Fairtrade labelling is an increasingly common sight on western supermarket shelves. Consumers with a conscience are seeking out products which they know have been sourced at a fair price from developing country producers. But can it really help make a difference to the lives of hard pressed third world farmers? Chris Lyddon reports.

The concept of a fairtrade label originated in the Netherlands in the 1980s. The first fairtrade labelled product was Mexican-sourced coffee. There are now, according to the UK’s Fairtrade Foundation, 19 organisations around the world running fairtrade labelling schemes, all of them coming under the Fairtrade Labelling Organisations International (FLO), the international standard setting and monitoring body for fairtrade.

Producers who are registered with FLO receive a minimum price, covering the cost of production and a premium to be invested in the local community.

Eileen Maybin, spokeswoman for the Fairtrade Foundation, is convinced the scheme does a lot of good. “Fairtrade definitely does benefit farmers on the ground,” she told just-food. “I’ve been and seen it for myself in Ghana, Cuba and South Africa. I’ve seen how fair trade improves the lives of farmers.”

Maybin had also visited coffee farmers in Nicaragua at a time when coffee prices were low. “I saw farmers who were really struggling, who were getting world market prices which had been falling for four years,” she said. “The farmers were very impoverished by that stage. They were having to take their children out of school.” She explained that although education was free in Nicaragua, farmers with children couldn’t afford to pay for things like the books. “Farmers supplying the fairtrade market were much better off. Whatever the price of coffee and cocoa is on the world market, fairtrade guarantees a minimum price.”

More than just a better price

There were other benefits to belonging to the fairtrade system. “It means they can access international markets,” she said. “If people are working on their own the world system is very difficult for them.”

It also meant cooperation with other farmers and the system requires producers to be linked. “If they want to participate in the fairtrade system, if they’re not already in a cooperative there has to be some other democratic structure,” she said. “Most of them are organised in cooperatives, but for example in South Africa there weren’t any cooperatives and they have set up premium committees.”

There are also costs. Anyone who wants to sell fairtrade products paid around 1.8%, she explained. There was also a “small fee” for producers to be part of the system. Auditing and inspection came from the FLO budget. “It is funded by members like us but you do also get grants,” she said.

She accepted that the size of the market was limited. “There is already a limit,” she said. “We have more producers producing more volume than we can sell on fairtrade terms. We need to grow the market and find more consumers.”

“For example, those coffee farmers in Nicaragua were only selling 3% of their coffee on fairtrade terms,” she said. “Our aim is to increase fairtrade as much as possible.”

It was part of a wider picture. “We also campaign on trade justice issues,” she said. “We see fairtrade as something positive that people can do now while we wait for changes to take place. But we don’t lose sight of the broader issues.”

In the short term there was a need to increase the number of product categories. “We’re about to introduce fairtrade peanuts,” she said. “We have just introduced fairtrade cotton.”

Sales were growing fast. “Fairtrade products, most of which are foodstuffs, are doubling every two years,” she said. “It is a phenomenal growth. Our target is to continue to maintain that growth.”

“Fairtrade has a very positive appeal,” she said. “People can see that what they are buying is helping farmers in the developing world. They are also sending a message to government about trade justice.”

Sean Rickard, senior lecturer in business economics at Cranfield University, has his doubts. “At the end of the day you can’t buck the market,” he told just-food. Rickard, who wrote the governing Labour party’s 2005 manifesto section on agriculture and was identified recently by the Farmers Weekly magazine as one of the top 20 ‘power players,’ in British farming, has some sympathy for the ideals of fairtrade. “It is a laudable aim,” he said. “It’s fair to say that some Third World producers do get a pretty rough deal.”

However there were limits to what it could achieve. “Either you have to ring fence these people or you have to take others in,” he said. “The supply goes up and unless you have more demand a cut in prices is inevitable. As long as it’s 1% of total food production you get away with this little niche market. I don’t believe you can get away with it generally.”

He worried that fairtrade could obscure a more important issue. “You probably take your eye off the ball but the bigger picture is to get the fairtrade agreement necessary for all Third World producers and the WTO,” he said. What was needed was a deal which would open the European Union market. “If we said come on in that would help all of them,” he said.

There was no doubt in his mind that free trade was the answer to the question of a fairer deal for food producers in developing countries. “At the end of the day if we’re serious at government and consumer level that we want to do something about development then we should stop preventing them from exporting to this country,” he said.