A Philosophical Look At Fair Trade
What comes to mind when I say ‘fair trade?’
If I’m being honest, before I started looking into all of this I would have blurted out things like:
- Shea Butter helping women in Africa
- Cocoa Butter from Ghanan Co-operatives.
- Chocolate 🙂
- Third-World countries.
But that’s not it.
That’s not all of it.
I’ve been away from this blog for a while researching and working on other things, some cosmetic and some less so but while I’ve been away I’ve also been digging around into the world of Fair Trade and one thing that has struck me of late strikes at the very heart of who we are as people.
Does the need for certified ‘Fair Trade’ imply that regular trade is unfair?
A deep question indeed…….
One of the activities I’ve been participating in outside of direct cosmetic chemistry is farming and more specifically my husband and I have been undertaking a course in farm planning and management so that we might have the skills and contacts we need to make a go of our 50 acre block.
Farming has put me in touch with primary producers here in Australia and the story I’m getting from these people is one of increasing unfairness, of seeing margins squeezed, of being taken advantage of, marginalised, forgotten.
You don’t have to go to Africa to ask a farmer if trade is fair?
The last couple of weeks here in Australia have seen the fairness of milk pricing put on the table as many farmers have been slugged bills from the processors that run into thousands (sometimes hundreds of thousands) of dollars due to them slashing farm gate prices and demanding a claw back of funds. The issue is complex and is explained well here but basically our Aussie milk farm-gate price is determined by market forces – the local market (25% of total milk production) is dominated by a duopoly of supermarkets who have, since 2011 used milk as a loss leader to get people into their stores while the external market (75%) is traded on a demand and with the rising Aussie dollar and demand for powdered milk in China shrinking processor Murray Goulburn has ended up in a financial pickle!
Going back in time to before this current crisis the Australian dairy industry had been facing pressures to ‘get big or get out’ in order to streamline supply and cut costs in preparation for global market success. Success for whom you might ask?
Some words to keep in mind here are:
- Global Market
- Free Trade Agreements
While we do use milk in our cosmetics this example is a classic case of what happens when the market moves away from the farmer. Indeed, I’m convinced that the further away from the consumer the farmer is, the greater the chance that trade will be unfair mainly because it is so easy to lose sight of the farmer.
Unlike Australia which is a mixed economy, economies of emerging countries are typically farm based and often single product dominated (the so-called banana republics). Farms are typically small, family owned enterprises that have moved past subsistence and into a trading situation. The fact that these farms are family enterprises needs to be held firmly in our minds when discussing things like occupational health and safety, pay, child labour and working hours. In particular I believe that it is imperative we avoid allowing ‘Western privilege’ to cloud our views on what is and isn’t acceptable in terms of division of labour while at the same time working to empower positive improvement.
Many, Many small farms producing cash crops for market.
- Around 50 million people globally depend on cocoa for their livelihoods (2011, Fair trade commodity briefing)
- 3.5 million tonnes of cocoa beans produced each year.
- Over 90% of the world’s cocoa is grown on 5.5 million small farms.
- Cocoa growers currently receive around 6% of the price of chocolate paid by consumers in rich countries, compared with 16% in the late 1980’s
- Around 122,000 farmers from 62 producer organisations in 18 countries benefit from fair trade cocoa.
70% of Cocoa is grown in West Africa (Ghana, Ivory Coast, Nigeria, Cameroon.
Around 7% is from South America.
14% from Indonesia
Although the on-the-ground farming situation for cocoa growing remains in the hands of the farmers who have had less pressure to grow than say those in the Western World that is not necessarily for good, honourable reasons. Even if they wanted to farmers in these emerging markets are effectively prevented from rising up the ladder and growing their share of the pie because of the way the global market works.
Cocoa is as good an example as any.
Cocoa is farmed by many farmers. The farm-gate cocoa price is either negotiated in a co-op situation run to help get a fair price for the farmer or by licensed buying companies that may pay more weight to the global price of cocoa than to local farming families. The cocoa may then go through another level of administration before making its way to foreign-owned up-stream processors or out onto the local market.
With regard to cocoa I was particularly alarmed to find that all of the value-adding processing is in the hands of multinational companies, that the only money the cocoa producing country is guaranteed is the traded price of the raw commodity.
Africa only captures the profit made on its raw commodity and not the value added product.
Let me explain.
Cocoa beans are picked and then must be ground to split the waste shells from the liquor or NIBS. These nibs can then be further processed into cocoa powder, cocoa butter or chocolate:
Shelf Life implications for each stage of processing.
BEANS Cocoa beans are normally stored in form of whole beans in jute bags for relatively short period. They can be stored for 5 to 6 months safely. During storage and transportation they are subjected to problems of insect infestation, mould contamination and moisture exchange between atmosphere and the beans, which are hygroscopic
NIBS If cared for properly, Cacao Nibs have a shelf life of two to three years as long as these conditions are met:
- Avoid exposure to heat. The nibs will remain fresh if stored at room temperature or below.
- Avoid exposure to direct sunlight.
- Squeeze all of the air out of the bag before sealing.
- Seal the bag tightly after each use.
- Store the nibs in a dry place, and avoid all contact with moisture.
Butter If kept in a cool, dry environment the butter should have a shelf life in excess of 1 year.
Turning Beans into Nibs is a significant step in the process as you take a highly vulnerable and perishable crop and turn it into something with a long and stable shelf life (something us cosmetic scientists know all about).
The fact that the nib step is owned and controlled by multinationals is a tragedy that bleeds cocoa growing countries of potential profit. Profit that could be re-invested into infrastructure, manufacturing capability, farm improvements, education, healthcare and more besides.
This happens irrespective of whether the beans are bought for a fair market price or not. The country is still only seeing a small slice of the profit pie and because of that it is prevented from growing and investing in the very infrastructure needed to take control of more of the supply chain.
So where does fair trade fit into all of this?
Fair trade works to keep small family farms viable by negotiating fairer farm-gate prices for the crops and working towards improving working conditions. While this is a valid and worthwhile endeavour the power of this enterprise sits entirely in the hands of the consumer who must then agree (often consciously) to pay a premium for the goods on offer. Often the consumer must also expel effort to seek out these goods all the while knowing that Fair Trade is no guarantee of quality or reproducability. That is not to say that fair trade material is of inferior quality, more that the quality of the product isn’t the key concern although the Fair Trade brand good will does rely on a quality product.
There is no doubt that the Fair Trade model does improve the lot of farmers exposed to the global market but is there more we could be doing?
Free Trade, the Global Market and Globalisation.
What I can’t fail to notice with all of this is the role that free trade plays in manipulating a market and exploiting producers. When the world is your market those with the means to explore and move with the market can exploit it, shopping around for cheaper product, faster supply, different quality. We have grown used to this and often accept it without question but lately I’ve been questioning if we are right to accept this as a good way to trade.
Global Market – This is basically a situation where the whole world is seen as the market for your goods. There is nothing inherently wrong with that. Since the beginning of time people have peddled their wares around the globe trading, swapping, negotiating and growing.
Free Trade – This is a legal agreement set up between countries or regions (such as the European Free Trade agreement that Ghana and the Ivory Coast have with Europe) to reduce the barriers to trade between countries. Often a country will impose import duties and tariffs on foreign goods to protect their local industry. Before World War two it was common for countries to favour goods from their own nations and impose heavy tariffs and taxes on imported goods. However, after World War two a guy called Bretton Woods put together a plan that turned into the World Trade Organisation which promoted free trade as a way of securing world peace. This sparked more free trade agreements and has ultimately lead us to where we are now.
Globalisation – This is really a philosophy that has risen up out of global travel and trade – international integration or the ‘it’s a small world’ thing.
Is there a way of making all trade fair?
I think that’s a subject for another blog post given that this one has become quite long but in a (cocoa) nutshell I’d say this. Any structure that creates the environment for disproportionate wealth and choice detached from the REAL economy (i.e the people who profit most don’t even have to see the product they are selling) is inherently unfair and must be carefully monitored in order to regulate for this.
Free markets in liberal economies resist regulation as it goes against their political ethos.
The economies of the Western World are all liberal economies.
So while yes, there is a way there may not be enough will.
It’s worth digging into that a bit more in another post.
And it is also worth looking more closely at how Fair Trade can be integrated into a cosmetic brand. Some are doing it but how and is it really making a difference?