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Overview
Did you know that buying fair trade:
-- Helps eradicate sweatshops
-- Helps end child labour
-- Reduces the debt burden on developing countries’ farmers
-- Ensures small-scale farmers can earn a living wage
-- Supports and protects the environment?
This book provides a critical guide to international trade and shows that fair trade presents a realistic and positive alternative for farmers and producers in developing countries. By improving schools, healthcare and working conditions, the fair trade movement has already saved lives and empowered whole communities. This book shows how every consumer can help make a difference in the fight to end poverty and inequality.
Product Details
| ISBN-13: | 9781783713882 |
|---|---|
| Publisher: | Pluto Press |
| Publication date: | 01/20/2007 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| Pages: | 256 |
| File size: | 1 MB |
About the Author
Based in the UK, Miles Litvinoff has a long history of involvement in fair trade and the global justice movement.
Based in the UK, John Madeley had a long history of involvement in fair trade and the global justice movement. John worked on poverty and trade issues with United Nations organisations in Geneva, New York and Rome.
Read an Excerpt
CHAPTER 1
Back a system that benefits the poor
The mainstream trading system is failing the poor. Fair trade offers partnership in place of exploitation.
Trade is as old as humankind itself. At its most basic, trading takes place because people have different skills and abilities and find it worthwhile to exchange with people who have other skills and resources. Nations began to trade for much the same reason.
International trade has enabled people to enjoy a vast range of goods and has raised the living standards of many communities. But it has long been marked by greed, indifference and the oppression of those whose trading skills, resources and circumstances are relatively poor. Trading skills in an unfettered "free" market have led to the amassing of wealth for some, who gain a dominant position over others. The mainstream trading system is today failing the poor. While some gain, many lose.
The trade that has increased living standards has also caused people to go hungry and starve. During Ireland's famine of 1845-9, for example, which killed almost a million people, large landowners routinely exported food to Britain as poor peasants dropped all around them. Today food is still being exported from countries where there is gross hunger and people are dying as a result.
Substitute developing countries for Ireland, transnational corporations for large landowners, and the Western world for Britain, and little has changed. The system continues to fail the poor.
As international trade widened, economists developed the theory of comparative advantage. This holds that output will be maximised and all will gain if each country specialises in producing those goods and services for which it is best suited, and then trades them with other countries. For a variety of reasons a country may be able to produce something at a lower cost than another country. It may have a better climate, or its workforce may have special skills, for example.
But the theory is deeply flawed. Clearly, not all countries have gained from international trade. Countries that produce industrial goods – notably Western nations – have fared better than those specialising in primary produce, notably developing countries. Divisions between industrialised and primary-producing countries are widening rather than narrowing. Some 300 years ago, there was little difference in income levels across countries. At the start of the twenty-first century the difference across countries was 100 to 1.
The economists' theory has failed. Whereas people in Western countries buy more manufactured goods as incomes increase, many developing countries are less and less able to earn enough from selling their commodities to buy the manufactured goods they need.
"FREE" TRADE TODAY
In the last 20 years of the second millennium, international trade went even more severely wrong. Trade liberalisation – the reduction of barriers to trade to bring about "free" trade – began to work against millions of the poor, intensifying their poverty. The liberalisation had been underway for manufactured goods since the late 1940s, but the big move came under the structural adjustment programmes of the World Bank and International Monetary Fund, introduced in the early 1980s. Developing countries had to agree to these programmes if they wanted aid, investment and, more recently, debt relief. Trade liberalisation was a central feature.
More recently the World Trade Organization, set up in 1995, has given a further push to liberalisation. The Geneva-based WTO makes the rules that govern trade. With 149 member countries (in July 2006) the WTO has the task of enforcing the agreements that emerged from the Uruguay Round of world trade talks which ended in 1993. There are four main agreements – the Agreement on Agriculture, the General Agreement on Trade in Services, and agreements on Trade-Related Intellectual Property Rights (TRIPs) and Trade-Related Investment Measures (TRIMs).
The WTO presents itself as a forum for members to negotiate over trade liberalisation. In practice it is a trade liberalisation juggernaut which has been ceded enormous power by its members. It uses that position to further the cause of liberalisation, chiefly to the benefit of those who stand to gain most from that process – in practice, transnational corporations. The WTO's first director-general, Renato Ruggiero, said in 1998:
We stand at the very beginning of a whole new phase of internationalism. We are living through a time of deep and rapid transition towards a very different world. [We have] an opportunity to reaffirm our political will to move towards a better system of global governance ... shaping the institutions of an increasingly borderless economy. The great promise of the new global age demands nothing else.
The vision is therefore one of a borderless world economy, of global governance, based on the "free" trade system. A snapshot of what has happened to developing countries since the early 1980s and the coming of significant trade liberalisation is revealing. Developing countries were growing at about 3 per cent between 1960 and 1980, but they grew at only about 1.5 per cent between 1980 and 2000, as University of Cambridge economist Ha-Joon Chang points out. He says:
During the last 20 years, African economies have been shrinking (at a rate of about 0.8 per cent per year versus a 1.6 per cent growth rate before), while Latin America has been basically stagnant (growing at 0.3 per cent vs 2.8 per cent before).
Only in parts of Asia, notably South Korea, Taiwan, Indonesia and China, has there been any significant reduction in poverty, and those countries have made extensive use of trade restrictions. They have not followed the classic trade liberalisation route.
There is clear evidence from developing countries that the poorest peoples and communities have lost ground under trade liberalisation. small-scale farmers are an example. The last 20 years have seen a huge increase in food imports into developing countries.
Millions of small-scale farmers have been unable to compete and have been driven into bankruptcy. "The relentless pursuit of trade liberalisation, privatisation and deregulation", said the Make Poverty History campaign, "has continued in the face of mounting evidence that they entrench and do not overcome poverty. The impact on poor people and our collective environment has been disastrous."
A world without barriers may sound a good idea, but the reality is that in today's economic world there are huge disparities of power. In the twenty-first century, it is companies not countries that trade. In a "free" trade, no-barriers system, the poor swim in the same economic stream as the corporations. Putting a tiddler into the same stream as a shark can have only one outcome – and it's not good for the tiddler. The poor cannot be expected to survive, let alone gain, in a system where they have no say, control, power or influence.
The corporations have been described as "instruments of a market tyranny that is extending its reach across the planet like a cancer ... destroying livelihoods, displacing people, rendering democratic institutions impotent, and feeding on life in an insatiable quest for money". The worst aspect of this is that it hits hardest at the most vulnerable people. Throughout the developing world people are working in poor countries for less than a dollar a day to make goods such as clothes and toys for the Western world. Often these goods carry prestigious brand names and sell for high prices. But wages for the people who make them are rock bottom and working conditions are often appalling. "Free" trade does not free the poor from poverty. In the mainstream trading system, the poor lose.
Fair trade, which helps the poor rather than reinforcing their poverty, is gaining support the world over and offers important hope to millions of impoverished people. In the fair trade system, the poor gain.
The rest of this book will show just how much.
CHAPTER 2
Pay small-scale farmers a fairer price
Fair trade raises incomes of small-scale farmers and boosts local economies. The fair trade farm-gate price is the key to a better life for hundreds of thousands of families.
Agriculture is the biggest economic sector in most developing countries, and hundreds of millions of people earn a living as small-scale farmers. For decades there has been an oversupply on world markets of widely traded agricultural commodities like coffee, sugar and tea and often an undersupply of more varied local produce for local needs. This market glut has resulted in falling prices and dwindling incomes for Southern growers. Variations in the weather, crop diseases and other factors also make farm-gate prices rise and fall unpredictably.
Twenty-five million farmers in 50 developing countries depend on coffee as their main or only crop, roughly half of them operating small family farms. Many small-scale coffee growers are geographically isolated or lack transport to take their produce to market, so they have to sell to traders and moneylenders (see Reason 21). In the case of exported coffee, the middlemen often sell to a mill for processing first, and the costs at each stage cut part of the price paid to the original grower. In addition, having to hire seasonal labour at harvest time can easily double a coffee grower's production costs.
When we buy coffee in a supermarket, only a small fraction of the retail price goes to the producer. No surprise, then, to hear from Oxfam that two-thirds of the world's coffee growers live in absolute poverty. With the international coffee agreement's collapse in 1989, prices fell below the cost of production for many farmers, supermarkets, coffee shops and large transnational brands like Kraft and Nestlé carried on making big profits, while many debt-burdened growers could hardly scratch a living. In the words of Nicaraguan coffee farmer Mario Perez: "We practically had to give away our harvest."
Low and unstable coffee prices have had a terrible impact on the lives of small-scale farmers and their communities. There have been reports of increasing social unrest, robberies, suicides, mounting household debt, children withdrawn from school by parents, families unable to afford hospital fees – and in Colombia and Haiti growers turning in desperation to illegal drugs cultivation. In Nicaragua thousands of coffee workers held a "March of the Hungry" to the capital in mid 2003. It's said that 14 of the marchers died on the way.
Prices have been falling for banana producers too. The world banana trade – worth more than £5 billion a year – is dominated by five transnationals: Dole, Del Monte, Chiquita, Fyffe's and Noboa. They have driven down costs by sourcing supplies from large Latin American and West African plantations that pay rock-bottom wages, where working conditions are abusive and the fruit is drenched dangerously with pesticides. The smaller independent banana growers – such as hillside farmers in the Caribbean – have been unable to compete on price and have lost market share. As Dominican grower Amos Wiltshire puts it: "The economy went down to zero. ... Everything was going haywire: increasing crime, youth violence, ... delinquency. ... Husbands couldn't maintain their families.
Faced by this downward price spiral, "free" trade seems to have nothing to offer small-scale Southern farmers except more of the same. But fair trade does have an answer: a fair minimum price.
BETTER INCOMES FROM FAIR TRADE
Fairtrade certification guarantees minimum prices for producer organisations. The minimum price is based on local economic conditions and covers production costs, plus provision for household members to enjoy a decent living standard, and the cost of farm improvements and compliance with fair trade standards, including the cost of belonging to a farmers' co-operative.
Fair trade buyers pay this "floor price" – plus, for all Fairtrade-certified produce, a "social premium" (Reason 4) – when world market prices are low. But they pay the going world market rate when it rises above the "floor". In recent years the floor price paid to producers for Fairtrade-certified arabica coffee has averaged $1.21 per pound, compared with an average world market price of 70 cents a pound.
The fair trade market for bananas – second in retail value worldwide only to coffee – works similarly. The floor price takes account of the fact that smaller-scale banana growers use fewer pesticides than large plantations, and so have higher production costs because more handwork is needed, and that they have higher organisational and transport costs. In 2005 the minimum fair trade export price for Ecuadorian bananas was $0.13 per pound – roughly double the non-fair trade market rate.
The additional benefit to producers for Fairtrade-certified produce worldwide was an estimated $100 million in 2004-05. Every study made has found income higher for producers who sell to fair trade markets than for those who don't. Fair trade farmer co-operatives are estimated to earn between 25 and 60 per cent more than they would without fair trade.
How do the producers feel about it? Nicaraguan fair trade coffee grower Bertilda Gamez Peres says:
There are big advantages. ... We get more money for our crop. We didn't make enough money to live on before. Now we get a better price and the money comes directly to us. I can buy more food. I can help support my daughter at university ... and take care of my son.
Costa Rican farmer Guillermo Vargas, who visited the UK in 2002, recalled:
For my grandfather and my father, both coffee farmers, nothing changed. Between 1950 and 1988, nothing got better. We knew we had good coffee, but working on our own, trading as individuals, we could do nothing. Then, in 1988, we decided to form a co-operative. It gave us strength to negotiate a better price and we were able to sell to Fairtrade. When we found that one thing had gone well by acting together, we tried other things.
For Amos Wiltshire, a Dominican banana producer, fair trade "has made a huge difference to the families, the farmers concerned and to the economy as a whole. ... Fairtrade is a shining light ... the saviour of the farmers in Dominica."
Fair trade farmers and their families benefit by being able to invest in their smallholdings and homes and pay for schooling and health services (rarely entirely free in developing countries). But the wider community also gains from the "multiplier" effect of more money earned and spent locally. New jobs get created, and local governments have more tax to spend (Reason 48).
On a broader scale, influenced by the success of fair trade in raising coffee producers' incomes, banana companies like Fyffe's and Dole are looking into ways to source and market fair trade or other forms of "socially responsible fruit".
CHAPTER 3
Buy products you can trust
There are now over 2,000 Fairtrade-certified products – and even more fair trade goods besides!
When you buy a fair trade product, you want to know that it's the genuine thing. You want to know that it's a product you can trust. There are two main ways you can do this.
PRODUCTS THAT CARRY THE FAIRTRADE MARK
The Fairtrade Mark is your guarantee that a product has been carefully checked and certified. It's an independent label that appears on products as a guarantee that disadvantaged producers are getting a better deal.
Coffee was the first product to be certified Fairtrade – in the Netherlands in 1989. The Dutch label is called Max Havelaar, after a best-selling nineteenth-century book about the exploitation of Javanese coffee plantation workers by Dutch colonial merchants (see Reason 11). After this first initiative, other national labelling initiatives soon followed, some using the same name, others introducing new ones like TransFair, Fairtrade Foundation and Râttvisemarkt. They all started individually, and each chose for its market the Fairtrade consumer label it wanted on the products.
In 1997, 17 national initiatives together founded a worldwide organisation, Fairtrade Labelling Organisations International (FLO). And they recognised the need for a single mark. This came into being in 2002 as the "International Fairtrade Certification Mark". FLO is responsible for setting international fair trade standards, for certifying production and auditing trade according to these standards, and for the labelling of products. Its Fairtrade Mark is both a certification mark and a registered trademark. FLO is now made up of members in 20 countries (Appendix 3).
(Continues…)
Excerpted from "50 Reasons to Buy Fair Trade"
by .
Copyright © 2007 Miles Litvinoff and John Madeley.
Excerpted by permission of Pluto Press.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
ForewordAcknowledgements
Introduction
1. Back a system that benefits the poor
2. Pay small-scale growers a fairer price
3. Buy products you can trust
4. Help producers believe in tomorrow
5. Make trade more democratic
6. Put a human face on development
7. Ensure plantation workers earn a living wage
8. Empower women and girls
9. Enable people to eat
10. Save a cotton farmer's life
11. Be part of a growing global movement
12. Say Nuts! to unfair trade
13. Enjoy real quality, produced with pride
14. Send a child to school
15. Help make poverty history
16. Make your town a fair trade town
17. Shield small-scale growers from falling and erratic prices
18. Give someone's health a boost
19. Promote human rights
20. Free child carpet workers
21. Cut down the middlemen
22. Drink to a better world
23. Transform lives
24. Give bad balls the boot
25. Stamp out pesticide poisoning
26. Travel with respect
27. Support the environment [Be a friend of the Earth]
28. End child exploitation
29. Lift the debt burden
30. Say no to GMOs
31. Do something funky with your furniture
32. Rebuild lives and livelihoods
33. Make transnationals trade more fairly
34. Put paid to sweatshops
35. Buy into a longer-term relationship
36. Show solidarity with Palestinian farmers
37. Reach for the MDGs
38. Be a progressive coffee drinker
39. Help people overcome malnutrition
40. Co-operate with co-operatives
41. Prove the free-trade eggheads wrong
42. Make tomorrow's business happen today
43. Vote for trade justice
44. Enjoy that sweeter taste
45. Celebrate in March--and again in May!
46. Make markets really work for the poor
47. Invest in the future
48. Keep families and communities together
49. Defend diversity
50. Change the world!
Notes and sources
Appendix 1 Where to buy fair trade
Appendix 2 Fairtrade towns etc. in the UK
Appendix 3 Where to find out more
Index