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February 29, 2008

 

Expanding Fair Trade for Poverty-Free World

kitazawasan.jpg Copyright JFS

Lecturer: Koh Kitazawa, representative of Fair Trade Resource Center.

I worked as a staff at the Fairtrade Label Japan, the Japanese chapter of the Fairtrade Labeling Organizations International (FLO) for about two and a half years since 2003. Now I operate the Fairtrade Resource Center, a non-profit organization that widely provides news and information about fair trade in Japan and abroad. Today, I would like to discuss the current situation and role of fair trade.

Trading System Widening the Gap

When we talk about "fair trade", we often mix two different main concepts. They are the trade issue and the development issue. From the development point of view, it is mainly a story of job creation: The fair trade targets the people who make, for instance, handicrafts and fabrics in the developing countries, and who often had been excluded from the trade with industrial countries. On the other hand, from the trade point of view, the fair trade literally aims to promote the fair trade, targeting the people who had been exploited in trade due to the expansion of free market economy since 1980's. The international prices of agricultural commodities fell after the industrial countries put pressure on the developing countries, leaving farmers impoverished.

There is no clear borderline between these two issues, but today I would like to mainly focus on the fair trade from the viewpoint of trade. Before I start my lecture, let's play a "trade game" so you can feel what sorts of things could happen in actual trading.

"Now please cut out some paper "products" in different shapes including round and rectangle as shown on the whiteboard using the tools such as paper, scissors and compasses distributed to each group's table. Then you can come and sell the products at the market. The group that makes the most profit will win. But we can't accept the products that are not adequately manufactured in the light of international standards."

After this, each group of four or five people started manufacturing the "products." Since the tools were not equally distributed, each group had to try and figure out how to manage with a limited supply of tools, or to negotiate with other groups about borrowing and lending the tools. As a result, there was a huge gap between the group with the highest sales and the group with the lowest sales. The participants virtually experienced the system in which the economic disparity grows under unequal conditions.


After experiencing the trading game: Now, I would like you to rethink about why we trade. Both of our country and other countries may be able to grow through trading. It is so-called a win-win situation. Did you see the win-win situation in the game we just played? Some teams made a huge profit and others didn't. It is OK because we were just playing a game today, but this is the reality happening in the world. Why can't we have a win-win situation?

For one thing, each country and region has different resources. Let's say, in the game we just played, paper would be a natural resource and scissors and compasses would be the technology and information. In addition to the gap in initial resources, the principle of competition naturally functions. In reality, the rich countries and regions gain more, and the poor countries become even poorer.

For instance, we can think about the price of coffee. The reason why coffee is one of the main fair trade products is that the trade amount of coffee from the developing countries to the industrial countries is the second highest following oil. A pound (about 435 grams) of coffee beans makes about 50 cups of coffee. At 300 yen (about US$3) per cup, the total sales will be 15,000 yen (about US$151.50). However, the producers who grew a pound of coffee beans in the developing countries usually get only about 80 yen (81 US cents). Ethiopia, a producer of mocha coffee beans, depends on about a half of its foreign currency acquisition on coffee, but the average annual income per capita is only about US$160. During the Coffee Crisis from around 2003 to 2004, their income dropped by half.

Against this backdrop, one of the solutions is fair trade. Through fair trade, we can purchase the goods made by people in so-called developing countries and regions at a fair price in the long term and make their life and production sustainable. Fair trade has various approaches including directly connecting producers and the market and providing technical supports to the producers about making value added products by processing raw materials when the brokers are making substantial profit through exploitation of the producers.

Supporting the Whole Community

Let's take a look at an example of the Indigenous Ecological Federation of Chiapas, or FIECH (Federacion Indigena Ecologica de Chiapas in Spanish), a FLO-certified cooperative of coffee producers in Mexico to see if fair trade is actually good for producers. Coffee farms are generally made by clear cutting the forest, but the FIECH grows coffee beans organically using an agroforestry system that coexists with forest. The forest is left as is without destroying the original ecosystem, and other crops such as bananas are grown on the same land. By maintaining the biodiversity, agroforestry prevents soil degradation and excessive dependence on chemical fertilizers. The cooperative supports farmers by providing training on organic farming and by instructing them to put the name of the group the producer belongs to on the shipping bag to secure traceability.

At a cooperative named Union of Indigenous Communities of the Region of the Isthmus (Union de Comunidades Indigenas de la Regiodel Istmo in Spanish), or UCIRI in Oaxaca, Mexico, the birthplace of fair trade labeling, is trying to diversify the operation, for instance, by producing passion fruit jams in addition to coffee beans to avoid the risk of depending on one commodity. As the town is located deep in the mountains without any means of transportation, the cooperative provides transportation service by purchasing a bus to provide farmers with mobility, and enhances welfare through offering free dental treatment. The cooperative functions like a municipality, supporting the whole community.

Most of the coffee beans produced in UCIRI are shipped as fair trade products. About 20 to 30 percent of the products from other cooperatives in Mexico, however, are shipped as fair trade products. The rest of the products have to be sold at the general market, reducing the amount of profit to producers. In Ethiopia, the situation is much worse and only about seven percent of the total production is classified as fair trade. We need to expand the fair trade market.

Further Increasing Popularity

Now let's look at the fair trade market. For instance, Germany, one of the leading fair trade countries, has some headquarters of international fair trade organizations such as FLO. There are about 100 organizations and groups that sell fair trade labeled products, which are also available at about 24,000 ordinary supermarkets. The fair trade market in Germany is said to be about 70.85 million euro (about 9.91 billion yen). One of the major reasons for this is that the German government officially announced its support for fair trade in 2003.

In the United Kingdom, the organizations such as Oxfam, a major non-governmental organization, have been leading the fair trade movement. The citizens are highly interested in fair trade, and the sales is about 280 million euro (about 39.2 billion yen), with the second largest market in the world following that of the US. There are 178 organizations and groups that sell the certified products, and about 1,500 kinds of fair trade products are distributed. Some municipalities declared themselves as "Fair Trade Towns." The fair trade is disseminated into people's lives both from the business and government sides.

On the other hand, fair trade is slowly prevailing and is not yet commonly known in Japan. The market size is 470 million yen (about US$4.75 million), lagging far behind those of the United States and Europe. In some European countries and the United States where fair trade is popular, ethical consumer movement has grown, for instance, protesting against wearing fur coats and animal testing for cosmetics from the viewpoint of animal protection. But the movement in Japan has been focusing on advocating consumer rights, therefore ethical consciousness was not expanded very much.

In the future, I would like to introduce fair trade in the area of education on development and on international understanding as well as through films and TV programs in order to gradually increase recognition among general public. Some people have an impression that fair-trade products are expensive, but we should be able to cut the cost and further accelerate the dissemination as the market grows. In the United Kingdom, the price of fair trade coffee is set lower than that of instant coffee.

When we buy a certain product, we support the environment where the product was made. If we buy a product that depends on child labor, it means that we choose the world where child labor exists. In this sense, I would like everyone to know that fair trade is the issue we are all involved with.

Fair Trade Resource Center (Japanese only)

Profile

Koh Kitazawa is the representative of Fair Trade Resource Center.

Kitazawa became engaged with the health education activity in Cambodia in 2000. He worked at the Fair Trade Label Japan, the Japanese chapter of the Fairtrade Labeling Organizations International (FLO), from 2003 to 2005. In April 2006, he established the Fair Trade Resource Center that provides news and information about fair trade in Japan and abroad widely to general public and currently serves as the representative. He is also the representative director at Green Source LLC., a consultant, a writer and a translator.

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