Fairtrade profits rise, but is the small farmer missing out?

More supermarkets are taking up the brand which sounds so ethical and offers attractive profit margins

Once, people laughed at the notion that fair trade could infiltrate the profit-hungry world of retail. Yet new figures from the Fairtrade Foundation will reveal tomorrow that UK consumers take the issue very seriously, spending half a billion pounds on Fairtrade-branded products last year.

However, the rush to fair trade is prompting questions about how "fair" it really is to small farmers in developing nations. The rate of sales growth rocketed during 2007, up 80 per cent on the previous year as companies from Sainsbury's to Virgin Atlantic stepped up their commitment to fairly traded goods. The total value of Fairtrade sales hit £490m, up from £273m in 2006.

Sainsbury's move to stock only Fairtrade bananas meant the supermarket chain almost tripled the value of its Fairtrade sales to £140m. Its tea, coffee, hot chocolate and sugar brands will be next to get the Fairtrade badge, helping to put the Fairtrade Foundation, which licenses the mark to products sold in the UK, on course to quadruple its annual sales to £2bn by 2012.

Speaking ahead of Fairtrade fortnight, which starts today, the Fairtrade Foundation's executive director, Harriet Lamb, said: "People laughed when we first started talking about fair trade [in 1994]. But now it is an increasing part of consumers' shopping habits."

With a recent poll showing that more than half of UK shoppers recognise the Fairtrade logo, even the big brands are waking up to the selling power of the black, green and blue symbol. Tate & Lyle this weekend became the biggest company yet to carry it, promising to make all of its retail range Fairtrade by the end of 2009.

It isn't just Sainsbury's giving Fairtrade products more shelf space: the Co-operative Group has switched all its own-brand hot beverage drinks to Fairtrade; Waitrose only sells Fairtrade bananas and Marks & Spencer is expanding the Fairtrade clothing range to its fashionable Limited Collection.

Cynics claim their devotion to the cause is less than altruistic, however, pointing to the higher profit margins some Fairtrade products enjoy and the fact that the goods provide a useful marketing tool as supermarkets attempt to paint themselves a greener hue.

Tim Harford, author of The Logic of Life, who first highlighted that some chains were profiteering from Fairtrade, said: "At the UK consumer end, some companies have charged a far higher mark-up on Fairtrade products than ever goes to producers. Fairtrade is about a promise for fair value to the producer, not a fair price to the consumer."

Research this month by the consumer group Which? found that Fairtrade products were 9 to 16 per cent more expensive per gram than their non-Fairtrade equivalents. Philip Booth, at the Institute of Economic Affairs, a free-market think tank, said: "How much of that higher price finds its way back to the grower?"

Douglas Holt, L'Oréal professor of marketing at Oxford's Saïd Business School, said the extra amount that Fairtrade producers received was "nice but relatively trivial". He added: "Until you have the whole value chain, especially retailers, buying into Fairtrade and taking lower margins so they can pass on as much profit as possible, Fairtrade can never make more than a marginal difference."

Other critics go further, claiming the Fairtrade system leaves unaccredited farmers worse off. A new report from the Adam Smith Institute criticises the movement's core stipulation: that farmers must belong to co-operatives to get the Fairtrade premium.

Even Tate & Lyle's move will help only those farmers supplying the retail branded side of its business, not its bigger ingredients arm. Claire Melamed, head of trade and corporates at ActionAid, said: "Fairtrade is still essentially a niche product. The challenge is to get all trade conducted according to much fairer principles."

Where it works, though, the fair-trade movement is much feted. For more than 6,000 farmers on the Iriaini tea plantations in Kenya's Central province, Fairtrade has increased their income by about a third, paying for school fees and healthcare costs that for generations have been beyond them.

"Fairtrade is not just about the money. It changes the people's attitude. [It also] creates a better product," said Matthew Nd'enda, the unit manager of the Iriaini plantation. Bridges have been built, leaf collection centres upgraded and a centre for orphaned children has been established.

That's the image UK shoppers will be buying into when they next buy a Fairtrade product.

To have your say on this or any other issue visit www.independent.co.uk/IoSblogs

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
Fans take a selfie with Ed Miliband in Kempston, near Bedford, on Tuesday
election 2015
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Ashdown Group: Accountant - London - £48,000 - 12 month FTC

£40000 - £48000 per annum + bonus + benefits: Ashdown Group: International Acc...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power