Fair trade leap

December 01, 2002

Fair Trade sales are growing. No longer are fair trade products only to be found at the back of church after the service or in charity shops, but everyday shoppers can now find them on the shelves of major retailers.

This poses two questions about who benefits.

Firstly, fairly traded products sell on the grounds that the producer is paid a premium above the market price. If that added cost is passed on to the consumer, then consumption of the product will fall. Which of the intermediaries between the producer and the consumer should absorb the cost of the premium to keep the fairly traded product competitive in the market? The answer is unclear. An incisive economic analysis on this point would be helpful.

Secondly, it is claimed that fair trade assists community development. Can the co-operatives involved show that they have better outcomes on health, education and security of income than other producers? Is investment in education and health more beneficial than investment in new roads and improved technology? If fair trade is to consolidate its success, these questions need to be investigated too.

The Co-op is calling on all chocolate manufacturers to launch at least one product with the Fair Trade mark in their range, after the announcement on November 26 that the company was switching the supply of the cocoa used in all Co-op brand block chocolate to fairtrade cocoa. Meanwhile a new international Fairtrade trademark is being introduced for all products certified by the Fairtrade Foundation, starting from mid-October. The trademark will be used across the 17 countries that make up the Fairtrade Labelling Organisations International. Contact Martin Henderson, The Co-op, on 0161 827 5292 (http://www.co-op.co.uk); Eileen Maybin, Fairtrade Foundation, on 020 7405 5942 (http://www.fairtrade.org.uk)

Arcadia came under fire on November 19 when reports emerged that workers in a supplier’s London factory were being forced to work in freezing temperatures and dangerous conditions. The minister for employment relations, Alan Johnson MP, announced the launch of an investigation into the factories on November 20. Chief executive, Philip Green, promised the garments would be destroyed rather than sold, and said the supplier concerned would lose his contract with the company. Contact Sandra Bull, Arcadia, on 020 7927 1877 (http://www.arcadiagroup.co.uk)

The Ethical Trading Initiative and Just Pensions are offering fund managers a new tool to investigate company performance on labour standards in their supply chains, with the publication of a consultation in November. The paper addresses how a company establishes credible policies, as well as looking at implementation and management systems. Contact Dan Rees, ETI, on 020 7404 1463 (http://www.ethicaltrade.org)