What is fair trade?
Is it like two kids on a playground working out for themselves what is right or wrong? Sort of.
Often pitted as the antithesis of “free trade,” which believes that producers of a product or good have the right to sell without government interference, like taxes or tariffs.
Proponents of fair trade, on the other hand, believe that while the free trade system might be good for some, it leaves producers in developing nations at a disadvantage. In poorer nations, producers do not have the luxury of waiting to sell until the time is right, which results in losses of a lot of money.
Fair trade imposes some rules on the global market so developing countries have the chance at an equal playing field. As DoSomething.org points out:
“If you buy a fair trade cup of coffee, it means that the farmer who harvested the beans in a developing nation had some help getting his specific product to you. Fair trade aims to help producers in developing countries obtain better trading conditions and gives an extra boost to those producers who promote sustainability.”
Opponents believe this creates competition with inferior goods, and that developing nations may be selling more, but still aren’t buying. Historically, the fair trade movement takes responsibility for other factors as well, by creating standards for environmentally-friendly production, and fair wages for workers who wouldn’t otherwise achieve them. Fair trade places an emphasis on goods going from developing countries to more developed countries, like the United States. Commonly fair-traded products include but are not limited to coffee, cocoa, sugar, tea, honey, cotton, chocolate, and flowers.
According to Fair Trade USA, the movement began in the 1940s “when a few small North American and European organizations reached out to poverty stricken communities to help them sell their handicrafts to well-off markets.” Max Havelaar was a fictional Dutch character created to promote the issues surrounding exploited coffee pickers. This fair-trade advocate can originally be found in the 1860 novel by Multatuli, entitled Max Havelaar, written in protest against Dutch colonial policies in the East Indies (Indonesia). In the novel, Max Havelaar battles a corrupt government system in the Dutch colony, Java. Java, coffee, trade…Get it?
What essentially spurred the novel was a series of Dutch policies called the Cultivation System. This system set a quota on Indonesian farmers, stating they had to grow a certain amount of tradable crops (tea and coffee), instead of growing staple foods, which would boost their communities. This colonial provision also established a tax collection system, where collectors received a commission, enabling abuse of power in impoverished areas, typically inhabited by farmers.
Fast forward to the 1940s, when similar instances of power abuse in trading was taking place. Religious groups and other NGOs worked to encourage fair trade, but it wasn’t until the 1960s that the current system for fair trade began to come together in Europe, often from groups of young people who were dissatisfied with traditional business models, and who were protesting multinational corporations who were perceived as neo-imperialists. In 1965, the first Alternative Trading Organization (ATO) was created. Through the 60s and 70s the movement took off, though was largely centered around handicrafts rather than agricultural goods.
By the 1980s, demand had worn off for fair trade handicrafts, and the ATO model had to undergo some strategic changes, as fair trade advocates became increasingly concerned about the impacts of changes to agriculture structures on small farmers. This, coupled with decreasing commodity prices, led to fair trade agricultural commodities working with existing ATOs. These new coalitions offered renewable income sources for farmers; the first fair trade commodities were coffee and tea, just as Max would’ve wanted.
And speaking of Max, the character began to be used in fair trade certification in 1988, when the first fair trade initiatives took off in the Netherlands, allowing goods to be sold in mainstream markets, reaching a larger consumer base and increasing sales. Labeling also ensured consumers could track which goods were fair trade, so they could know where their dollars were going. Eventually, fair trade certification caught on, and many other types of goods were included in the system.
In 1997, Fairtrade Labelling Organizations International (FLO) was established in North America and parts of Europe as an umbrella organization setting fair trade standards, offering support and inspecting producers to gain to certification. FLO stemmed from the need for harmony among labelling organizations, or LIs (Labeling Initiatives). In 2002, the first International Fairtrade certification mark was created, and is now used in 50 countries and on dozens of products.
For more information on Max Havelaar, check out the free ebook.
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