Development Aid from the Left: The Case for Fair Trade

By Dustin Johnson

While many of us likely think of fair trade as a label on coffee and chocolate indicating that it was produced under better and fairer conditions than the average batch, it is a much more radical project than that. Fair trade is rooted in the idea that people who produce goods, whether they are farmers or artisans or miners, should be able to live comfortably from their labor and choose how best to invest in the improvement of their community. To ensure this, fair trade systems set a guaranteed minimum price that producers will receive when they sell their products, thereby providing stability and insulating them from global market fluctuations. Most systems also include a premium, or additional price per unit, which the producers use to improve their production, support education, improve health and sanitation, or otherwise benefit their community.

Development policy, left and otherwise, is often segregated from the labor power considerations at the heart of fair trade systems. Yet a left approach to development must consider not just living conditions in the global South, but power relations both within the South and between North and South. One way for a left international development policy in the global North to expand worker power around the world is to expand support for fair trade producers and systems.

Philosophically, there are three key reasons why fair trade is an important project for the left. First, it is rooted in the idea that there is a viable alternative to the dominant exploitative international trade practices, so that everyone along a supply chain from producers to consumers is treated fairly and equitably. Second, fair trade is based on North-South solidarity in a truly global struggle against economic inequality and exploitation. Third, fair trade producers are, by and large, organized into democratic cooperatives, which give producers significantly more economic and political power and control. They determine how premiums should be spent to benefit the community and often form larger second-level cooperatives, which exert sizeable influence. Many of the companies that sell fair trade products in the North are also worker-owned cooperatives. One of the fair trade certifiers, the Small Producers’ Symbol, is entirely owned by cooperative-based producer organizations that control their own terms for certification and trade. More substantively, the Fairtrade Labelling Organization (FLO), which runs the world’s largest fair trade certification system, recently shifted to 50 percent ownership by producers; producers make up half of both its general assembly and standard setting committee.

Stable and fair prices, democratic control and organization, and solidarity have generated real results for producers in the global South. Three success stories illustrate fair trade’s potential as a development approach: solidarity with the revolution in Nicaragua in the 1980s, which helped launch the fair trade movement in the US; the fair trade sugar cooperative in Paraguay, which was able to break the control of sugar exports held by a few wealthy families; and the European-Caribbean banana regime, which provided fair prices to hundreds of thousands of banana farmers in the Caribbean.

In response to the Contras’ war against the Sandinista government in Nicaragua, an international solidarity movement developed. In Europe and North America, the movement imported coffee, bananas, and other products from cooperatives in Nicaragua to help support the Sandinista cause. Before this, the early fair trade movement had largely focused on handicrafts. Trade in food, especially an important commodity such as coffee, offered the possibility of reaching far more producers and consumers. The coffee and other cooperatives established during this time and their exports on fair terms to the North provided a model for other producers around the world to learn from and gave many fair trade pioneers, such as Equal Exchange, their starts. Since then, the organization of smallholder farmers into cooperatives have given them significant power, allowing them to resist the neoliberal government that followed the Sandinistas, weather the steep decline of coffee prices in the 1990s, and increase the quality of their coffee to obtain higher prices.

In Paraguay, sugar production was traditionally controlled by private companies and wealthy individuals, who were able to dictate prices to farmers who had no choice but to sell their harvested sugarcane to mills. This allowed those controlling the sugar trade to exploit smallholder farmers and buy from them at below-market prices. In 1975, a group of sugar farmers in rural southwestern Paraguay formed the Manduvira cooperative to challenge this system and improve their lives and communities. The organization and power brought about by forming the cooperativeand the financial benefits of fair traderevolutionized the way the farmers ran their businesses. They organized strikes for better prices and conditions, then rented a sugar mill to process their own cane, and finally constructed their own mill to directly produce and export refined sugar. In addition to breaking the monopoly on sugar production held by the wealthy and well-connected, members of the cooperative now earn nearly twice the annual minimum wage in Paraguay.

For a final illustration of how fair trade works in practice to challenge current economic relations, it is useful to look at a past example of large-scale, state-led fair trade. The European-Caribbean banana regime was a mechanism that provided preferential access to the European market for banana producers in the Caribbean, most of whom were much smaller scale than the US-owned industrial fruit growing operations in Central and South America. While this system did not provide the premiums, standards, or other aspects of fair trade to these producers, it provided higher, more stable prices than on the world market to far more farmers than current non-state fair trade systems have been able to achieve. At the behest of banana companies including Chiquita, the US government challenged the banana regime at the World Trade Organization. While the EU resisted, the banana regime was eventually ended, resulting in a significant decline in banana exports. For instance, exports from the Windward Islands fell roughly 66 percent from their peak by 2008.

These examples suggest that, in the long run, fair trade provides a basis for a global trade system that is not based on exploitation. Currently, however, fair trade faces two main barriers to expanding its impact on producers: first, most of the production of fair trade producers is not sold on fair trade terms, as their market share in Northern countries remains small despite significant amounts of activism and promotion. Second, the market for fair trade products remains small in their countries of production, though this is beginning to change in countries such as South Africa, Brazil, India, and Kenya.

In the short term, a variety of steps could be taken to support fair trade through development aid. While some fair trade proponents take a “trade not aid” approach, in reality many fair trade producers benefit from development aid like grants for projects, capacity building, and improvements to infrastructure and governance. A Northern government committed to progressive foreign policy should expand upon these successes by using development aid to improve and expand fair trade. This could include supporting existing fair trade producers with money and technical support for climate change adaptation, particularly for vulnerable crops like coffee, and for increasing gender equality within producer cooperatives; addressing issues such as a lack of access to low interest financing for producers by shifting some of the priorities of the new International Development Finance Corporation; and assisting Southern governments to incorporate fair trade into their national development and export strategies.

Support for fair trade is about aiding people in the global South who face oppression and exploitation from our current international trade system and transforming this system into one that supports their economic wellbeing. Of course, support for fair trade via development aid must be done hand in hand with transforming the international trade system. While Senator Warren’s recent speech on foreign policy presented a progressive roadmap for change, it focused on how progressive foreign policy, especially trade policy, is good for Americans. Trade deals such as the North American Free Trade Agreement have certainly harmed American workers while creating employment in the South, but these jobs are often exploitative and pay poorly. We can construct a foreign policy that fairly supports people both within America and beyond our borders.

Dustin Johnson is a member of the Canadian Fair Trade Network’s Advisory Council and a former member of its board, and has been involved in fair trade activism since 2012. The views expressed in this post are his alone and do not reflect those of the Canadian Fair Trade Network or his employer. You can find him on Twitter at @WarAndCoffee. He is originally from Los Alamos, New Mexico.

One thought on “Development Aid from the Left: The Case for Fair Trade

  1. Pingback: Europe/Americas update: December 18 2018 – and that's the way it was

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