In a recent article for Foreign Affairs (“Unfair Trade,” April 4, 2013), Amrita Narlikar and Dan Kim criticized our organization, Fairtrade International, and the fair trade movement writ large for doing too little to help the poor. They are wrong on a number of counts.
First, Narlikar and Kim argue that Fairtrade deflects attention from the biggest challenge facing farmers in the developing world: domestic farm subsidies in developed nations. We agree -- and have stated publicly -- that such subsidies do great harm. The United States and the European Union, for example, annually pay out $4.8 billion worth of subsidies to domestic cotton farmers. These payments create an impenetrable market barrier for many cotton farmers in developing countries, especially those in West Africa. The World Bank estimates that African farmers, already among the poorest in the world, lose out on $147 million in annual revenue due to Western cotton subsidies alone.
Yet far from compounding this injustice, Fairtrade has drawn new attention to it, galvanizing public support where it was previously lacking. After all, rising Fairtrade sales provide hard evidence that the public supports the kind of structural reforms Kim and Narlikar advocate. To defer steps that we can take now (such as purchasing Fairtrade) in the hope that Western leaders act on their own defies any basic understanding of change. Rather, as public-sector attitudes and private-sector practices shift, so, too, will government opinion.
Second, Narlikar and Kim are wrong to claim that the Fairtrade certification system harms farmers. A recent study by the Natural Resources Institute states that “a small number of studies suggest that there might be negative externalities, but no empirical evidence was found of this occurring in practice and in fact a higher number found positive influence on local market prices for non-Fairtrade farmers.” In a comparison of the incomes of Fairtrade and non-Fairtrade farmers in Peru, the Centre for Evaluation at the University of Saarland found that, due to Fairtrade, the former doubled their incomes in the last five years in
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