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Consuming Issues: Let's be fair to Fairtrade - it can reduce poverty

Even buying tea and coffee poses a dilemma these days: do you pick up the virtuous but more expensive Fairtrade packs which promise to help poor foreign farmers, or do you quietly pocket the cash and buy a normal product? This week some national newspapers may have given the impression that you needn't bother buying Fairtrade.

A report by the London-based think-tank the Institute of Economic Affairs, called Fair Trade Without The Froth, by Dr Sushil Mohan of Dundee University, cast doubt on the fast-growing movement and was given an airing in several newspapers. Quite right, too, for the good reason of balance, given the number of highly supportive pieces about Fairtrade that appear in the media.

Nonetheless, the 134-page report was not quite as damning as readers may have been led to believe. The headline on page two of Thurday's Guardian was "Costly Fairtrade Foundation accused of failing coffee farmers". The first sentence read: "Multinational companies such as Starbucks, Kraft and Nestlé do more for coffee farmers than the Fairtrade Foundation, according to a critical report from a free-market think-tank."

Now, I've read the report (from an organisation wary of a movement that criticises international trade) and, actually, it's not that critical at all. In fact, it doesn't seriously question that Fairtrade sends back more cash to farmers than they would receive if they sold their products on the open market, even taking into account the costs of forming themselves into co-operatives and obtaining certification as suppliers.

In case you don't believe me, this is one of the report's conclusions: "There is no question that Fairtrade will help some producers, and it may help [to] build more general business capacity that improves the prospects for development more generally within the communities within which it operates. It is a strategy for development that may well help seven million or more people in this way."

Instead, Dr Mohan comes up with a series of quibbles about different aspects of Fairtrade, none of which alters the central fact that it helps poor farmers. Here are a few:

* Fairtrade's marketing undermines the far greater benefits arising from (more plentiful) ordinary free trade;

* Fairtrade is concentrated in middle-income states rather than the very poorest ones;

* Fairtrade imposes costly demands on farmers that force them to spend money on becoming certified;

* Academic studies suggest that only 10 to 25 per cent of the extra money charged for Fairtrade products goes back to farmers; retailers and others pocket much of the rest.

Overall, Dr Mohan concludes that Fairtrade, while doing some good, is small and accounts for only 0.01 per cent of global food and beverage sales. Development and the removal of western trade barriers can, and will, help developing countries more than Fairtrade, he argues. Now, there is no time to answer each point, but let us look at the report's central charge: that Fairtrade is not "a poverty panacea or general long-term development strategy".

Well, Fairtrade alone cannot save the world, that's for sure. But it is still a neat idea: shoppers opt to pay more for commodities so that more money is returned to the farmers who grow them. Certainly, it is a shame that not all of the premium charged in the shops goes back (though sometimes there is no premium) but the little extra that goes back goes a long way; it makes the difference between grinding poverty and comfortable subsistence, where school and hospital fees can be paid and glass put into the windows of homes. Fairtrade isn't perfect, but as the cotton growers of Mali or coffee growers of Tanzania or sugar planters of Belize would point out, it is not a perfect world.