Last Thursday the largest Fair Trade organisations met as we do every three months to discuss long term strategy, share information and brainstorm. Amongst the topics this time was the big one – credit crunch and the recession and how it is impacting Fair Trade producers and the movement.
The Fair Trade movement and the general public has, for years, campaigned to improve the deal for producers in the developing world and their trade terms, (the trade terms include not only a fair price paid to the producer for goods, but how promptly they are paid and other risks that often result people working through the night and orders being sub contracted which makes meeting minimum ethical standards impossible), recently some principles of Fair Trade are beginning to fall their way into ‘ethical standards’ of mainstream practice.
At People Tree we’ve found a different way of working with small groups so that they do not have to take unfair risks in trade and by paying a fair price and giving 4-6 months to make products we can bring the benefits of Fair Trade to the most economically marginalised people in rural areas. We’ve found that the High St can change Fair Trade, placing orders earlier to give enough time to produce it and helping towards producer advance payments. But this could now be under threat as cash becomes tighter and companies want to make decisions at the last possible moment to reduce their risk. Sales of Fair Trade products seem to be holding up as customers see Fair Trade as part of long term solution to moving towards a sustainable economy – and know that it makes a difference to the producers.
Many Fair Trade Organisations reported how producers are having difficulties raising finance and loans locally in the developing world. As banks run out of money Fair Trade groups are starting to struggle to meet demands for growing working capital.
The Fair Trade movement needs public and government support to raise working capital for Fair Trade businesses around the world.
Credit is not a luxury. Access to credit is an imperative for producers and Fair Trade organisations because otherwise they cannot buy materials to start production and earn a fair income. With 50% of their incomes being spent on food (not 13% as in the UK or 20% in Japan) people are living very close to the edge. Fair Trade needs credit to oil the wheels of trade and help them escape poverty. As the recession bites, companies are negotiating even cheaper prices that will result in poorer conditions in garment factories around the world. We are already hearing of factories closing in India and China as they scramble around for smaller and fewer orders on worse terms. Millions of garment factory workers are being laid off and those that work continue to at an even lower pay – often one that doesn’t afford them 2000 calories of food each day.
Fair Trade – a model for a sustainable economy
Fair Trade is unique, promoting livelihoods amongst marginalised people making sustainable, organic, and carbon neutral products. Fair Trade is also based on using appropriate technology that is accessible to the poor. Fair Trade shares the benefits of trade, operating with transparency and in long term partnership.
People Tree will need to strengthen Fair Trade groups and help train more people as garment factory workers lose their jobs in the factories and return to their home villages.
Next week I leave for the villages of Bangladesh o visit our Fair Trade groups. I will also travel to the slums to meet factory workers to learn first hand how the global recession is impacting them. We hope you’ll help us by buying Fair Trade and supporting our work. Check into my blog next week and find out what we are doing.
