If you’ve been paying attention to the discourse on how to improve living standards for the world’s poor, “Trade not aid” is a familiar phrase. Over the past decade especially, armchair development experts (and, you know, “actual development experts”) have criticized aid for its failure to bring fundamental change. Meanwhile, virtually anywhere you turn, someone extols virtues of fair trade. But what happens when trade fails in the same fundamental ways as aid?
Take, for instance, the well-known Fairtrade program, which provides a baseline price for crops, allowing farmers protection against price manipulation and encouraging more democratic access to global markets. Criticism of the program has come from all directions; radical leftists revile its acceptance of and reliance on markets, while free-market conservatives dislike the distortions it brings.
These criticisms arise out of the biases of those making them. As far as criticisms based on actual results, economists and others have warned of the program’s ineffectiveness and potential to do harm. Most of the available studies in English have focused on South America, which accounts for over 90% of U.S. coffee purchases. However, a new study by the Forum for African Investigative Reporters (FAIR) confirms that Fairtrade really ain’t so fair for farmers in West Africa either.
According to FAIR, cocoa growers participating in Fairtrade programs in Nigeria, Ghana, Cameroon and Côte d’Ivoire see little of the additional money paid by Western consumers for Fairtrade certified chocolate. They are left in the dark about world market prices by the Fairtrade cooperatives meant to inform them of such things. For many, the membership fees they must pay to participate outpace the premiums they can earn.
In Côte d’Ivoire and Ghana, Fairtrade has become linked with the “cocoa mafia” and the historically corrupt state Cocoa Board, respectively. When FAIR team member Selay Kouassi first attemped to report that story, he was threatened and eventually forced to go into hiding. All this suggests that Fairtrade is not just ineffective; rather, it has been subjected to and complicated by the realities of the post-colonial African economy, namely elite dominance and the inability of the state to fully establish a legitimate monopoly on violence.
But the report’s most damning finding is that, of everyone involved with the Fairtrade program, Fairtrade itself walks away with most of the money. In the Netherlands, for example, for each chocolate bar sold for $2.50, Fairtrade earns about six cents of the fair trade premium. West African cocoa farmers, on the other hand, earn only 2.5 cents. Over the course of 2009, this meant Fairtrade earned $520,000 from chocolate sales in the Netherlands, while the coffee growers themselves earned only $218,750. This is obviously deeply problematic, and though FAIR’s study focused only on cocoa, and only on Max Havelaar – the Dutch incarnation of Fairtrade – its account is another piece of evidence in a case increasingly stacked against Fairtrade.
Why would FAIR’s Selay Kouassi face threats if Fairtrade were not benefitting powerful actors above and beyond the farmers it was meant to help? What are we to do, as Western consumers, if Fairtrade is little more than a marketing gimmick? Contra the prevailing logic, should we avoid products marked with its logo? Are we being conned?
While aid often fails to achieve its goals, caught up in processes endemic to the post-colonial state, the same can be said of trade – at least in this case. But it’d be naïve to assume we’re talking about a unique case.