Sunday, August 8, 2010

Essay on FairTrade

Written in a rhetoric class I was enrolled in. There is some pretty good information about the FairTrade organization.

Fair Trade is an organization specifically formed to aid farmers in developing nations. The farmers normally would have to wait for an auctioneer to buy out their crop, but because the farmers typically do not know what a fair price is, auctioneers typically cheat the price. Farmers would work their land but no profit would be gained. The Fair Trade organization solves this issue by buying those farmers’ crops at the market premium, which increases profits for the laborers. The newfound revenue would be put to use either in the town that the farmers resided by building hospitals, wells, schools and other public facilities, or be used to help improve the farmer’s business by improving irrigation, increasing wages, or buying eco-friendly fertilizer.

The Fair Trade organization is dedicated to helping small farmers increase their personal profits, not the profits of the middlemen that dictate unfair prices to the poor agricultural producers. The price of commodities should be regulated by the public market and under a Fair Trade label, this is insured. The Fair Trade organization buys products from the small farms at a minimum price that is always above or equal to the current price of those goods. Skeptics believe that Fair Trade is deceptive, seeing as the increased retail price in the product does not all go directly to the farmers. The money is divided between the farmers, the packagers, the distribution, and the retailer. The skeptics also point out that the organization might hurt farmers not able to join an established co-op, which is a requirement of Fair Trade. Overall though, the organization has helped numerous communities in countries that are oppressed by poverty and lack of a safeguard to help regulate fair prices for products, as well as labor. The money from the organization has gone to support the farmers in their businesses as well as for their personal benefit. The Fair Trade organization should be installed in numerous farms and plantations to directly aid in the development of many countries.

A supporter of Fair Trade, Alastair M. Smith, is a graduate of York and Oxford Universities with degrees in politics, history, and development studies. In an article published in the Economic Affairs journal, he breaks down critic’s arguments and offers counterarguments. He also critiques the critic’s arguments in terms of rhetoric, stating that their fault is “a failure to cite credible empirical evidence to support arguments…” Smith’s first counterargument is against a writer that stated that “[Fair Trade] has only little to do with how it treats its employees.” Smith analyzes the Fair Trade standards, which have an entire section devoted to labor requirements. Fair Trade employs the standards set by the International Labor Organization that encompasses everything from employment policy, to discrimination, to health and safety. The requirements are meant to be met within a three year period when the participating farms are in the process of becoming certified by Fair Trade. The labor standards are not only aimed at permanent employees on the production facilities, but also to seasonal and temporary workers that would not otherwise receive those specific benefits. Another argument against Fair Trade is that it “helps only a select few at the expense of other [small farmers]…” This argument is based around the assumption that small family production facilities cannot afford any permanent employees, which in turn means that the farm cannot join a co-op to secure the protection of their employees’ rights under the Fair Trade Standards. Smith points to a section of the Fair Trade Standards which states that “any producer group that is structurally dependent on hired labor still has the option to register under alternative certification.” The Fair Trade Standards give those farmers another option which entitles that the workers are able to form a union to secure their labor rights. Every small farmer has ability to be able to become certified by the Fair Trade Organization, which is evidence that no small farmer is hurt. Smith points out the flaws of rhetoric in critic’s arguments, mostly in that the arguments are lacking in logos to back up claims, an aspect that is very prevalent in Smith’s counterarguments. Smith sheds light to the fact that Fair Trade is not selective or inclusive to who they will give aid to; Fair Trade is fair.

Smith continues in his argument about the criticism that most of the money from the Fair Trade products does not go to the farmers themselves but rather is (he quotes) “eaten up by the co-operative bureaucracy.” Smith is not blind to the fact that not all of the money goes to the farmers, but how could the Fair Trade organization exist without a small portion of the profit? Another criticism he addresses is about the co-ops and how they are inefficient and how they waste consumers’ money. But, he points out; “one of the primary expenses … is repaying pre-existing loans which they are now able to pay off thanks to Fair Trade incomes.” Along with the opportunity to gain a fair income, the farmers are also able to practice trading in a safe environment; under the Fair Trade umbrella. Learning the about the public market and practicing trading on a world economic level is an invaluable skill that being part of a Fair Trade co-op offers. For a third world country to start developing, the citizens in the country need to understand economics on a world level, which is the first step to modern development. As Smith states, “…rural communities and agricultural producers need to learn how to integrate effectively with the wider economy.” Fair Trade not only offers financial benefit, but also the benefit of the skills of trading. These, along with many other positive effects, make the Fair Trade organization a successful charitable group.

In an article published by the Africa Research Bulletin, The Times scrutinizes the Fair Trade organization. The article’s only credibility is that it was published for The Times, but it lacks in logos and pathos immensely. The article is a direct example of the kinds of articles that Smith (aforementioned) criticizes for their lack of facts to back up their stance. The article states how “Managers at one tea estate in Kenya said that Fair Trade regulations were too expensive or difficult to implement and that some of their workers found them too restrictive.” The only aspect to analyze in this passage is diction; there are no facts for the argument to stand on. In another example, “Some workers suspect that the scheme is being used to make estates appear socially responsible…” There are only “suspected” allegations against the Fair Trade organization that are being stated. The argument that the article is putting forth is not convincing, as it does not offer counterarguments. Estates that are certified by Fair Trade are being chastised for buying from non certified farms. The counterargument for this statement is that not all farms are certified by Fair Trade, so the amount of Fair Trade products that one can buy is limited. To make profit an estate must buy and sell a specific quota and as a result, must buy from non certified farms, which is a statement found in the article itself; “Fair Trade estates can also supplement their output by buying from non-certified plantations, although they cannot then sell such produce as Fair Trade.” The article presents the negative side of the argument without presenting a full 360 degree view on the subject, which is unsuccessful rhetoric.

According to Gene Callahan, a critic of Fair Trade, the organization “tends to diminish [exploited farmer’s] prospects and hurt overall economic development.” She grounds her stance on the assumption that Fair Trade ignores the economic laws of supply and demand. Her example is coffee, which is a major cash crop in many developing countries. Her argument is that by Fair Trade offering incentives on one agricultural product, the price of that commodity would drop in the free market due to oversupply. She advocates for farmers to diversify their options and maybe even stay away from an agricultural career. The one thing that she fails to take into account is that coffee is not the only crop that Fair Trade can be applied to. Fair Trade products include: tea, fruits, fruit juices, sugar, cotton, clothing and even sports equipment. The range of products is so vast as to encourage diversification. Another aspect that Callahan fails to mention is the education of the people residing in the third world nations. In those countries, modern development has only just begun recently, and those countries are lacking in fields of knowledge that include economics. Farmers would not know how to navigate the market as to be able to make a profit. Fair Trade offers a safe environment for the farmers to practice in and learn the basics of world trade. Callahan’s lack of successful rhetoric makes it simple to break down her argument and present the true facts. She fails to use any form of logos in her article, and she presents too many claims that are not backed up. She boldly states that “fair trade is a bad deal. The intention is noble enough, but the impact on human lives is tragic.” Callahan does not present the opinion of the farmers who are affected by Fair Trade, only the opinion of the analytical, self-professed expert. Research shows differently of Callahan’s statements.

Catherine S. Dolan, in an article published in Globalizations, analyzes the effects of the Fair Trade organization in Kenya. Most of the farmers see the organization as a helpful charity that they can identify with. One farmer in particular says that the organization is a dependable charity. He continues by saying, “Other missionaries come and leave, fair-trade is still there and they keep on giving, giving, giving.” This shows that the Fair Trade organization is prevalent in the lives of the Kenyan producers and farmers. The organization has helped to build roads, school busing systems, hospitals, and overall improve the society. Fair Trade is an organization that gives back to the community as a whole. One producer relates a personal story to the impact that Fair Trade is having on the people of Kenya. “There are many countries that buy produce from Kenya but they don’t give something back for thanksgiving like Fairtrade. Like I had constructed a toilet as a form of appreciation in a nearby school. I was doing that because the money I get, it’s from these children and their parents. So I thanked them by constructing a toilet for them.” About two-thirds of smallholders have directly benefited, or know another that have benefited from the community projects that Fair Trade funds. The good that the organization has done is immeasurable. A manager of one of the certified factories was so bold as to state that “if everything could go to Fairtrade … this area would be like London. ... we would change the whole situation here.” While so many critics of Fair Trade point out flaws and weaknesses of the system, they fail to voice those whom the organization truly affects. More and more farmers in Kenya are demanding that Fair Trade be implemented where they are employed. One manager says that they have seen “the light at the end of the tunnel.” That light at the end of the tunnel should be available to every small farmer, and the Fair Trade organization could bring that about.

Starbucks is the world’s largest purchaser of Fair Trade coffee, buying about 14% of the global supply. The company portrays itself as being ethical and virtuous in statements such as, “For us, corporate social responsibility is not just a program or a donation or a press release. It’s the way we do business every day.” The CEO of the company, Howard Shultz, in an interview on 60 Minutes, announced boldly that “We’re in the business of human connection and humanity. We set out to become a company that would create and achieve the balance between profitability and… a love of benevolence.” Statements like these must be backed up in order to earn trust in the customers, but when Starbucks decided to block the Ethiopian government from profiting on trademarks of the exported coffee, their ethical image was seen as false advertising. Although Starbucks does sell Fair Trade labeled coffee, the company’s efforts to aid in the development of other countries seems to be lacking, which is in conflict with their portrayal of ethical legitimacy. The company boasts a welfare organization of its own titled “Coffee and Farmer Equity” (CAFÉ), which supposedly promotes beneficial social projects and labor requirements. A closer look into the CAFÉ practices tells another story. Almost 70% of Starbucks’ farmers are not in accordance with over half of the guidelines set by CAFÉ. An inspection of the guidelines themselves reveals such rules as “Fair and humane working conditions” and “Minimum child labor laws.” These guidelines are quite vague and could entitle
practically anything. Organizations like CAFÉ do not compare to the Fair Trade organization in terms of integrity and strict guidelines meant to benefit farmers, not corporations. Organizations connected to a large business will still operate to serve that business. Since the Fair Trade organization is not linked to any corporation, they do not have that bias and will serve the people in need.

No organization is perfect and Fair Trade is no exception. There are flaws within the system but the overall premise is having a positive effect on the countries in which it is employed. In an article found in The Ecologist, Tomy Mathews, founder of Fair Trade Alliance of Kerala, simply stated that “whilst the desire to expand Fair Trade was legitimate it needed to be done in a way that put a central emphasis on trade justice and nurtured the smallholder farmers…” He goes on to say that most of the issues with the organization are occurring because they are growing too large, too quickly, and so to keep up with demand some owners of farms are finding ways of cheating the system to raise their profits by a Fair Trade label. One of the suggested solutions to the issue is for consumers to look to buy from certified Fair Trade businesses and not just Fair Trade products. This would insure that the money would be going directly to those who need it most.

The Fair Trade organization is a tool that, if implemented correctly, could build up the economies of developing nations and put money into places that are in desperate need. Countries do not necessarily need government reform or a rebellion to put them on the right track for modern development; they simply need a smart shopper who is willing to pay the extra few cents.

Works Cited

• "Is Fairtrade Still Fair?" The Ecologist 39.1 (2009): 10. Print.
• Smith, Alastair M. "Evaluating the Criticisms of Fair Trade." Economic Affairs 29.4 (2009): 29-36.
• "Tea: Fairtrade Benefits?" Africa Research Bulletin: Economic, Financial and Technical Series 45.12 (2009): 18103c-8105c.
• Dolan, Catherine S. "In the Mists of Development: Fairtrade in Kenyan Tea Fields." Globalizations 5.2 (2008): 305-18.
• Callahan, Gene. "Fair-trade Coffee: Not worth a Hill of Beans." Christian Science Monitor 8 Aug. 2008.
• Davis, Rowenna. "The People vs Starbucks." New Internationalist Apr. 2008: 21-23.


  1. There are several reports made by a Dutch NGO on fair trade and tea.
    You should ask Jackie about them.

  2. A very interesting summary of the discussion and evidence available on Fair Trade!

    On Gene Callahan (et al.)'s economically simplistic account of disincentivising diversification see smith's 'Fair Trade, Diversification and Structural Change' in the Oxford Journal of Development Studies.

    Or a publicly accessible summary at:

  3. Ice,

    I'll post a link to this essay on a forum on leafbox.

    Alastair Smith,

    Thank you for the link! I need to read that and perhaps add a bit more to this discussion! I appreciate your input greatly!

  4. Thanks...this is pretty dense and I would like to return and re-read it more thoroughly in the future. I think there is a lot of information and discussion that you have here that I think would enrich the page on fair trade tea that I've been working on, as you delve into the criticism here in much more depth than I do on that page.

    Thanks for posting this...I think it's great when work for a class or school can be used to contribute to the discussion and flow of ideas. This is the type of work that I think sparks debate and moves things forward when people share it.

  5. Alex,

    I hope you can find some valuable insight in this essay. Anything that you may want to use for reference on your page on Fair Trade, please do. I made this essay public for a reason!
    Thank you and I do hope you enjoy reading my dissection of the Fair Trade controversy.