Friday, 16 March 2012

Fairtrade and Co-operation

No one who has been involved in the Fair Trade movement could be failed to be moved by encounters with the producers they meet from the developing world. I have had the honour this year to meet Palestinian farmers from Zaytoun and Ugandan co-operative women coffee growers. This is what the movement is all about putting the producers in contact with the consumers avoiding the alienation and mystification of the ‘market’ and despite the downturn this year’s total sales of fait trade products should reach £1.3 billion.

If nothing else showing, at a time when incomes are tight, that consumers do have a conscience. Today corporations do everything they can to hide exploitation, yet we all know how conventional marketing masks the gross inequalities between producers and consumer, asking consumers to fixate on the commodity.

It’s a long way from the early days of ‘suitcase trade’ when visitors, mainly missionaries, bought suitcases of handicrafts back from the developing world to sell amongst their communities and parishes.

That process of direct contacts between consumers and producers making trade fair was systemised by organisations like Oxfam Trading, the Dutch Fair Trade Organisatie and the Christian based Traidcraft. Their mission was about building relationships and drawing explicit attention to the production process.

Today the base of the Fair Trade system is the huge numbers of producer co-operatives representing small farmers in poor countries producing over three quarters of all fair trade commodities. It was by the formation of these producer co-ops that farmers sought to bypass the monopolists and penetrate western markets. Only co-op control could guarantee that the fair trade premium was distributed fairly and used for wider community benefit. The democratic control embodied in the co-op model was therefore crucial to the system.

Thanks to the Fair Trade mark however the system may be now becoming a victim of its success. The development of the ‘label’ makes a huge difference to the process. It enables consumers to distinguish fairly trade products from ordinary ones and the labelling organisations have become the backbone of the movement.

Originally, however, the movement had a vision of a global trade system built on moral rather than market values. I believe that original objective has been compromised by collaboration with transnational corporations to gain market access. This means that the producer co-ops are once again becoming dependent on the transnational corporations for their survival – the very thing from which they were seeking to escape.

Many argue that Fair Trade is about reforming how markets work and that the contagious Fair Trade mark has been forcing companies to reform their practices even if just for cosmetic reasons and that it has highlighted trade injustices including the complicity of the WTO and IMF in creating an unfair world trade system.

There is some truth in this but even the strongest advocate of fair trade labelling would agree that the movement has not fundamentally changed the underlying imbalance between consumers and producers.

Today, for example, despite the fair trade critique of the system between 70% and 90% of the major commodities are marketed by just 15 transnational companies. The closer we get to the consumer the more concentrated is their power. In coffee, the most traded global commodity after oil, just 6 companies control 50% of the total market. Indeed just two, very well known companies, control half of the market for roast and ground coffee.

Just as co-operatives have fundamentally changed the lives of many poor farmers in the developing world, improving their lives and strengthening their communities, there is a need for co-operative steps to take this further.

We need to make co-operative systems central to the remaking of economies at the growing, picking, and hauling end of the market by helping them to diversify from often single cash crops by leveraging the relationships and capital that comes from fair-trade to localise expertise, resources and co-operative commercial systems.
We need to devise local strategies for accessing global market and there are co-operative ways of doing this too. There is also a need for a formal link between the Fair Trade and Co-operative Movements.

We need to have a wholly co-operative supply chain. There are examples of this on a small scale. Like the way Edinburgh workers co-op, Equal Exchange, creators of direct trading relationships between producers and consumers brings Zaytoun olive oil into the UK from the Palestinian Fair Trade Association which is a group of eight producer co-ops, oil that is then on sale in co-op shops here in the UK.
Other examples include the way the Kuapa Kokoo co-op from Ghana with help and investment has established its own brand of chocolate, Divine, here in the UK capturing more of the value in the supply chain. There are also Co-op Wholesalers like Essential Trading in Bristol, Infinity in Brighton and Suma in Elland in Yorkshire.

All of them work to build genuine relationships with suppliers.
These may seem small scale examples, proof of a principle, perhaps and may not generate the spectacular growth in Fair Trade sales of persuading Nestle to put a fair trade mark on a Kit Kat. In the long run however keeping farmers out of clutches of the transnational corporations is the only way to build a lasting genuinely fair trading system.