The Issue of Fair Trade... and Unfair Trade

 

Why do third world producers need a better deal?

 

… A typical example of how the multinational companies trade in the third world...

 

 

Buyers attend tea auctions in tea-producing countries where the picked tea is sold in bulk. The vast majority of tea (around 80%) is bought by buyers acting on behalf of just 3 large global corporations. The market power of these corporations allows them to influence the price they end up paying for the tea. The growers are not in a position to do anything about this. In order to sell what they have produced, they end up accepting whatever price they can achieve.

 

The buyer then arranges for the bulk tea to be shipped to a first world country like Australia, usually on a ship owned by a rich first-world multinational company.

 

Once in the first world country, the company arranges for the bulk tea to be processed, blended, packed, distributed and retailed by companies they or their friends control.

 

For every dollar that you pay for tea in the supermarket:

• Less than 15 cents goes to people in the country where the tea is grown.
  
• More than 85 cents is raked off by those involved in the above steps - all controlled by the multinationals.

 

How does fair trade give producers a better deal?

 

Under Fair Trade, growers are encouraged and helped to set up co-operatives which oversee the process of blending and packing the tea within their local community, or at least within their own country. In this way, there is more money kept in the country to help in local programs.

 

The tea is then shipped and sold to a partner organisation (such as People for Fair Trade). The selling price includes a Fair Trade Premium, an extra payment to producer groups over and above market prices, to ensure that producers are being paid a fair price. The Fair Trade Premium benefits the local people by improving their housing and living conditions and helping them to establish sustainable agricultural practices such as organic farming.

 

For every dollar you pay for your fair trade tea:

• At least 50 cents goes to the country of origin - more to the growers and their local communities, more to developing local value-added industry.
  
• At most 50 cents goes toward covering the overheads and transport costs that are unavoidable within Australia.

 

Now, isn't that fairer?

 

 

So next time you shop, stop and think about the goods you might be buying. Not just tea or coffee, but any product in any shop. Choose to buy only when you are satisfied you're not overlooking alternative goods of similar quality that have been traded fairly and are readily available. Be a partner in the fight for global justice!

 

For more information, check out our newsletters and articles, ask us to talk with your community group about fair trade and visit our Volunteers page to see how you can help make a difference and empower the developing world.