The Fairtrade initiative aims to enable
organizations of smallholder producers of coffee (and cocoa, tea, honey,
bananas, orange juice and sugar) to improve their conditions of trade, e.g. more
equitable and more stable prices. Currently, Fairtrade efforts in coffee and
other products like cocoa, honey and rice are concentrated on smallholder
producers only. Conversely, in products like tea, sugar, bananas and other
fruits the emphasis is also on estates (improving conditions for the labour
force). Coffee prices are by nature unstable, especially since the
disappearance of the old ICO price support agreements, and during the closing
decades of the twentieth century extremely low, sub-economical coffee and cocoa
prices caused serious economic and social problems. Many growers could not even
recoup their production costs, let alone make a decent living.
The Max Havelaar
Foundation was established in the Netherlands in 1988, and since then
another 18 countries have followed suit (see the list in 03.06.03). In 1997 the
different national institutions established an umbrella organization known as
the Fairtrade Labelling Organizations
International (FLO) (see 03.06.04) with offices in Bonn, Germany. FLO,
together with its member organizations, works towards improvement in the unequal
distribution of wealth between North and South.
The objective is to assist without patronizing anyone
by providing the instruments necessary to enable small growers to take their
development into their own hands, as independent producers and not as recipients
of occasional gestures of largesse. This is achieved by incorporating in the
producer price not only the cost of production but also the cost of providing
basic necessities such as running water, health care and education, and the cost
of environmentally friendly farming systems. Consumer support for more equitable
North-South trading conditions is then linked to participating growers through
the by now well-known Fairtrade labels on retail packaging in consuming
countries. Simply put, the higher prices consumers pay for Fairtrade products
reach the growers' organisation through a combination of guaranteed minimum
prices and premiums.