The Fair Trade Scandal: Marketing Poverty to Benefit the Rich by Ndongo Sylla

The Fair Trade Scandal by Ndongo Sylla (1st half)Bacon Phat
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The Fair Trade Scandal by Ndongo Sylla (2nd half)Bacon Phat
00:00 / 58:06

In this episode, we discuss:

  • Our one-day stickers

  • Julia's new Bacon Phat sweatshirt

  • Sasha adventure snowboarding in Colorado

  • Julia hunting adventure coming up

  • Seed probiotics for better poop

 

Show notes

 

A different point of view

Ndongo Sylla’s book about the less glamorous side of fair trade is eye-opening to us since we have been champions of fair trade since learning about it in college. Julia studied human rights in her bachelor’s degree and took a class heavily devoted to fair trade. Sasha studied business, including supply chain management, and studied fair trade organizations every chance she got. During her studies, she learned about the different labeling organizations including Fair Trade Certified (formerly Fair Trade USA), Equal Exchange, and Fair Trade International.

 

One of the problems with fair trade labeling organizations is that they have different requirements for labeling. This can create confusion and inconsistency in the rights supposedly guaranteed to laborers. In fact, the most vulnerable people in the supply chain are those whom fair trade says it helps the most but in fact are most exploited. One point the book mentions is that fair trade can selectively apply to some parts of the supply chain but not all, so the people at the very bottom of the chain are not impacted at all.

What is Fair Trade?

 

Fair trade tends to operate in two different ways. The first is through co-ops where a fair trade organization represents several producers in a collective. In this model (also called the integrative approach), the entire collective receives fair trade pricing for its goods, and this premium is given to the entire collective. The collective then decides how to spend this premium, and paying higher wages to the most vulnerable workers is rarely chosen. The other method is for producers to apply for fair trade status and pay a fee to the fair trade labeling organization. This is often difficult for producers who are too small to afford the fees and easy for major companies because the compliance rules are not very strenuous for them. Neither method has to guarantee living wages for laborers at the very base of production. There are some characteristics labeling organizations want to see, but they are not strict, and labor rights do not have to apply to everyone in the process.

What about labelling organizations?

Labeling organizations take money and use it to keep their doors open and carry out marketing campaigns to encourage more people to buy fair trade. One consequence of this, argues Sylla, is that people become skeptical of any company that isn’t fair trade and only trust those that have a fair trade label. This is problematic because it can actually negatively hurt producers that offer higher wages and better protections and guarantee more rights for workers but cannot afford a fair trade label. Such a situation arose when Douwe Egbert coffee wanted to sue a Dutch province because it was not certified fair trade even though its standards were stricter than those used by fair trade labeling organizations. The province banned all non-Stitching Max Havelaar-certified (Fair Trade International in the Netherlands) coffee, but Douwe Egbert had UTZ certification, which its producers argued was more ethical and far-reaching than FTI.

Fair trade is not that dissimilar from conventional trade

 

While we thought that fair trade reduced the supply chain and cut out the middleman to create a more direct relationship between producers and consumers, Sylla argues that there are just as many middlemen in fair trade as in the conventional model. In fact, his major argument is that fair trade is just an extension of capitalism, not an answer to it. The biggest problem (and reason for the title of the book) to Sylla is that fair trade does not achieve its stated purpose of lifting the poorest workers out of poverty. They are impacted just as negatively by the fair trade model as the conventional. 

 

Similarly, there are not enough value-added producers within the fair trade world, argues Sylla. Exploitation continues to happen to the poorest producers because they’re essentially just making raw ingredients for a few major companies so the latter can create value-added products. For instance, 5 companies (Mars, Nestle, Mondelez International, Ferrero, and Hershey) control a majority of the international chocolate market. Because the raw ingredient isn’t as valuable as the value-added product, it receives a much lower price than the same raw ingredient that has been turned into chocolate. As long as there are few value-added companies and plenty of producers, the former will always have the upper hand and be able to exploit the latter.

The global North consumes way too much

 

We agree with much of what Sylla says regarding consumption in affluent Western nations. He refers to them as the “global North”, and “developing” countries are called “the global South”. He argues that the North consumes way more than the South, and fair trade does nothing to alleviate this. The destruction, economically and environmentally, of the South is directly caused by consumption habits of the North. Relative to the South, the North consumes at a rate of 6:1. Production of goods and waste from said production are exported to the South, so the unhealthiness of developing countries is due entirely to the excessive consumption habits of the North.

Sylla implies that fair trade labeling exists in part to assuage the guilt rich Westerners feel due to having more than poor people in other countries. And the various alternative names of consumption similarly serve this purpose. We really like Sylla’s point here. Perhaps it’s a bit too reductionist or simple, but he argues that terms like “sustainable development”, “international development”, “humanitarianism”, “fair trade”, “ethical consumption”, etc. all refer to the same thing but with a nicer, euphemistic name. He argues that it is impossible to consume ethically. All consumption by the North is unsustainable and inequitable by nature. Compared with the South, the North is in a consumption debt, meaning it has environmental and social costs per capita that exceed the planet’s capacity. If everyone in the world consumed like Americans, we would need 5 planets, argues Sylla.

Degrowth is our new favorite thing

 

The answer, suggests Sylla, is degrowth, or rewilding for the economy. Julia loves this concept because she studied economic development for her master’s program, and she had a huge problem with the idea that endless growth should be the goal of development professionals, cities, and humans in general. The answer to poverty, dangerous communities, unhappiness, poor health, etc. was always growth. When she argued that endless growth wasn’t possible because resources are finite and there are always losers for every winner, her professors evaded answers and talked in platitudes.

Degrowth has become our new lifestyle goal. We want to change our lives so that we can consume way less. Sylla’s book has helped us see that fair trade consumption is still consumption, and even though many companies advertising fair trade are also using environmentally friendly ingredients and practices, transporting those goods is still wasteful, and there are negative environmental impacts regardless of the product. Unless you buy things made within a few miles of your house, there will be environmental impacts.

Other thoughts

We also appreciate that the book’s major argument was not that poor workers in other countries will try to game the system and pull one over on rich people. Other critics of fair trade make the argument that a producer will sell an inferior good at the fair trade price even if this is above its market price simply because it can. We do not see this as a problem. We see the taking back of even the tiniest drop of control by marginalized people of whom the system has taken advantage for so long as a major victory for those people. If Western people have been exploiting poor people for centuries, then we think it is only right and just that poor people can trick the wasteful North into overpaying for something. To us, this is the system working exactly as it should. If Western people need something so badly, they should be willing to pay its producers at least a living wage.

 

Our major critique of the book is that we do not have many concrete examples to support the claim that fair trade has not helped any producers at all. There are no major studies or figures cited to show that the number of people helped by fair trade is alarmingly small. Typically Sylla relies on theoretical arguments with one or two examples overall to argue empirically that fair trade has been unsuccessful. This is ironic considering he spends a lot of time bashing neoliberal critics of fair trade for disliking it solely on theoretical grounds.

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The Fair Trade Scandal pulled the wool off our Fair Trade-consuming eyes. Via a masterful discussion of economic theory, real-life examples, and personal experience, Sylla forced us to face the facts about fair trade as a model for consumption. Rather than consider fair trade as an alternative to typical consumption, we need to see it as a natural extension. Anyone looking for ways to truly live their values should read this book.

 

While Sylla’s prose is often very advanced and difficult to understand, and he lacks concrete examples of some of his arguments, the book should not be written off or ignored. Rather, it is incumbent upon the reader to ensure she can understand and confidently discuss the ideas present in a book about something she has until now supported. Just because an issue is complicated is no reason to disregard its scholarship and continue with current behaviors, however detrimental they might be. Moreover, a book like this offers the reader (and wannabe ethical consumer) the opportunity to encounter several new sources of information and academic theories she would not otherwise have found.

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