Demand for Fairtrade products may be soaring in the UK but the scheme is leaving Third World farmers worse off and does not aid economic development, a UK think-tank has claimed.

A report by the Adam Smith Institute claimed the Fairtrade brand is a “nice idea” but questioned whether it helped farmers. 

“There are a number of inconvenient truths about Fairtrade,” the institute’s Marc Sidwell said. “Indeed, on closer inspection it may not be that fair at all. It only offers a very small number of farmers a higher fixed price for their goods.”

Sidwell added: “Given the way markets work, these higher prices come at the expense of many other farmers who, unable to qualify for Fairtrade certification, are left even worse off.”

The report, which coincides with the launch of Fairtrade Fortnight, said the brand sustains uncompetitive farmers on their land, holding back diversification, mechanisation and denies future generations the chance of a better life.

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Fairtrade is a brand competing with other ethical schemes and charities for people’s money, the report claimed.

“Fairtrade’s success rests on its skilful advertising and its ability to persuade corporations, schools, towns and even nations to ‘go Fairtrade’,” Sidwell said. “But when you look at the evidence it is clear that for all its good intentions, Fairtrade is not the only way to make a difference, and it is not the best way either.”