Fair trade makes good: as you reach out for a jar of coffee in the supermarket, you can give a hand to the people who grew the beans - Lead Story

For A Change, June-July, 2003 by Mary Lean

You'd be amazed how much difference your decisions in the supermarket can make to small farmers in the developing world.

The choices of western shoppers have made it possible for Mario Hernandez, a coffee grower in Nicaragua, to buy clothes for his family, and for Ugandan tea grower Aloysius Tibyabako to send his children to school. Grandmother Dolora Castillo now has an outside toilet, something previously unheard of in her small banana-growing community in the Dominican Republic. And Miguel Molina Barrantes, who belongs to a cooperative of coffee farmers in Costa Rica, has simply been able to stay in business.

These small farmers owe the upturn in their fortunes to one of the areas of the European economy which is booming--fair trade. They sell their produce to Western importers who guarantee them a fair price--liberating them from the vagaries of world market prices and the stranglehold of middlemen, who often take up to 70 per cent of the export value of a crop.

World sales of products sporting a fairtrade label rose by 21 per cent in 2001. In the UK, their annual retail value hit 63 million [pounds sterling] in 2002, nearly twice its level in 2000. Over 100 fairtrade products are available in the UK, ranging from coffee and tea, through bananas and mangos, to honey, orange juice and chocolate. In Switzerland, every fourth banana bought has been traded fairly.

The fairtrade movement dates back to the 1940s, when the Mennonite Central Committee in the US started importing products from poor communities. In the 1960s and 1970s 'world shops' opened in many developed countries, selling crafts from the developing world. Parallel with this a 'solidarity market' developed, which gave the politically conscious consumer the chance to support the Sandinistas, for instance, by buying Nicaraguan coffee.

The idea of using trade to promote community development came of age in the late 1980s. In 1986, coffee farmers in the Chiapas region of Southern Mexico asked the Dutch development NGO, Solidaridad, to help them sell their coffee. The world coffee price was so low, and the local middlemen (known as 'coyotes') so rapacious, that the farmers were desperate to find a direct market. Two years later, the world's first fairtrade labelling scheme, Max Havelaar, was launched in the Netherlands. The Belgians and Swiss followed suit in 1990 and 1992, and the UK Fairtrade mark was launched in 1994. Seventeen western countries now have fairtrade labels, supporting some 350 groups of cooperatives in 36 developing countries.

ECONOMY BASED ON TRUST

Robin Murray, the Chair of the 'alternative multinational' Twin Trading, is passionate about fair trade. The non-profit company imports the coffee, cocoa and tea which go into Cafedirect, Teadirect and Day Chocolate, Britain's ground-breaking fairtrade brands. It has been at the cutting edge of alternative trade for nearly 20 years.

Twin Trading was set up by the Greater London Council (GLC) in 1985, in response to requests for help with trade and industry from developing countries. Initially these were requests from governments, but before long the company found itself dealing with the grassroots. When the GLC was abolished by Margaret Thatcher's government the next year, Murray, who had been its Director of Industry, joined Twin Trading's Board.

An academic economist by training, Murray sees fair trade as a model of how the world economy should be run. 'It's a much healthier relationship,' he says. 'We depend on the producers for coffee, they depend on us for the market--it's not just us with the money. And an economy based on trust is so cheap.'

Over the years, Twin Trading has learnt a lot about trust. In 1989, one of its staff, Pauline Tiffin, returned from Mexico with the preposterous suggestion that the company should send 30,000 [pounds sterling] to a group of beleaguered coffee farmers, who would then send them a container-load of green coffee to sell.

'Pauline told us she thought they could be trusted,' remembers Murray. 'Everyone on the Board said of course we should do it. So we sent the money, backing the view that economics should be more like that. Two months later the container turned up.' They enlisted a coffee trader, and made a decent profit, most of which they returned to the growers.

The cooperative asked them to repeat the process and, as word got around, other cooperatives approached Twin Trading. 'We never turned anyone down,' says Murray, 'but we never took anyone on without Pauline going out there and getting to know them.'

Some 600 containers later, they have only been let down once, when a Peruvian cooperative went bust. Murray and his wife were in Peru at the time, and discovered the problem. 'We travelled with them for three days and in the end they trusted us enough to tell us what had happened. Then we had to assess what was going on. We felt that the two main people involved were entirely trustworthy and committed.' Rather than demanding their money back, and pushing the cooperative further into bankruptcy, Twin Trading decided to help them restructure, and the cooperative--now back in business--are gradually repaying the money.