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Fair Trade
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A Growth Opportunity for Small Farmers
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Fair trade bananas from Costa Rica, chocolate from plantation areas around the equator or coffee from Peruvian cooperatives: fairly traded products are becoming increasingly popular with consumers. Most of this agricultural produce comes from small farmers in developing countries. However, the products have come a long way by the time they are offered for sale in our shops.
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Agriculture is important
Three-quarters of the world’s poor live in rural areas and earn a living as small farmers. Hence agriculture and smallholdings play a key role in developing and emerging countries. At the same time, small farmers face multiple challenges. Insecure food supply, lack of access to markets, little negotiating power, trade barriers, volatile commodity prices and depopulation of the countryside are just a few examples from a long list. Furthermore, they lack the know-how and financial resources to increase their output and efficiency.
Fair trade opens prospects
One highly positive, market-oriented approach to improving the economic position of small farmers in developing and emerging countries is fair trade. Its key features are a guaranteed minimum price for produce and what is known as a fair trade premium. The guaranteed minimum price assures a basic subsistence income for small farmers, protects them from fluctuating commodity prices and enables them to plan with security.
A major contribution to development
The small farmers decide jointly how to use the premium. They spend most of the money on improving their infrastructure and production on their farms; a proportion also goes to social development projects such as building schools and water purification plants. Cooperatives play a central role throughout the process, acting as the link between small farmers and the markets. They handle many vital tasks such as financing, trade, processing, training and fair trade certification. This certification ensures that producers actually receive both the guaranteed minimum price and the fair trade premium.
In addition to the most traded staple fair trade products, sales outlets are now stocking an array of new products such as olive oil, cotton and nuts. However, the very pleasing growth in demand entails an increased need for financing in developing countries. The cooperatives especially require additional working capital, for example to finance their exports and enable their members to prefinance their harvests. This is the only way for cooperatives and small farmers to exploit the opportunities available to them more successfully.
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Fair trade: a growth market
Fair trade is a market with high growth rates.
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- USD 5 billion in annual sales
- 20% annual growth rate (2005–2010)
- 1.4 million small farmers and workers
- 6 million family members benefit
- 60 source countries
- 1,000 fair trade producers
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Source: Fairtrade International, responsAbility
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