Fair Trade: Feel-good fad or best-kept development secret?

Although Fair Trade is considered by some folks to be a development tool, meaning a set of principles and practices that help disadvantaged people increase incomes, invest in communities and protect the environment in sustainable ways, the fact is I don’t get to hang out with development practitioners all that much. Sure, Catholic Relief Services is full of specialists and experts who devote their energies to responding to natural disasters, promoting agro-enterprise, and treating diseases like HIV/AIDS. But because my job is to talk to “consumers” about CRS Fair Trade, I don’t always spend a lot of time with my peers who are working with producers. That changed a bit last week as CRS participated in the annual conference of the Small Enterprise Education and Promotion (SEEP) Network, the leading international network and promoter of best practices in enterprise development and financial services.

CRS has been a member of SEEP for a long while, but this year was the first time the conference had a plenary session dedicated to Fair Trade. I was honored to moderate a panel that I had dubbed “Fair Trade: Feel-good Fad or Best Kept Development Secret?.” Of course, Fair Trade is neither, but I just wanted to make sure we hooked the 300 or so participants into the plenary on the last day of the conference. Also, the title was a way to acknowledge that many in the development world are sometimes skeptical of Fair Trade. We had a great panel from Divine Chocolate, Root Capital, Honest Tea, and Gone Rural who engaged in dialogue conference participants representing groups from Latin America, Asia, and Africa. A lively Q&A session helped us explore together what Fair Trade really offers.

Some of the more interesting questions revolved around the trouble small producers have in accessing credit. One classic concern about Fair Trade is whether or not producers can “scale up” to meet large volume demands. Yet the panelists pointed out that to invest in the equipment and supplies necessary to increase production, producers sometimes face interest rates on loans as high as 22%.

Fortunately the Fair Trade system is helped by socially responsible lenders but, even those institutions have to weigh financial risks. For them, the fact that a producer is part of the Fair Trade marketplace is seen as collateral. First off, it shows that a group adheres to a set of Fair Trade criteria. From an economic standpoint, though, there is an expectation that consumers like you will support Fair Trade companies and products. This expectation builds the “assets” of a cooperative or association. Buying Fair Trade not only helps the producers directly, but it also builds the movement’s credibility by demonstrating demand for a type of purchase. The lender then feels more confident in giving a loan at better terms.

Maybe my world as an educator isn’t as far removed from development folks as I had thought! And now you have yet another reason to shop Fair Trade: you promote Fair Trade principles and you demonstrate that Fair Trade is a viable, supported market alternative.

This entry was posted on Monday, October 29th, 2007 and is filed under Chocolate, Coffee, Events, Fair Trade, crafts, tea . You can leave a response, or trackback from your own site.

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