2008 - A UK-based policy institute this week slammed Fairtrade, saying that the practice distorts the market and traps some of the world's poorest farmers in a cycle of poverty.
According to the report 'Unfair Trade' issued by the Adam Smith Institute, the fair trade movement, which allows consumers to buy ethically-sourced products such as coffee and chocolate, does little to drive the momentum of the global food chain.
The report's author Marc Sidwell claims that consumers who buy Fairtrade products end up spending more money on poorer quality goods, due to the fact that the Fairtrade system pays farmers a fixed price.
This leads to farmers not being pushed financially to improve the quality of their products, and they may even hold the best of the crop back to sell on the open market.
"Fairtrade is not a reliable mark of delicious coffee or food," Sidwell said.
The only solution to market distortion is therefore global trade, he added, and countries in Africa should instead remove the restrictive trade barriers currently keeping their economies in chains.
The report also accuses Fairtrade of trying to unfairly dominate the market for ethical products, "quite aggressively competing with alternative schemes with their own merits and demerits."
According to Sidwell, Fairtrade's marketing tactics, such as the 'Fairtrade Fortnight' currently taking place in the UK, blind consumers to other ethical trading schemes that may be more advantageous to third-world farmers.
The author even goes so far to accuse Fairtrade organisers of manipulating consumer judgement, citing the UK government's blessing of the use educational games such as 'The Advanced Banana Role Play' in schools.
"Even assuming Fairtrade goods are all they claim to be, their merit would still deserve to be weighed against the rival schemes or against the possibility that the money might be better spent in other ways," Sidwell said. "Yet the moral packaging appears to overcome our educational guardians. Freetrade Fortnight gets a free pass."
In terms of helping support poor farmers in third world countries, the report claims that Fairtrade also fails with this initiative.
Sidwell says that by sustaining uncompetitive farmers, Fairtrade holds them back from the processes of diversification and mechanization, depriving them the chance of improving their professional life.
The report also says that Fairtrade supports more farmers in richer countries such as Mexico and South Africa than those with poorer economies. Mexico has 51 certified producer organisations, while Ethiopia has only four.
However, several Fairtrade organisations were quick to respond to the Adam Smith report, mostly accusing the institute of inaccuracies.
In a statement on its website, the UK Fairtrade organisation denied ignoring the poorest countries in the world.
"Leaving aside the fact that the coffee producing regions of Chiapas in Mexico are some of the poorest in Central America, Fairtrade through partnerships with people like Tadesse Meskela of the Oromia Co-operative Union is working with thousands of small farmers across Ethiopia," the organisation said.
Fairtrade UK also denied trapping the farmers it works, claiming that the money producers earn through Fairtrade help allows them to invest in diversifying their trade in a way that would not have otherwise been feasible.
Divine, the Fairtrade chocolate company co-owned by a farmers' cooperative in Ghana, pointed out that Fairtrade was established because the market was unfairly biased towards Western firms, not in order to hinder third-world farmers.
