The No-Nonsense Guide To Fair Trade
Reviewed by Bill Mithoefer
Thursday, August 30 2001, 4:12 PM
David Ransom cleverly uses the relationship between the U.S. agrarian cotton-based economy and England's cloth industry in the early part of the nineteenth century to illustrate the current global economic order. The secondary product-oriented markets of the North obtain their raw materials from the commodity-based economies of the less-developed nations (LDN) of the South. As Ransom points out, U.S. farmers produced cotton, a labor-intensive raw material, to supply the textiles industries of Great Britain, whose owners enjoyed the considerable profits reaped from the large mark-ups on processed goods. Northern U.S. entrepreneurs recognized the egregious imbalance of profits precipitating the Civil War, as the northerners wanted access to cotton produced by slave labor in the South.
Similarly, in the current scheme of the global political economy, large multinational corporations of the North buy commodities such as coffee, cocoa, and bananas from the South, and sell them at a staggering profit. This profit is made on the sweat of farmers of the South, where corporations maintain and/or support plantations run with often horrendous working conditions. Because of structural adjustment (SA), the LDN become trapped in a downwards spiral of debt, due to the price differential of raw materials and end-products. Increasing interest on debts plunge the citizens of the LDN into poverty, malnutrition, poor health care, lack of shelter, and poor education, often leading to massive social upheaval. Meanwhile small elites working on behalf of governments and multinational corporations reap large rewards. So-called "Free Trade," with its alleged market Darwinism, results in a form of totalitarianism, in which these elites function in much the same way as monarchs in medieval Europe
Enter Fair Trade. Ransom uses case-studies of the coffee, cocoa and banana industries to show the small gains and pitfalls of Fair Trade approaches to economic organization. My personal suspicions of Fair Trade as a feel-good ploy for affluent liberals to assuage their guilt each time they have a cup of coffee were not completely diminished. I still can't help but feel slightly nauseous every time I think of a newspaper article detailing victoriously the purchase of Fair Trade coffee by Starbucks, whose aggressive business practices put many independent cafe owners out of business.
Ransom examines the coffee industries of Mexico and Peru, interviewing farmers involved in this labor-intensive activity. In Mexico, the coffee-growers of Chiapas, carefully developed a Fair Trade situation with the Max Havelaar group of the Netherlands. In exchange for a guaranteed minimum price for a bag of coffee, Mexican farmers provide the Dutch trading company with high quality coffee. Ejidos (collective farms) are moving to organic coffee production and Fair Trade means that the Chiapans cut out the coyote middle men. Organic production means much more intensive labor, but Cirilo, one of the farmers, tells Ransom "We are doing it for future generations." Recently, the Union of Ejidos managed to set up a cafe of its own in an upscale neighborhood of Mexico City and the Havelaar group helped support the farmers during the war between Mexico and Chiapas.
In Peru, however, the farmers are only able to produce a tiny percentage of coffee of high enough quality for Fair Trade groups. Ransom shows the gruelling process of growing and tending the coffee and the long road to the market place. Abraham, a 73-year old farmer notes, "We cafeteleros, the coffee farmers, were poor when we came here 40 years ago, and we are just as poor now." The price of a cup of coffee in Sydney, Toronto, or New York, would net US$13,000 for a fifty-kilo sack of beans, but Peruvian farmers were lucky if they could receive US$70. Ransom points out that growers and exporters each receive 10% of the price, while shippers and roasters in the North get 55%, and retailers, 25% of the total cost of the coffee.
For decades, Ghana and cocoa have been synonymous. As the big chocolate corporations continuously seek the cheapest price on the world market, the cocoa industry and consequent well-being of Ghanaians, have declined severely. The cocoa industry has collapsed several times, in the early seventies, during the sahelian drought of the eighties and in 1999-2000. In earlier years, Ghanaian farmers were able to send their children to secondary and even tertiary educational systems. Due to structural adjustment, the farmers now get only fifty percent of the modest price a bag of cocoa commands. Few are even able to afford health care, as Sam Nyako explains. But fair-traders in Europe now pay double the price-US$1600 for a bag of beans as opposed to US$800 on the world market. The fair-traders also pay a 'special premium' of US$150 which goes into community infrastructure. US$300,000 has been accumulated by the Kuapa Kokoo farmers trust which uses the money for health centers, water bore holes and improvements to schools and credit programs.
Ransom peers into the horrors of the banana trade, with wide-spread spraying of pesticide on the farmers and draconian organization. He shows that if we were to apply fair trade to a pair of jeans, we would each pay US$300 a pair.The No-Nonsense Guide actually gives an insider's perspective of the farmers of the Southern himsphere. Fair trade is a slow process of sacrifice, based on cooperative social principles. This unromantic perspective shows how a few people are slowly making a change.
The No-Nonsense Guide To Fair Trade is available from Verso