Countries / Territories

Impact on Development: Is There an Ethical Distribution of Benefits?


    Consumer Conscience: How Environment and Ethics are Influencing Exports

    8 - 11 October 2008, Montreux, Switzerland

    SESSION SUMMARY: Friday, 10 October 2008                                 print iconPrinter-friendly version 


    Impact on Development: Is There an Ethical Distribution of Benefits?

    Neelam Chhiber, Founder Director, Industreecrafts pvt. Ltd, India
    Anne MacCaig, Chief Executive Officer, Cafédirect PLC, UK
    Willington Wamayeye, General Manager, Gumutindo Coffee Cooperative, Uganda
    Marc Sidwell, International Policy Network, UK
    Karen Ellis, Programme Leader, Business and Development Performance Programme, International Economic Development Group, Overseas Development Institute (ODI), UK 

    The secret to boosting the benefit to producers from the fair trade movement lies in helping them to move up the value chain, panellists agreed. But saying it is one thing, achieving it is another, they added.

    Moderator Karen Ellis introduced the debate by saying that the evidence to date on the benefits to producers from the fair trade movement is mixed, leaving it open to the charge that it is little more than a marketing ploy.

    Pursuing the theme, Marc Sidwell said that there are studies that show that very little of the profits derived from fair trade labels goes towards enhancing the lives of producers. He cited a report in the Economist which said that 90% of the premium from fair trade coffee is not going to promote development.

    The question that has to be asked is whether there are better ways of doing things. The fair trade system suffered from bureaucracy and high costs. "Can we do more good through another route?" he asked.

    An alternative could be the use of charity brands in which a fixed amount went to development. This might simplify things, he said. But other panellists strongly defended the fair trade model. "It is as much about people as it is about making money," said Anne MacCaig.

    Willington Wamayeye said that fair trade offers a stable market and encourages the growth of a relationship between the producers, buyers and the market. "Price is important…But it is not necessarily about price, fair trade is about people," he said. In his producing area, fair trade agreements have helped towards the building of a clinic and helped empower women.

    The question, however, is how to add more value so that producers can move up the chain, earning more and achieving a sustainable business. MacCaig said that is a key goal of her organization, but the problem is how to achieve it. "It is crucial that we take value back into those places," she said. "But it is vital that businesses are efficient and are able to compete. It is crucial to develop local markets," she added.

    But Wamayeye noted this is not easy in Uganda, which lacks much of the needed infrastructure. It is difficult to develop a local coffee market because people are tea-drinkers. There are also environmental considerations. "If we started to pack tea in Tanzania, we would be moving a lot of cardboard by air," said MacCaig.

    Neelam Chhiber said that her company has found that the best way to raise the income of its craftworkers is to get them to invest in the business, something that has become easier in India following the development of micro-financing. By becoming stakeholders, they benefit directly from the brand, she said.

    She also noted the importance of moving up the value chain, but added that this involves investment in capacity-building.