'Fair Trade' Markets Growing Quickly

Companies which observe "fair trade" practices buy raw materials from suppliers that meet certain environmental and labor standards. Alan Beattie is the world trade editor at the Financial Times. He tells Renee Montagne that some companies that package coffee and some that make chocolate, buy beans only from growers who use environmentally friendly practices and pay their workers fair wages.

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RENEE MONTAGNE, host:

Two of the world's biggest makers of chocolate candy, Mars and Cadbury, have in recent weeks announced that they well buy cocoa from suppliers who meet certain environmental and labor standards. This is a victory for what's known as the fair trade movement. And to find out how much impact fair trade is having generally, we rang up Alan Beattie. He is world trade editor of the Financial Times and he has a new book out called "False Economy." Welcome to the program.

Mr. ALAN BEATTIE (Financial Times): Nice to be here.

MONTAGNE: Let's start with those announcements from Mars and Cadbury. How significant?

Mr. BEATTIE: Well, there's been a lot of controversy, particularly over cocoa bean farming in recent years. Certainly labor abuses. And I think what they are trying to do is kind of sanitize the supply chain and make sure that their reputations aren't hurt by anything that happens anywhere in the supply chain right back to the farmer.

MONTAGNE: How big is the fair trade movement? I mean it's not just chocolate and coffee. There are all kinds of products. I gather even footballs are traded using these more ethical standards.

Mr. BEATTIE: Well, it's been expanding quite quickly, but it's been expanding from a very small base. You mentioned coffee and chocolate, and bananas is another one, particularly within Europe, where it's managed to get something of a significant foothold within certain markets; in the U.K., for example, which is the one of the most advanced fair trade markets. I think roasted and ground coffee, maybe a fifth or so, is now fair trade.

But in the greater scheme of things, and the last kind of overall numbers I saw, again within the U.K., I think it is less than half a percent of all food and drink sales were fair trade. So it's growing quickly but it has a substantial way to go before it really challenges more conventional producers.

MONTAGNE: Back to the actual products that seem to be more at the center of the fair trade movement - that's coffee, chocolate, and you've just mentioned bananas. Why these products?

Mr. BEATTIE: I think those products because they are the ones that are sourced from some kind of former European colonial countries. So I think there a sort of sense of, you know, these were countries which were colonies and now export into Europe, and so there's more of a kind of concern, and if you like, some kind of sense of colonial guilt. So I think it's those that tend to be focused on getting into the fair trade movement.

MONTAGNE: So far, how much of an impact has there been on the countries where fair trade organizations focused their efforts?

Mr. BEATTIE: Not a huge amount, because you are only talking about shifting prices via bid. One of the problems with all of these programs is that they just make a difference to something at one end of the supply chain. The change a price or they change the conditions on a particular farm. That doesn't necessarily really transform the economies. What would really revolutionize the economy is if you could take more of the supply chain into the country. I'll give you an example with coffee. There's a brand of coffee which is now sold into Europe called Good African Coffee, which is made by a Ugandan entrepreneur called Andrew Rukasira(ph).

He bought his coffee beans from Ugandan coffee growers who've been growing their beans for, literally, for decades. And he said until he had actually made them some coffee and got them to drink some coffee, they themselves had absolutely no idea what these things they were growing were for. Some of them -if you can imagine this - even thought they were bullets. They thought they were growing bullets for use in the civil war in the Democratic Republic of Congo next door. They just had no idea. And so when he set up Uganda's first roasting and grinding and packing plant, that was the really the first time anyone had tried to do that within the country. And I think it's really operations like that and initiatives like that which are going to do a lot more to transform the economy rather than just changing the conditions on farms that already exist.

MONTAGNE: Although how hard do you, do you imagine it will be to make that sort of a transformation, processing?

Mr. BEATTIE: It's not easy. But a lot of the constraints are actually in the fact that it's just very hard to do trade and to get stuff across the borders. I mean what Andrew Rukasira said to me is that not until people invented this technology that allowed you to kind of roasted and ground coffee in bags, which meant it couldn't go stale, could you actually export it, because it took him literally a month to get his coffee from Uganda out to the port in neighboring Kenya and Mombasa from where it went to Europe.

And so not until that technology had been developed could he actually go up the value chain and do this kind of production. So a lot of the constraint is actually just that it's very hard to do business in these countries, and until those fundamental changes are made, it's going to be difficult to transform those supply chains in any substantive way.

MONTAGNE: So even with big candy making companies, the whole fair trade movement is still likely to be to some degree a minimal or a fringe part of global trade?

Mr. MARTIN: Fringe might be a bit harsh, but I certainly think that those people within the fair trade movement who think that this is a large political project which is fundamentally going to remake the nature of global trade have a very, very long way to go to prove that it can actually do that.

MONTAGNE: Alan Beattie is world trade editor of the Financial Times. His new book is "False Economy: A Surprising Economic History of the World." Thanks very much for joining us.

Mr. BEATTIE: Thank you.

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