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Fair Trade

Dave Crampton



International trade is worth ten million dolars a minute. Yet one child dies of hunger every eight seconds. Increased prosperity has gone hand in hand with mass poverty. Fledgling businesses in developing countries are increasingly struggling to compete against the market powers of multinationals. Furthermore, rich countries continue to protect key sectors of their economies so when developing countries export to these countries they face high tariff barriers that are up to four times higher than those encountered by rich countries. Trade may be one of the motors of globalisation and can lift people out of poverty more quickly than was ever possible in the past. To do this, trade has to be fair. In New Zealand, fair trade is predominately about coffee and other substances that find their home in a mug or a cup, as students will find out during Fair Trade Fortnight, starting April 29.
Fair trade is a trading partnership based on dialogue, transparency and respect that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to marginalised producers and workers. It offers an alternative approach to conventional trade as it seeks greater equity for producers and workers in developing countries because producers are guaranteed minimum prices for their products. As there is less links on the chain between grower and seller it means that producers who make the goods you buy get a price that fairly rewards their work and skills.
Student groups like Victoria’s Just Action is mobilising involvement in promoting the positive message of fair trade. Formed two years ago, the group is committed to social justice, sustainability and fair trade, and many of its core members volunteer in the Trade Aid shop in the city. Just Action co-founder Andrew Johnston believes fair trade is a relevant issue and wants student activists on side.
”I think there’s some latent activism in students that is dying to come out and I think this is a good way to let it out. Fair trade is becoming more of a topical issue.”
“Buying fair trade products is a real practical way to make a difference,” Just Action member Grace Leung adds. “Everyone can just think more about what we are buying and where it comes from and think about the stories behind the things that we buy. It’s very easy to get disconnected from stuff and it is so easy for us to go to the supermarket and not think about where things are coming from. Fair trade has a big impact on producers and on the planet.”
Oxfam New Zealand, a non-Government organisation dedicated to finding lasting solutions to poverty and injustice, has been raising awareness of fair trade for more than 40 years in the developing world. Oxfam’s fair trade coordinator Linda Broom says Oxfam is assisting producers in trading their way out of poverty and giving them access to New Zealand markets.
“We are working with the producers in the developing world, and we help to build capacity of these producers that we are working with. We are helping them buy equipment so that they can trade and so they can access the fair trade market in New Zealand. We show them how to build a livelihood so they can trade their way out of poverty. They are working their way out of poverty.”
AIDS, terrorism and third world debt may be considered important issues, but international trade is the most important issue in global relations with an $8 trillion annual price tag. Free trade is analogous to the All Blacks playing the Eketahuna U6 rugby team with the former setting the rules and supplying the referee. It’s obvious who will win.
Fix trade and you go a long way in fixing debt. Fix debt and grow the economy. Grow the economy and increase health services to combat AIDS. Combat AIDS and keep third world traders alive. Trade may be one of the motors of globalisation and can lift people out of poverty more quickly than was ever possible in the past, as long as trade is fair.
Oxfam and groups like the Fair Trade Association of New Zealand (FTANZ) will be raising public awareness of fair trade during the annual Fair Trade Fortnight, from April 29 to May 13. FTANZ is organising a five-a-side soccer competition using fair trade soccer balls on 5th May, and the association’s director Stephen Knapp will lead seminars on the fair trade labelling system, fair trade in the Asia/Pacific region and the producer supply chain. The fair trade label is a seal of approval that appears on products that meet internationally agreed fair trade standards and which guarantees to consumers that their purchases will benefit the producers, their families and the surrounding communities from developing countries they originate from. It is administered by Fair Trade Labelling Australia & New Zealand (FTLANZ), a local not-for-profit organisation also headed by Knapp. FTLANZ is a full member of the Fair Trade Labelling Organisation, the international organisation that governs the use of the fair trade label worldwide.
”The labelling system has taken fair trade into the mainstream,” Knapp says. “In the end customers know that the product has come from a certified fair trade supply chain by reading the fair trade label. That’s what it is all about – you get to know where your product is coming from and the benefit it brings.”
There’s a fair bit going on at Victoria during fair trade fortnight, details of which are currently being finalised. Just Action is assisting with the programme, and is in the process of organising a fair trade concert at Happy. Other planned events include a coffee tasting event, a movie screening and speakers.
“We’re going to be doing stuff in the quad a lot and getting the message out there,” Johnston says. “Fair trade is about trying to reassess the unfairness on the polity and is trying to even up the playing field and give producers some more ownership of their own lives and their own products. Getting that dialogue out between people who consume the stuff and people who make the stuff is something that I`d like to see.”
And he will see it. Will Padilla, a coffee farmer from the Coope Agri in Costa Rica, will be appearing at Victoria University on May 7 as part of a national tour organised by the Fair Trade Association. He will talk about the impact of fair trade on his community and promote the benefits of consuming fair trade products.
Last year $3.8 million worth of fair trade certified products were sold in New Zealand, including at three Victoria University venues; Mount Street Café, Café Galleria and the university bookshop, which all sell fair trade coffee, chocolate and tea. Projected growth is expected to grow by the end of this year to nearly $5 million. Knapp says the spectacular growth of fair trade products from less than $20,000 two years ago is due to the adoption of the fair trade labelling system, and has made New Zealand the fastest growing fair trade market in the world.
The growth of fair trade product in New Zealand is pretty significant when you consider that prior to 2004, fair trade products were not available outside Trade Aid shops. According to the 2005 Just-Food Global Market Review, Global fair trade sales should reach US$9 billion in 2012 and US$20-25 billion by 2020. Broom says Oxfam has been working with student groups here in New Zealand in its promotion of fair trade, and is holding a fair trade coffee morning on 4 May at Victoria as well as promoting Pallida’s speaking tour.
“We will be challenging workplaces (including university departments) around the country to switch to fair trade coffee,” she says. “We have got an incredibly powerful role as consumers to make a difference. We have a very powerful voice and so by choosing fair trade products we tell farmers that we don’t want them to be exploited. We have the power to change the balance in international trade.”
So forget the Drop the Debt campaign. Forget the Make Poverty History campaign, the best way of dropping debt and making poverty history is to make trade fair. So, students who buy fair trade coffee at Mount Street Café or People’s Coffee in Newtown, for example, are making a real difference to the lives of coffee producers in third world countries. Matt Lamason founded Peoples Coffee in October 2004 after graduating from Victoria with a politics degree.
“I was doing a second year development studies paper and I was a barista while studying. I didn’t want to sit in an office after graduating so some friends encouraged me to look at building up a fair trade café.”
But Lamason opened a roastery instead and sold coffee as well. He currently has two outlets in addition to the roastery and sells “anything fair trade that goes in a cup”, which includes tea, chocolate and even sugar. He gets product through Trade Aid from places such as Columbia, East Timor, Mexico, Ethiopia and Jamaica, ensuring that growers in these places receive a fair price for their work. Trade Aid is a registered importer through the fair trade labelling system and retailers like Lamason have a licence to use the fair trade label as a product. People’s also grind fair trade coffee and even have a “daily grind” newsletter, highlighting the plight of poor traders, which is available from its website at http://www.peoplescoffee.co.nz.
”Fair trade is about the poorest of the poor, the growers,” Lamason says. “ It’s about giving self-determination back into the community. We`re paying a minimum price that is not going to go below the cost of production.”
Lamason believes so much in the fair trade philosophy that he feels it is important to keep in touch with growers whose product he sells. So every year he goes overseas to see for himself how growers are doing. In fact he will be in Columbia during Fair Trade Fortnight after visiting Ethiopia last year.
”We’re going to find out what fair trade is doing on the ground, what the benefits of fair trade are, what the concerns of the growers are, that sort of thing,” he says. “We`re going to spend one week in Columbia, and one week in Peru at harvest time and will drive around, talk to growers, talk to families, work in the harvest and see what’s being going on,” he says.
But what has been going on outside countries that market, grow and sell fair trade products is that as a result of international trade practices, developing countries are getting poorer because rich countries set the rules. Trade barriers cost poor countries twice as much as what they receive from aid from these rich countries. Under conventional trade, a packet of coffee that sells for almost $7.00 brings only 70 cents to the Central American farmer who is grows it. These coffee pickers have to involve their entire families – including their two year-olds – in picking coffee beans, and they earn in three days what it costs us for one cup of Starbucks coffee. That’s if they can get the work, and many can’t.
”Coffee is one of the products that illustrate why fair trade is so important,” Broom says. “Coffee prices were so low that people could not cover their production costs, and coffee farmers were abandoning their farms.”
The world’s 25 million coffee farmers used to earn a decent living from the coffee industry, because coffee prices were set through the International Coffee Agreement in order to ensure that prices were stable and fair to both consuming and producing countries. That changed in 1989 when the Agreement collapsed after the US pulled out. Subsequently coffee has been traded on an open market, which has resulted in incredibly volatile prices. In 2001, coffee prices fell to a 30-year-low (around 60 US cents per pound of green beans). When the price of coffee falls, coffee farmers struggle to meet their basic needs – feeding their families, education for their children and basic healthcare.
According to Guillermo Vargas Leiton, a coffee farmer from Costa Rica who visited New Zealand in 2005, coffee farmers in his region where receiving between 60-70 US cents per pound of coffee which it cost them 80 US cents to produce. Farmers in similar coffee growing regions have been abandoning their farms and migrating to urban slums to find work. In Latin America and Africa, some coffee farmers have been turning to drug cultivation as a more lucrative alternative.
So now you can see why fair trade is important when free trade has led to the biggest wealth divide between rich and poor countries purely because the rich keep on writing the trade rules for their benefit. The world’s poorest 5 per cent lost a quarter of their real income during the past decade while the richest 5 per cent gained 12 per cent. The poor countries also received twice as much aid as they traded. Yet no Government wants to rely on foreign aid for the provision of their basic needs. Poor countries, in particular, want a fairer trade system so that they can trade with rich nations, earn more money, grow their economies and pay for their own health and education. Instead they are paying nearly twice as much on debt servicing than they are paying on health and education combined to pay back aid to rich countries.
At the same time as poor countries are struggling to pay back aid, the rich countries have reduced their aid budgets by $13 billion in the past 10 years. Yet they also continue to set trade rules and close off their markets to the poor by setting import duties and quotas. Take poor countries that rely on a single commodity, like coffee or bananas. Last year, poor countries sold 20 per cent more coffee than in 1998, yet they were paid 45 per cent less due to falling commodity prices. Had they sold at the original prices, they would have been $8 billion better off. Last year Ghana increased cocoa production by a third but was paid a third less than the previous year. Sure, rich countries provide aid to poor countries, but they would do better if they traded with these countries fairly, thus minimising poverty.
“When we talk about poverty, we talk about like its something affecting other people… ‘these poor people in poverty’,” Johnston says. “Yet trade is the thing we actually have a relationship with. Trade is the thing that we can change – change that will affect all those other things. It’s the thing that we can change the most effectively, so trade is relevant.”
Johnston and his Just Action colleagues, like others in like minded organisations, are well aware of poverty issues with growers and want to promote the gospel of fair trade as they believes everyone can do something about poverty in countries like Ghana and East Timor. Like drink the most appropriate type of coffee, perhaps – with fair trade sugar. But don’t try to persuade Oxfam’s Linda Broom to drink the brown liquid, “I don’t actually drink coffee, I think it tastes gross. I can’t drink it, it gives me a headache.”