The Fair Trade initiative was conceived more than 40 years ago as a response to concrete problems facing commodity producers. It is an alternative approach to conventional international trade dominated by big traders and in later years, by big agribusiness. It seeks to ensure that producers, the bulk of whom are poor and located in developing and underdeveloped countries (generically referred to in this paper as the “South”), are paid and treated fairly by providing, among others: (1) a fair price for their goods to cover both the cost of production and guarantees for a sustainable living; (2) long term contracts that provide real security; and (3) support to help them gain the knowledge and skills needed to develop their business, increase their sales, and therefore, work their way out of poverty.
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Fair Trade is defined by most of its proponents as “trade which promotes sustainable development by improving market access for disadvantaged producers. It seeks to overcome poverty through a partnership between all those involved in the trading process: producers/workers, traders and consumers”. The definition is based on the shared analysis that, while international trade has flourished, its benefits have become unequally shared often at the expense of poor and small-scale producers of raw agricultural products. The emergence of large transnational companies with more resources, capital and capacity, has distorted the original trading system. In agricultural trade, transnational corporations produce agricultural inputs such as fertilizers and pesticides required in the farm and on which producers have come to depend to attain optimum production. In many developing countries, large traders often provide the capital to producers in the form of such inputs and have also taken an active role in marketing farmers’ produce since they have the resources to transport products from the farms to the markets.
On the other hand, small traders, given their limited resources, cannot compete on an equal footing with big traders and companies. Thus, trade, once considered as a powerful engine of economic growth, has now become a tool for taking advantage of others, often the resource-poor. As big companies and traders have increasingly prospered, small traders and producers have been pushed further on the brink of poverty.
The proponents of the Fair Trade Model believe that as trade becomes more skewed for the benefit of a few, the different sectors in society must work together to ensure that trade fairly and equally benefits poor producers as well as rich ones.
The Fair Trade model was developed by a consortium of development organizations based in Europe which have had long experience in working in developing and underdeveloped countries in Africa, Asia and Latin America. Oxfam International, a confederation of 12 independent development organizations worldwide dedicated to fighting poverty and injustice around the world, is one of the pioneers of Fair Trade, along with CAFOD, Christian Aid, TraidCraft Exchange and the World Development Movement.
Among the groups involved in promoting the Fair Trade system, different models and approaches are adopted based on the experiences and capacity of the proponents and their partners. In most parts, this study will highlight the model adopted by Oxfam-Great Britain which is one of the oldest and most established among the Fair Trade organizations. The study will, at the same time, look at the overall goals, strategies and approaches adopted by the international Fair Trade network which is largely comprised of development organizations in Europe.
The choice of Oxfam-GB is also based on the rich experiences and lessons that it has gained in promoting its Fair Trade model which has evolved through the years in response to global trade developments and response of the market. Notably, too, Oxfam-GB has a highly institutionalized mechanism for monitoring and evaluating its Fair Trade model in collaboration with its partners which has served as the basis for the evolution of its strategies and approaches over the decades. In that light, the model adopted by Oxfam-GB is a very useful example of how the Fair Trade system operates in reality and the lessons drawn from its experiences would be very valuable for other development organizations intending to develop alternatives to the current iniquitous trading arrangements.

Fair Trade as an Alternative to Conventional Trade: The Oxfam Model
It is very important to note that while the Fair Trade system offers an alternative to conventional trade – specifically to trading relations dominated by big agribusiness and traders at the expense of small-scale producers – it does not in any way challenge the paradigm that trade is an important activity for economic growth and stability. While believing trade patterns and unfair trading can create massive inequalities, Fair Trade believes that trade can offer a possible solution to poverty if only trade patterns and ways of trading are changed.
This dictum provides the context in forging collaboration among producers, small traders and consumers to empower each sector to challenge the way conventional trade works. In the Fair Trade concept, small-scale producers and traders can improve their livelihood by gaining more power in the markets, while consumers play an active role in the trading system by using their purchasing power to tilt the balance, however slightly, in favor of poor producers and traders.
In increasing the power of small-scale producers and traders in the market, Fair Trade believes that dialogue and transparency among the actors in setting the price, providing work standards and fulfilling their responsibility to society are indispensable.
In specific terms, Fair Trade is guided by the following goals:

1. To improve the livelihoods and well-being of producers by improving market access, strengthening producer organizations, paying a better price and providing continuity in the trading relationship;
2. To promote development opportunities for disadvantaged producers, especially women and indigenous people, and to protect children from exploitation in the production process;
3. To raise awareness among consumers of the negative effects on producers of international trade so that they exercise their purchasing power positively;
4. To set an example of partnership in trade through dialogue, transparency and respect;
5. To campaign for changes in the rules and practice of conventional international trade; and
6. To protect human rights by promoting social justice, sound environmental practices and economic security.

In the case of Oxfam-GB, its model echoes the basic principles of Fair Trade which serve as its process standard which producers must commit to in the organization’s Fair Trade initiatives in the developing countries:

1. Fair wages in the local context;
2. Participation in decision-making;
3. Safe working conditions and practices;
4. Positive/improving situation of women;
5. Protection of children and young workers;
6. Protection of the natural environment.

Notably, Oxfam-GB’s Fair Trade model has gone beyond the traditional fair trade concept of providing fair terms for small-scale producers, as reflected in the above set of goals, to cover the provisions of “market access” to poor producers. It states the aims of its Fair Trade model as: “To help overcome poverty by enabling poor producers or workers to access markets on terms which enable them to obtain a fair return from the product they grow or make”. The evolution of the aim of Oxfam-GB’s Fair Trade model can be attributed to its thorough analysis of the current trading system within the aegis of the World Trade Organization (WTO) where the market access for agricultural products from developing countries is severely curtailed by their inability to compete with the agricultural produce from industrialized countries where agriculture continues to be heavily subsidized despite international agreements to the contrary.
Social Infrastructures and Institutions in the Fair Trade System
While the principles, goals and aims of the Fair Trade system are clear and quite easily comprehensible, the social infrastructures and institutions that have evolved to implement the system itself can only be understood and appreciated by studying how Fair Trade is actually implemented by a specific organization and in specific contexts. A look at how Oxfam-GB implements its own model of Fair Trade would be instructive.
The Oxfam Fair Trade Program Cycle
The Fair Trade model adopted by Oxfam-GB follows this simple cycle which is notably derived from the conventional paradigm in community development that starts from social analysis and preparations and targets a phase-out scenario with planned development interventions in between designed for the specific needs, conditions and capacities of the local partners. Planning, monitoring and evaluation are considered as crucial components of the program cycle.
In addition to the overall marketing strategies adopted by the international Fair Trade network, the specific strategies and approaches adopted by Oxfam-GB in promoting its own Fair Trade model merits a close scrutiny for a more holistic appreciation of how the system is actually implemented in specific contexts.
Oxfam-GB follows a Fair Trade Project Cycle which is largely based on conventional processes followed by most development organizations in implementing community development interventions applied in the trading context and guided by Fair Trade principles. It is premised on the objective of empowering poor producers by providing access to commercial markets and improving their bargaining position. Oxfam-GB works with producer groups, either directly or through intermediary organizations, from whom they buy particular products at fair terms and prices while at the same time providing capacity building for producers to hone their skills and improve the quality of their products.
As producer groups succeed in accessing and competing in the commercial market, Oxfam-GB gradually phases out its interventions by buying significantly fewer products and providing less development intervention. The objective is for the producer groups to develop their own markets independently of Oxfam-GB while adhering to the Fair Trade principles, while new producer groups enter the program and benefit from the Fair Trade system. This local trading arrangement then feeds into the Fair Trade strategies, approaches and schemes at the international level aimed at facilitating trade among small-scale producers, intermediary organizations, alternative trading organizations and consumers.
Under Oxfam-GB’s Fair Trade model, fair price, while being the cornerstone, is determined following processes that consciously lead to the empowerment of small-scale producers. Fair prices for products are set in joint agreements with the producer groups and the intermediary organizations, based on reasonable returns to producers and their organizations and an acceptable margin to the marketing organization/exporter (in cases where the marketing part is not within the capacity of the producer group). The Fair Trade model also involves trading policies that include the payment of hard currency to trading partners to ensure that they benefit from the devaluation of the local currency, extension of pre-financing to trading partners, and prompt payments for goods and advances.
In sum, the actors and institutions involved in Oxfam-GB’s Fair Trade model are categorized broadly as follows:

1. Producer Groups: local groups of small-scale producers or community-based organizations involved in the production of a particular product to be traded under Fair Trade terms.
2. Intermediary Organizations: usually local non-government organizations (NGOs) involved in organizing or dealing with the Producer Groups, playing the role of facilitator between the local groups, partner traders and Oxfam-GB. In cases where the Producer Groups have the capacity and human resources to organize themselves and deal directly with the other partners, Intermediary Organizations are not among the actors involved in the Fair Trade project.
3. Marketing Organizations/Exporters: could be local NGOs or private traders who adhere to the principles and terms of Fair Trade, acting as the direct buyers and/or exporters of the products of the Producer Groups largely because of their existing capacity and trading networks. In a few cases, Producer Groups or Intermediary Organizations themselves have evolved the capacity to market and even export their products without depending on Marketing Organizations/Exporters.

The different actors work together under the principles, goals and terms of Fair Trade. With Oxfam-GB’s guidance, the actors level off on the concepts and practical translation of Fair Trade and enter into a Trading Agreement where the terms are clearly set. The most notable innovation in Fair Trade that may be gleaned from this collaborative agreement– which is completely absent in conventional trading system– is transparency and dialogue among the actors. This transparent arrangement even extends to agreements in setting the price of the final product and discussion on profit margins, as well as the work conditions of the small-scale producers. Unlike in the conventional trading system, where the actors in production and marketing are completely detached from each other and decisions are made by a few in the name of the “market”, under the Fair Trade system, the producers, intermediaries and traders all operate as partners and as persons who know each other. The principles of check-and-balance and social responsibility are therefore deeply ingrained in the system.
Apart from the obvious benefits derived by small-scale producers from the fair prices and trading policies offered by Oxfam-GB, more long-term benefits are actually provided through proactive capacity building and development programs. The areas covered by these competence development programs are aimed at honing the capacity of poor producers to develop their marketing skills, improve the quality of their products and hone their capacity to compete in the commercial markets. Among the development areas covered are market information and assistance, product development, design and technical assistance, business and organizational development, social development and networking.
An important component of Oxfam-GB’s Fair Trade model is monitoring and impact assessment which has helped the organization adopt changes and innovations through the years in response to the actual experiences and direct feedbacks coming from the different actors and institutions involved in the program cycle. The monitoring and impact assessment components of the cycle include an appraisal of the partners involved in a particular fair trade project, monitoring of compliance and implementation of the Fair Trade principles, and assessment of partners’ compliance with the Trading Agreement signed with Oxfam-GB at the onset of the project.
Challenges Faced by Fair Trade
The experiences of organizations implementing the Fair Trade system over the past four decades have shown that while the system is theoretically sound and conceptually just, there are a number of challenges and realities that directly affect the outcomes. The major challenges faced by the Fair Trade system, which can be gleaned from the scant literature available on the experiences and lessons learned by implementing organizations, are outlined in this section of the report.
Fair prices and over-production
One major concern often raised against the Fair Trade system, particularly the aspect involving the extension of fairer (often higher that in conventional trading terms) price for the products of small-scale producers, is the danger that it may result in over-production and worse, it may encourage the production of cash crops to suit the demand of consumers in the North. This concern is grounded on past experiences in conventional agricultural trading where the international prices and demand for a particular cash crop or product determine the production patterns across the world. In times when the price of coffee, for example, is high in the international market, farmers in coffee-producing countries shift to coffee cultivation to take advantage of the good export price. When coffee prices drop in the international market, coffee farmers are widely devastated and those who have the resources to do so would shift to other cash or food crops as a survival strategy.
Fair Trade proponents, on the other hand, claim that based on their experiences, by working with small agricultural producers (either directly or through intermediary organizations) and offering a fairer price, Fair Trade actually provides farmers other options such as to invest in improving the quality of their products and gain access to specialty mark offered by the FAIRTRADE Mark, or to diversity into other crops to reduce dependence on a single crop. A closer analysis of the approaches and practices adopted by Oxfam-GB, as a pioneer in espousing the Fair Trade system, suggests that this may be a fair claim.
The concerns on the dangers of over-production, dependence on cash crops and crop uniformity are actually addressed by the other components and social infrastructures in implementing Fair Trade partnerships anchored on community-based development interventions of the local producers themselves or by intermediary organizations working with small-scale producers. It should be noted that the payment of fair prices for the produce of poor farmers is not a stand-alone strategy, but a mere component of an overall development approach towards promoting fair and equitable terms in international trading relations.
Competing in the international market
Since the Fair Trade system is based on the belief that it is the unequal terms and iniquitous arrangements in the conventional trading system that disadvantages small-scale producers and not trade itself, it competes in the international market on the same footing as conventional traders. Fair Trade proponents are also confronted by most problems faced by mainstream traders, especially outside the big transnational agribusiness, such as fluctuation of prices in the international market, compliance with trade rules and standards, stiff competition and instability of sources.
However, by working together at the global level, Fair Trade Organizations have managed to adopt measures and strategies that allowed them to cope with these challenges. The most notable mechanisms, strategies and approaches include establishing international Fair Trade networks to attain economies of scale, streamlining products offered by each organization to avoid counter-productive competition, innovations in product development, and sharing sources and suppliers of products. The details of these strategies and approaches are presented in a latter section of this study.
Culture of dependence
Perhaps the biggest challenge faced by the Fair Trade system revolves around concerns on dependency that it encourages among local producers and partners. The experiences of Oxfam-GB in implementing Fair Trade in the Philippines bear out these concerns where many local partners have depended on Fair Trade as the sole trading channel for their products even after many years of collaboration which made the arrangement unsustainable and unprofitable in the long term.
Despite the social preparations and infrastructures put in place and the strategic development interventions in the form of capacity building and networking, many Fair Trade organizations have failed to wean out their local partners as independent traders who can ably compete in the international market and reap the benefits of trade.
In many cases, such as in the Philippines, where there but a few exceptions, local partners are able to produce good products that can compete in the international market but many have depended heavily on Oxfam-GB to market their products and facilitate their international trading networks.
While this arrangement may work for a number of years, even for a few decades, it is obviously not sustainable especially in the case of Oxfam-GB where Fair Trade is but one component, albeit important, of the overall development strategy towards making international trade fair and genuinely beneficial for small-scale producers.
Approaches and Strategies of Fair Trade
The international Fair Trade network adopts a market-based development approach in promoting its alternative trading system. A trading partnership was developed based on dialogue, transparency and mutual respect for each sector that seeks greater equity in international trade.
Focus on a few agricultural products which have the most widespread impact on the livelihood of small-scale producers in developing countries, such as coffee and tea. Other products with great importance to poor producers, such as rice, cotton and fruits, are slowly being introduced over the years, especially by the smaller Fair Trade organizations with partners in the South that can meet the demand of consumers in the North.
Over the years, a number of Fair Trade organizations have joined hands, with some of them specializing in particular products and others, like Oxfam-GB, offering diverse products sourced from local producer organizations in the South. At present, there are more than 17 national Fair Trade organizations around the world which operate independently but often in collaboration with each other. The European Fair Trade Association (EFTA) was set up to facilitate inter-organization cooperation among Fair Trade groups as well as to attain economies of scale in production and trade.
For its marketing and trading approaches, the international Fair Trade network adopted the following unique schemes that came to be associated with the system through the years:
Establishment of Fair Trade Labeling Organizations (FLOs)
A standards body was established to monitor Fair Trade criteria. It ensures that producers adhere to the criteria set by the FLO. The FLO conducts extensive research in the major producing countries of a particular product. Interviews with various worker representatives and farmers’ organizations allow them to identify the problems faced by these groups. Based on these assessments and interviews, criteria are developed to address the issues that surfaced.
Producers who meet the following criteria can be registered with the FLO. These criteria are notably based on fair trading relations, such as:

1. A price that covers the cost of production;
2. An additional social premium for development purposes;
3. Partial payment in advance to avoid small producer organizations falling into debt;
4. Contracts that allow long term production planning;
5. Long term trade relations that allow proper planning and sustainable production practices; and
6. Fair production conditions which include a democratic participative structure for small farmers’ cooperatives, and reasonable working conditions with minimum environmental standards for plantation factories.

Environmental concerns are also considered as part of the Fair Trade criteria. Over the years and as the demand for organic products increased in the North, especially in Europe, some Fair Trade products have also been labeled as organic.
As an international standard-setting and monitoring body, the FLO incorporates various stakeholders, including producers and commercial representatives who are elected every two years to the Board. As of September 2004, there are 422 Fair Trade certified producers organizations in 49 countries.
The Fair Trade Foundation
In 1992, the Fair Trade Foundation was set up by alternative traders and non-government organizations in the UK, including Oxfam. As the UK-based labeling organization, the Fair Trade Foundation controls and awards the FAIRTRADE Mark to products that have been bought from internationally-recognized Fair Trade sources. It also coordinates the discussion of trade issues among its members and partners, and promotes Fair Trade endeavors.
In the case of Oxfam-GB, its Fair Trade model has developed direct trading relations with more than 140 suppliers in Africa, Asia and Latin America, comprised mainly of producer organizations who export their own products. Their partners also include non-government organizations (NGOs) and alternative trading organizations (ATOs) acting as intermediaries in Oxfam-GB’s trading relations with producer organizations and providing services to producer-groups.
The FAIRTRADE mark
The FAIRTRADE Mark is an independent consumer guarantee that goods labeled as such and sold in mainstream shops or retail outlets have been fairly traded. Brands that use Fair Trade products from FLO-registered producers are licensed to use the FAIRTRADE Mark by national organizations.
The FAIRTRADE Mark is awarded by the Fair Trade Foundation. At present more than 250 different products bearing the FAIRTRADE Mark are sold in wholesale and retail outlets worldwide.
Fair Trade cooperation
Over the years, various Fair Trade organizations have bonded together into networks to facilitate collaboration especially towards attaining economies of scale and avoiding duplication in markets which could be economically counter-productive. One example is the establishment of the European Fair Trade Association (EFTA), which was set up to facilitate cooperation among Fair Trade organizations, assist in joint sourcing, conduct joint monitoring and information sharing. Another example of a successful collaboration among Fair Trade organizations is the setting up of CafeDirect, a joint enterprise of Oxfam, Traidcraft, Equal Exchange and Twin Trading (all UK-based organizations), which aims to provide high-quality fair trade coffee products which are sold at competitive prices in mainstream channels across Europe.
Campaigning for Fair Trade
Strong advocacy, campaigns and lobbying for Fair Trade at the national and international levels are important elements that actually set Oxfam-GB apart from many Fair Trade organizations around the world. While most Fair Trade organizations are directly involved in the fair trading system and work directly with local producers and partner organizations, not many are actively involved in advocacy, campaigning and lobbying for policies that promote the principles and goals of Fair Trade.
A pioneer in adding this dimension to the conventional Fair Trade approach is Oxfam-GB. It should be noted too that while Oxfam-International (the international network of independent Oxfam offices in different countries) is actively involved in international campaigns and advocacy on Fair Trade in various multilateral platforms, only a few Oxfam offices are actually involved in Fair Trade projects with partners in developing countries.
Oxfam-GB is considered a trailblazer among development organizations in openly advocating for a Fair Trade system to take advantage of the potential benefits of conventional trade. While mainstream NGOs lambast the WTO-dominated trading systems and rules and noisily demand the dismantling of the WTO, Oxfam-GB pushes for the view that there are opportunities for poor producers and developing countries to benefit from the current trading regime only if the big players will follow what they preach in equalizing the playing field.
Oxfam-GB has led the development community in calling for the immediate removal of agricultural subsidies to allow the products of poor countries to compete fairly in the international market and for a stop to the dumping of heavily-subsidized agricultural products from industrialized countries. These policy demands at the multilateral level are notably consistent with the principles espoused by Oxfam-GB in its Fair Trade model.
Recognizing the fact that Fair Trade alone cannot address the crisis faced by millions of small-scale farmers and producers, Oxfam launched the Make Trade Fair campaign in April 2002 in 12 countries around the world which was aimed at changing the unfair rules of world trade. Real change will come when large numbers of people from both rich and poor countries really demand it. The Make Trade Fair calls on governments, institutions, and multinational companies to change the rules so that trade can become part of the solution to poverty, not part of the problem.
A key component of this campaign has been the multi-lingual, interactive website, www.maketradefair.com. Through the site, Oxfam, in alliance with others, encourages people to participate in the BIG NOISE: a unique petition of sound and signatures, featuring the voices of people from around the world all calling for the rules of trade to be changed. The campaign has generated more than 10 million signatures from across the globe. In other countries like Bangladesh and Zambia, popular approaches like radio, music and media were utilized to stage the campaign.
A major highlight of the campaign was the Coffee Campaign which urged companies and governments to look seriously at the failure of the international coffee market. When Nestle demanded a six million dollar compensation claim against the Ethiopian government after a coffee crisis and drought, over 40,000 people took e-action in protest, forcing the giant company to back down after 10 days. At the launching of the Make Trade Fair, Oxfam also launched a report entitled “Rigged Rules and Double Standards”, which examined the trade policies of developed countries especially in relation to agriculture. The report has gained wide recognition, becoming a reference point in debates on trade worldwide.
Partnerships and activities
Direct intervention with producers
While most of the activities under the Fair Trade system involve the trading of goods in the international market, it also directly assists producers in forging partnerships with alternative trading organizations and in the development of their products to make them more competitive. Fair Trade organizations like Oxfam-GB provide producers with technical assistance to develop their skills needed to improve their products and obtain greater economic value in the market.
Partnerships with Food Shops, Companies and Organizations
While the Fair Trade Foundation operates to set the criteria and standards required to award their stamp of approval – the FAIRTRADE Mark – on fairly traded products, other companies and organizations sell these goods in different outlets and through various schemes. In 1991, Oxfam helped found a Fair Trade coffee company called Cafedirect, which is now the UK’s sixth-largest coffee brand. Cafédirect functions as a mechanism to attain economies of scale in coffee production among producer groups all over the world, upgrade the quality of coffee products and create a niche market in the international market. Fair Trade products are also available in most major supermarkets, health and food stores.
Today, there are around 70 Fair Trade food products available in over 450 Oxfam shops in the UK. Other Fair Trade organizations also maintain their own Fair Trade shops in many countries across Europe, while at the same time opening up marketing channels in mainstream retail shops which makes Fair Trade products readily available to consumers. Food products include chocolate, honey, jam, marmalade, coffee, tea, juice, cookies and sugar. Some non-food products are also becoming fairly traded.
Awareness campaign and promotion
Fair Trade organizations adopt various strategies in raising the awareness of consumers on the principles and dynamics of the Fair Trade system, as well as to promote Fair Trade products among mainstream consumers. Fair Trade shops, like those operated by Oxfam-GB in the UK, are the main avenues for these awareness-raising campaigns and promotion activities. Shop teams organize events and testing to promote Fair Trade, especially during special occasions and events.
Some Fair Trade organizations have also established partnerships with mainstream retailers and manufacturers who adhere to Fair Trade principles, such as Max Havelaar in the Netherlands for coffee and Marks and Spencer in the UK for many consumer products such as chocolate.
Fair Trade universities
Partnerships with different universities were also established. Staff, students and Student Unions were encouraged to participate in the Fair Trade campaign by purchasing Fair Trade foods or by stocking and promoting Fair Trade food lines. The partnership is premised on the belief that students and academic staff, as consumers, can play a significant role in improving the balance of global wealth and power through simple day-to-day transactions.
Some of the existing Fair Trade University efforts in the UK are in Nottingham University, Loughborough University, Oxford Brookes University, and Aberdeen University.
Responses of Producers and Consumers
With a reputation built over 40 years, Fair Trade is now considered an established movement that continues to grow internationally. Sales across the 18 countries that license the FAIRTRADE Mark are growing at around 20 per cent every year. In 2001, sales of food products with the FAIRTRADE Mark increased by 40 per cent, reaching an unprecedented level of Euro 46 million.
In most countries that license the FAIRTRADE Mark, Fair Trade products are already considered as mainstream products readily available in major supermarkets and independent shops. Fairly traded coffee, for example, now accounts for eight per cent of the roast and ground coffee market in the UK with an estimated 1.3 million consumers. In Switzerland, Fair Trade bananas account for one in every five bananas sold in the market.
On the producer side, Fair Trade claims to be working with some 500,000 workers and farmers in developing countries who have benefited from better terms of trade and decent production conditions. In a case study on Oxfam-GB’ Fair Trade experiences worldwide, it was shown that local Fair Trade partners earn on average 28 per cent higher than other available alternative sources of income. The survey among Oxfam-GB’s local Fair Trade partners also showed that capital and physical assets have increased as well as investments in other assets, such as improved housing, livestock and off-farm income sources, and an overall decreased vulnerability to economic shocks.
The case study on Oxfam-GB’s Fair Trade experience also showed that the local interventions have undoubtedly provided new skills to small-scale producers. However, despite the explicit emphasis on promoting gender equality among local producers, the study found that gender inequalities persist and in some groups the impact on gender relations has been shallow and limited. Furthermore, while Fair Trade activities have provided employment to many local women, their workload increased because there was no corresponding reduction in their household work. Notably, this is a typical phenomenon in many development projects involving the provision of livelihood for women outside the home which fails to address the inequality within the home where women take up most of the burden of workloads.
External Environment
To summarize, it can be said that the Fair Trade system is a non-conventional development-oriented solution following conventional community development approaches to address conventional trading problems. It is an unconventional solution to the problems besetting the international trading system since the Fair Trade principles and mechanisms are the complete antithesis to the pro-agribusiness, strictly market-oriented, highly skewed and non-transparent trading system.
On the other hand, its operationalization adheres to the conventional paradigm in community development traditionally followed by development agents worldwide and applied in a trading context. This development formula aims to address the flawed traits of the conventional trading system, based on the belief that by making the terms fair, equitable and transparent, trade could also benefit small-scale producers. Fair Trade does not challenge the paradigm that trade can bring economic growth, but only questions the unfair and inequitable trading system. Thus, it aims to correct the unfair trading relations but continues to work within the mainstream trading rules.
A notable innovation in this formula is the model espoused by Oxfam-GB that extends beyond the Fair Trade arrangement with local producers, intermediary organizations and alternative trading organizations to include policy advocacy, lobbying and campaign in an attempt to influence and effect policy changes and adoption. In Oxfam-GB’s model, the local Fair Trade partnerships and the policy advocacy efforts are twin components that complement each other towards the goal of making international trade fair and equitable to benefit small-scale producers.
The collective muscle of Oxfam-International, a network of well-established independent Oxfam organizations in some countries in the developed world, in campaigning and lobbying for Fair Trade rules and regime has addressed the criticisms on the flaws of the Fair Trade system as narrow, unsustainable and fails to challenge the unfair rules in the current trade regime.
The network of Fair Trade organizations worldwide, on the other hand, provides a strong base working directly with producer groups in developing countries that lend the living experiences on how unfair trade rules adversely impact on poor producers and how efforts like Fair Trade can make a difference in their lives and impact on consumer awareness and behavior in developed countries. The international solidarity of Fair Trade organizations and the coordinated campaigns of Oxfam-International have shown that concerted actions and close collaboration are critical factors in enhancing the overall impact of any development initiative that aims to challenge and provide alternatives to conventional systems.
Threats and Opportunities
The mainstream agribusiness dominated international trading system continues to be the biggest challenge to Fair Trade. The institutionalization and strict global enforcement of trade liberalization under the auspices of the WTO has increased the burden on producers and small traders rather than deliver the promised benefits from increased trade. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), for instance, requires poor countries to enforce the same stringent patent, copyright and trademark protection that rich countries adopt, without considering the lack of sufficient capacities and resources and vast difference in economic development and cultural context of developing countries as against industrialized countries.
While developing and underdeveloped countries are obliged to eliminate subsidies to their producers, most industrialized countries, especially in the European Union and the United States, continue to subsidize the production of major farm products like corn, rice, sorghum, fruit juice, canned fruit, tomatoes, dairy products, tobacco and wine.
This condition allows them to sell their products lower than the world price and effectively dump their surpluses in the markets of developing countries thus depressing the world prices of these commodities and promoting unfair competition which gravely undermines the livelihoods of millions of smallholder farmers in poor countries that simply cannot compete.
Fair Trade addresses these threats using the opportunities from working directly with local producers and partners who adhere to common principles and goals that basically provide an antidote to the current inequitable trading systems and rules. The community development processes followed by Fair Trade organizations such as Oxfam-GB provide an opportunity for implementers to raise the awareness of local partners and communities on the issues affecting international trade and the root causes of the problems faced by small-scale producers such as domination by agribusiness and self-serving trade policies in developed countries.
The principles of transparency and partnership that guide the Trading Agreements help guarantee that fair terms are accorded to the producers and fair prices are given to the actors at different stages of the trading process. Policy interventions and campaigns at the national and international levels provide the complementary strategies to optimize the opportunities in the growing dissent among developing countries on the unfair trade regimes dominated by industrialized countries that violate trade agreements in multilateral platforms. Together, the opportunities at the local level and policy sphere work will contribute towards a future where Fair Trade brings benefits to those who carry the heaviest burdens.