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Fairtrade’s Unfairness

An article in The Jamaica Observer posed the question of What is the future for Jamaica’s banana industry? As the piece explains:

The industry still employs more than 10,000 people and accounts for $26 million of Jamaica’s Gross Domestic Product. But the end of preferential access to European markets has threatened the industry with extinction. Competing with the “dollar”, bananas produced by near slave labour in South America seems impossible.

Jamaica used to receive special preference on market entry to the U.K. and has, more recently, had preferred access to European markets in general. The U.S. and Latin American producers challenged this access before the World Trade Organization and have won several times. Europe has continued to come up with new schemes but, ultimately, all of the schemes are illegal under the WTO and, presumably, will come to an end.

The reference to “slave labour” is telling. It is really a reference to lower living standards in some of the Latin American producers of bananas, not to slavery. And viewed in the context of these lower living standards in poorer countries, this article’s recommendations to the island’s banana industry really tells us something about Europe:

But the islands of the Eastern Caribbean seemed to have discovered a way to save their industry. They have repositioned their bananas as a niche Fairtrade product. This way they can charge a premium. Furthermore the premium can be as much as 25% higher than the market price. And earlier this year Britain’s second largest supermarket chain, Sainsbury’s, announced that all the bananas it sells from now on will be Fairtrade bananas.

Because Sainsbury’s sells over 1,000 bananas a minute, that is a huge amount of bananas. They have committed to buying 75% of St Lucia’s banana export crop, 80% of Dominica’s and much of the production of the other Windward Islands.

The impact of Fairtrade bananas in the Eastern Caribbean has been tremendous:

Sir John Compton, the 82-year-old premier of St Lucia, told Justin King, the head of Sainsbury’s: “You have saved the banana farmers of St Lucia.” And the prime minister of Dominica, Roosevelt Skerrit, travelled to Britain in February in order to explain to British MPs how much the Fairtrade scheme had done for his country’s banana industry.

He said “What Fairtrade has done for us is ensure that the social stability of our country is maintained; that poor people particularly in rural communities can enjoy a better standard of living as a result of a committed price in the UK market.”

The article goes on to talk about the details of how Fairtrade works and urges the Jamaica banana industry to reposition itself as a niche, premium, Fairtrade product.

The author may be correct that this is the best thing for the Jamaican industry, although the larger scale in Jamaica may make it difficult to find buyers for that much Fairtrade product.

But even if it could be done, and accepting that the Jamaicans, St. Lucians and the Dominicans are perfectly in the right to look out for themselves, the moral implications of this for Europeans are rather striking.

Nothing that has been done has helped to increase consumption of bananas, so if Sainsbury’s “…saved the banana farmers of St. Lucia.” — banana for banana, it caused poverty and desperation in even poorer countries, those with the “…near slave labour…” conditions the article references.

It is as if morally the only thing that counts is what one elects to look at. So eminent person after eminent person traipses through St. Lucia, looks at the development projects paid for by the “Fairtrade Premium” and declares it good. Nobody goes to see desperate people who have lost the opportunity to sell to Sainsbury’s and notes what that has done for those areas.

If we are going to get involved in utilizing our purchasing power to be more “ethical,” shouldn’t we consider both the good we do and the harm we do through our programs? Or is this some kind of moral vacation for the west, where we only congratulate ourselves on our virtue and turn a blind eye to the less desirable effects of our actions?

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