Fair Trade – is it the right choice?

Fair trade logoFair trade is internationally recognized and leading certificate system, which fights for “sustainability and poverty alleviation”. While this is a noble endeavor we as a consumer might be betting on the wrong horse. Specifically, there might be a better option. Let me explain.

Through Fair Trade label, consumers know that for a small price premium they are paying for their products they are contributing to farmers getting fair wages for the job they are doing.

Fair Trade certificate is definitely working. Market research shows that 60% of world’s consumers believe that their shopping choices are making a positive difference for farmers and workers in developing countries.

On other side, market research also shows that this label creates false expectations. Consumers believe that food with a Fair Trade label has fewer calories and provides more nutritional value than it actually does.

Moreover, by helping farmers to get the fair amount of money, we are only contributing to helping farmers and their families, but we don’t help ourselves. Besides farmers businesses there is no development of our the society as whole. We don’t answer the bigger questions like “saving the planet” or “solving worlds hunger” nor we are improving the quality of food we are getting from the farmers we are helping.

So essentially we have a good model that works very well. Consumers are willing to pay companies extra money as long as this money is put to a good use. However, besides Fair Trade there is no alternative for people to choose where their money will be invested. For new companies, which will offer this option, it will be difficult to compete with Fair Trade as it is an established market leader. Through its network Fare Trade limits possibility for other companies to enter and operate in this market.

The logical solution can be two directional. Either Fare Trade expands its scope of activities or another brand has to offer a different solution. There is definitely market for it.

Do you agree?