The Telegraph 24 Feb 08;
The multi-million pound Fairtrade industry has been accused of failing to help the world's most impoverished farmers as Britain's second biggest sugar firm announced plans to convert its entire range to the scheme.
A report by the Adam Smith Institute claims Fairtrade products do not aid long-term economic development and often fail to help the poorest farm workers.
Consumers spent more than £290 million a year on Fairtrade goods in 2006 and sales of products bearing the distinctive black, green and blue logo have continued to soar.
They are likely to rise further after the sugar company Tate & Lyle said it would convert its entire operation to Fairtrade-certified farmers. Under the scheme, 40 per cent of the cost of each bag of sugar will now go back to Belize, where it will be shared by farmers, cane mills and community projects.
But the report, named Unfair Trade, has sparked a row over the scheme's effectiveness in tackling poverty. It claims that paying farmers for their produce sustains uncompetitive farming methods rather than encouraging modern techniques. The institute also says the payment structures put in place by the Fairtrade Foundation, which operates the Fairtrade label, unintentionally encourage farms in developing countries to take on labourers only during harvest time rather than employing them full-time.
In addition, it claims that just a fraction of the Fairtrade premium paid by consumers actually reaches the producer, while retailers pocket the rest.
The Fairtrade Foundation, however, insists it ensures farmers are paid a better wage than they would normally receive and this helps them to improve the lives of their families and the local community.
Tom Clougherty, policy director at the Adam Smith Institute, said: "At best, Fairtrade is a marketing device that does the poor little good.
"At worst, it may inadvertently be harming some of the planet's most vulnerable people. There is nothing wrong with being concerned about the working conditions, wages and environment of workers, but we don't believe Fairtrade is the most effective model.
"They make assumptions about agriculture in the developing world - that they must be small farming cooperatives, but this is just not sustainable if countries are to develop."
He said free trade was a more effective strategy for reducing poverty, as it encouraged countries to industrialise and develop more efficient farming practices.
The report also claims Fairtrade is actually failing to operate in countries that suffer from the lowest wages.
Mexico, for instance, is the largest Fairtrade coffee producer in the world, with 51 certified organisations, while Ethiopia has just four and Rwanda 10.
The institute also says the Fairtrade Foundation has tried to monopolise the so-called ethically branded produce market by persuading organisations, schools and towns to declare themselves Fairtrade at the expense of other ethical brands such as Cafe Britt.
There are more than 300 Fairtrade towns and cities across the UK, where councils are required to pass a resolution to support Fairtrade and ensure such products are readily available in shops.
Fairtrade is one of the fastest-growing retail sectors in Britain, with sales soaring by 46 per cent between 2005 and 2006. More than 3,000 products are Fairtrade-certified including coffee, tea, chocolate, fruit, vegetables and cotton.
The Fairtrade Foundation, which will launch its Fairtrade Fortnight promotion this week, claims more than seven million people in 58 countries benefit from the system.
The organisation said: "This is a cynical attempt to undermine our pragmatic approach to trade. Fairtrade products cost the consumer no more than ordinary products in many cases, yet we ensure farmers receive a higher price. We also work with other ethical brands such as those in the organic movement."
Other charities remain divided over Fairtrade. While Oxfam said it supported the brand, others criticised it.
Ceri Dingle, director of educational charity WorldWrite, said: "Fairtrade is much more about satisfying the Western consumer's guilt. No country has ever become a successful economy by being a farm - they need to industrialise."
