by producers already involved in the movement, and that fair trade’s current emphasis on handicrafts and food commodities does little to alter producers’ dependence on products that may face continually diminishing returns in the long run.[161]

Gendron et al have argued that “the real impact of fair trade on conventional trade is best demonstrated using qualitative rather than quantitative terms.” They note that “[t]he existence of fair trade itself serves as an ethical reference, fixing the standards of social responsibility by which large enterprises and their operations are now judged.”[162] Similarly, Tallontire has suggested that “[t]he key role for fair trade appears to be as an innovator and catalyst rather than as a major trader in the market.”[163]



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Masters Thesis for:
New School, Graduate Program in International Affairs
May 2007
Advisor: Professor Stephen Collier
Reader: Professor David Gold

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