Fair trade benefits certified farmers, but may not benefit the workers they hire.
A 2019 study found that farmers who are part of a Fairtrade cooperative (Fairtrade certified farmers) receive higher wages and better working conditions. However, farm workers they hire do not benefit from fair trade standards because their own wages are kept low. This may be because:
Farmers are not incentivized to increase farm workers’ wages and working conditions because they are not being adequately monitored by Fairtrade.
Labor standards may be unclearly defined, and thus are not enforced.
Smallholder farmers are often poor themselves and may be unable to pay higher wages, especially if they are not receiving significantly higher income as a result of fair trade certification.
Higher accountability is needed to ensure that fair trade is actually resulting in higher wages and more ethical labor conditions.
2. Fairtrade certification requires fees.
Fairtrade certification requires a fee that may be higher than small farms and producers can afford, especially if the certification does not pay off as intended. The cost of certification depends on the product, but in some cases, the fee can be thousands of dollars. This may exclude the poorest producers who need fair trade most.
For example, Fairtrade certification was around 6 cents/lb for coffee in 2006, with an annual fee of 3 cents/lb. This was not much lower than the amount farmers received as the Fairtrade premium.
3. Fair trade requires time and community investment.
Running a fair trade cooperative takes time and investment from community members who may have limited time to spare. Gaining certification is a time consuming process, which may discourage some small producers from seeking it out.
Becoming Fairtrade certified requires filling out an application online, working with the Fairtrade organization to get approved, upholding fair trade standards, and maintaining certification.
4. Fair trade products may be more expensive (but are generally competitively priced).
In some ways, this con is actually more of a myth. Some fair trade products are more expensive than traditional goods because the price is designed to support the workers. However, many fair trade products cost the same or only slightly more as other products, but a larger percentage of the sale price goes to producers. This is possible because fair trade organizations cut out middlemen who would normally take a percentage of the profit.
Some fair trade products like coffee may be 40% more expensive than conventional products.
5. Fair trade products must be globally exported.
Most fair trade products are sold in a country other than where it was produced, meaning that the products must be transported. This transportation of goods has a high carbon footprint. Some argue that eco-conscious consumers should focus on locally-produced products, rather than imported fair trade products.
In 2017, there were fair trade farmers in over 75 countries, and 30,000 Fairtrade Certified products were available in 150 countries around the world. While the spread of fair trade products is generally a good thing, it does increase the environmental costs of transportation and importation as compared to local products.
6. Buying fair trade may limit your options.
In many ways, the entire point of fair trade is to limit your purchasing options to only companies that engage in ethical practices. However, a downside is that fair trade is still growing and it may be difficult for consumers to find multiple fair trade options for products beyond coffee and tea. Buying fair trade means you will likely have fewer brand choices.
Over 322,000 small farms produced Fairtrade certified chocolate. There are far fewer options for other fair trade products, like neck ties or food containers for example.
Key Takeaways of Fair Trade Pros and Cons
While fair trade does have some challenges that must be addressed, such as increasing oversight and increasing the number of fair trade certified products, overall, the pros of fair trade outweigh the cons. Fair trade helps increase equality, ensure fair wages, living conditions and working standards, and promotes sustainable practices.