Dealing with and in the Global Economy: Fairer Trade in Latin America

Dealing with and in the Global Economy: Fairer Trade in Latin America Pauline E. Tiffen & Simon Zadek

Free Trade • People have to work harder for less immediate reward. • People in Mexico are poorer than they were a generation ago. • Nigerian incomes have fallen by a quarter since the mid-1970s.

Fair-Trade • A movement began in the 1960s. • This is an alternative which allows fair prices for workers. • Fair trade makes up only one hundredth of a percent of the annual world trade. • Growth in recent years has been in the food industry. • Fair trade is the same as free trade in desigfn and product development, production, logistics, transportation, marketing, customer service, and consumer mobilization. • Fair trade is distinctive in the motive, scale, orientation and ownership.

…. • Provides a particularly good price to the primary producers. • Marketing has been reformed to provide awareness of social justice and environmental aspects of the product. • Fair trade has offered new opportunities for social organizations and mobilization

Who are the fair trade organization? • Not-for-profit trading companies - Bridgehead • Self-standing trading units - Fair Trade Organisatie • Religious organizations - Traidcraft, SERRV and Selfhelp • Cooperatives - Tabora Beekeepers Cooperative • Community owned - Nahnu • Governments - TANICA • ***The varying motivations for fair trade make it difficult to come to conclusions.

IFAT code of practice All the organizations abide by these rules…which say “be fair to workers and the environment.”

Fair Price • More than the local price currently available to the producer • More than the price available from the international traders. • Enough for producers and their families to attain a reasonable or nationally recognized remunerative living standard • A price that enables the Northern partner to be no more than viable, but not to make a significant profit.

… • A trading regime that allows Southern producers to earn the same as Northern trading partners • Fixed remuneration to all parties involved directly in the chain, reflecting input, skills, and risk and not purchasing power or lending power alone---for mutual benefit

Latin America • Recently, they have seen the reduction or withdrawal of government price supports, technical and other advisory programs, and virtually all state-sponsored protection for indigenous agriculture and basic food crops, notable corn and rice. • This has occurred because of free trade

… • This has given rise to exploitative loans and consequent privitatization of land via forfeitures & migration to cities.

The Case of Coffee • Nestle says that they have to sell as much coffee as possible, the price paid to growers depends on the balance between supply and demand, the international market is neutral, there are many ways of buying coffee, none of which is more or less ethical than another.

1989 Failure of the International Coffee Agreement • It did not enable the U.S. to purchase the kinds of coffee the consumers wanted • The U.S. wanted to stop the sale of the cheaper non-ICA coffee going to the Soviet and eastern European markets. • The result was the de-fairing of the coffee market

Coffee and immigration to cities • When break-even prices are not met, many workers migrate to the cities to avoid impoverishment and malnutrition.

Mexican Coffee • One of the pages was black, so this whole section makes no since….but it mostly says “when we get bad prices for coffee, we all suffer.” • The premiums on fair-trade contracts at times when prices were very low made the difference between bankruptcy and survival for many small-scale farmers.

Environmental Dimensions of Fair Trade • Technical (1) Integrated pest control, the government is unwilling to pay for this, (2) There is frequently a local imperative not to address even clearly unsustainable practices that are detrimental to the soil and fertility

… • Colonial attitudes: Failure by Northern consumers to adjust their consumption practices is forcing a new era of biocolonialism on Southern countries. • Ecological footprints: fossil fuels are needed to transport goods around the world

… • Human rights: environmentally friendly does not always mean people-friendly.

Socially Responsible Business • Companies like Ben & Jerry’s and the Body Shop claim to be doing fair trade, and work both in the north and the south towards socially responsible business practices

The Marketplace and Consumers • Seals of approval mark which products are produced with specific goals in mind; chemical free, fairly traded, recycled contents, and so forth. • These seals boost sales, people love this stuff.

El Ceibo Cooperative • Rio Beni region of Bolivia, set up to grow organically certified cocoa beans and chocolate. They are very successful in their fair prices with and integrated approach, building international commercial activity onto a social and organizational system based on traditional practices.

Kuapa Kokoo • Farmer-owned and run company founded in Ghana. Coca production, very profitable, very fair.

Cafedirect • UK’s leading fair-traded coffee brand. They pay a 10% premium on top of the market price. Very fair and good stuff.

Conclusion • These initiatives show that the fair trade works to solve the profound corruption within trading chains. • Changes will only occur when large-scale producers see that this fair stuff is good business

Dealing with and in the Global Economy: Fairer Trade in Latin America