Ethical shopping: Principles come before price in war against exploitation

Fairtrade bananas. Photo / Dean Purcell

In the fourth of a five-part series on ethical shopping Andrew Laxon reports on Fairtrade.

What is Fairtrade?

Fairtrade is a marketing label which guarantees that the company selling an item has paid a previously agreed minimum price to the farmers and workers who produce it. The price is designed to protect people in poor countries from exploitation and fluctuations in world prices. The agreement also includes an extra sum for community development.

Where do I find it?

Fairtrade is best known in New Zealand for coffee. It makes up 10 per cent of the ground and roast market, with sales of $18 million in 2010, but is making equally big inroads in chocolate, thanks to agreements with Cadbury and Whittaker's. Sales jumped to more than $17 million - about 9 per cent of all chocolate sales - in 2010 as a result of the deal. The new entrant is bananas, which are becoming available in major supermarkets and make up about 2 per cent of sales. This is still tiny compared with Britain, where the figure is 25 per cent and two supermarkets stock only Fairtrade bananas.

Do Fairtrade products cost more?

Coffee, tea and chocolate now sell big enough volumes to list at or near the same price as regular items but bananas still cost about $1 a bunch more. Fairtrade's New Zealand director, Steve Knapp, says the price is determined by economies of scale, rather than the higher prices paid to farmers. "Because the farmers at the bottom of the supply chain get such a small percentage of the final retail price, you could actually increase what they get quite significantly without affecting the retail price too much."

Why are more people buying?

Fairtrade's breakthrough in chocolate follows a decade of shocking publicity over child and slave labour practices in West Africa and high-profile campaigns for "slave free" chocolate. Knapp credits big companies, such as Cadbury, for realising they not only have to ban these practices but also start investing in the future of their product. Some reports predict severe cocoa shortages and soaring chocolate prices within the next two decades because ageing poverty-stricken farmers have not replanted their trees and their children are looking for better-paid work elsewhere. Faced with the possible collapse of their supply chain, big chocolate companies have started to work with Fairtrade, which means the products become widely available atregular prices.

Does Fairtrade work?

Fairtrade gets attacked from both sides - some businesses complain it is too inflexible and offers the wrong incentives, while trade activists say it has abandoned the small producers it claims to represent. Last month the Bloomberg news agency reported that Fairtrade-certified cotton fibres used in Victoria's Secret underwear came from child labour plantations in Burkina Faso. It seems that the huge worldwide growth in Fairtrade products (up 27 per cent to $5.8 billion in 2010) and the extra money on offer has allowed unscrupulous operators to jump on the bandwagon. Fairtrade International disputed some points in the story but agreed it needed to improve training for local farmers, who claimed they were never told not to use child labour.

Can any of these claims be trusted?

Fairtrade can at least boast an independent system. Soon after All Good Fairtrade bananas arrived in NZ supermarkets, Dole bananas started carrying an "Ethical Choice" sticker. When critics accused it of "greenwashing", the company said it was an unrelated move to highlight its corporate responsibility programme. Knapp responds: "Consumers have to question the claims that companies make about themselves."