A Fairer Trade?
The fair trade phenomenon is sweeping through the activist community of the United States, particularly with college students, social justice advocates, and individuals burdened for the international poor. This approach to trade theoretically gives producers in the developing world easier access to the global marketplace, enabling them to compete economically with the much wealthier, more “imperialistic” companies in the market.
On the surface, fair trade is easy to swallow, and many people have. College campuses are swarming with fair trade awareness movements. Local churches are hosting 10,000 Villages sales, a bazaar of fair trade hand-crafts and products from the developing world. Starbucks and other coffee houses are marketing a variety of fair trade certified organic coffees, which conscientious consumers are quick to purchase. The movement is growing and merits further attention. Is it what it seems? Is it an economically and socially healthy solution to global exchange? As believers, what should our attitudes be?
Before we jump in, let’s consider a verse from the Old Testament to guide our discussion, Leviticus 19:9-11: “When you reap the harvest of your land, do not reap to the very edges of your field or gather the gleanings of your harvest…leave them for the poor and foreigner. I am the Lord your God.” The message of this verse is essentially two-fold: first, adopt an attitude of compassion to the poor; and second, consider their well-being by allowing them opportunities to provide for themselves. Out of generosity, leave the edges of your field so that they may do the work of harvesting it for their own provision. Give them access to labor and the factors of production.
This idea ties is quite well with the crux of fair trade. Its proponents are seemingly motivated with improving the economic outlook of those farmers and producers by giving them easier access to the market. Without this provision, they would be unable to compete with larger capitalist producers. This seems to reflect the Biblical notion of enabling the poor to reap the gleanings of the harvest.
Additionally, fair trade includes a regulated minimum wage for all laborers on fair trade farms, giving greater overall income to a demographic that needs it. But the benefits also reach the consumer in the developed world in that the stricter regulations of fair trade provide a superior end product—for example, fair trade coffees tend to be of richer taste and purer quality than coffees produced under the competitive structure of the free market. Lastly, fair trade has social benefit in the way that it seems to strikingly arouse the fervor of an otherwise disinterested developed world, a fact which is readily evident on most college campuses—fair trade is giving students and other individuals a cause to fight for, a heightened global awareness of international trade conditions, effectually compelling people to think about the way in which their purchases impact the developing world. These are all extremely positive things.
But to call fair trade “fair” is a misnomer. Because of the extreme amount of certifications and regulations associated with fair trade production, producers face higher start-up costs; consequently the number of farmers who are able to partake is much lower than might be expected. Additionally, the market for fair trade products is actually disproportionate to the level of production—that is to say, supply exceeds demand. In effect, fair trade products flood the marketplace and eventually are sold at the lower free trade prices. Even if the global market grew, it would encourage long-term production of an over-supplied commodity. This results in lost profit for producers, suggesting that the profits of fair trade are not sustainable in the long-run. How does this help the impoverished people of the developing world?
Lastly, fair trade practices entail a vast amount of price controls, certifications and regulations, which is problematic for two reasons: first, these controls are currently mandated by politicians and businessmen in the developing world, NOT by interested laborers at the local level, leaving room for regulatory corruption. Secondly, even if these decision-makers should have good intentions, controls are controls—they mess with the market, tampering with supply and demand. This may create profit in the short-term, but is not efficient in the long run.
And so we can see how the fair trade phenomenon, like all things, is not a perfect solution to a complex problem. It fails to accurately encompass the interests of third-world producers, the role of developed-world consumers, and the efficiency of economic exchange in between. Even so, it is a constructive and refreshing approach to increase the prospects of the developing world, enabling laborers to work for their own profit. Moreover, anything that encourages conscientious consumerism in the wealthier regions of the world is a good thing.
That said, it is not a perfect answer, and proponents must consider long-term economic ramifications before jumping on board. In the meantime, this is only a cursory study, and many additional resources for further analysis are available online and in academic journals. However, the ultimate take-away here is to bear in mind our responsibility as comparatively wealthy people to consider the access that the poor have to the edges of our fields. When we reap a good harvest, we must never forget to take into account their well-being.
*It should be noted that, in some instances, fair trade also denotes that there was no slave labor used in the manufacture of the product. Obviously, the preceding article only applies to instances where no coerced labor is involved.