Fair Trade Labeling

May 18, 2007 • Volume 17, Issue 19
Is it helping small farmers in developing countries?
By Sarah Glazer

Introduction

Small farmers like Dennis Alfredo Cruz, a coffee grower from Honduras, receive guaranteed minimum prices for their crops when they deal with fair trade-certified groups.  (AFP/Getty Images/Mike Clarke)
Small farmers like Dennis Alfredo Cruz, a coffee grower from Honduras, receive guaranteed minimum prices for their crops when they deal with fair trade-certified groups. (AFP/Getty Images/Mike Clarke)

The number of products sold with fair trade labels is growing rapidly in Europe and the United States. Big chains like Wal-Mart, Dunkin' Donuts, Starbucks and McDonald's have begun offering coffee and other items. Fair trade brands hope to raise their profile by targeting consumers who care about the environment, health and fair-labor standards. Fair trade supporters say small farmers in the developing world benefit by receiving a guaranteed fair price, while the environment gets a break from intensive industrial farming. But critics say consumers pay too much and that fair trade's guarantee of a good return — no matter what the market price — sends the wrong economic signal to farmers. When the price of a global commodity like coffee tumbles in response to oversupply, overcompensated fair trade farmers will remain in an uneconomic sector long after they should have switched to some other crop or livelihood, free-market economists argue.

ISSUE TRACKER for Related Reports
World Trade
Apr. 2010  Evaluating Microfinance
Sep. 2009  Future of Globalization
Jul. 2009  Fixing Capitalism
May 18, 2007  Fair Trade Labeling
Sep. 28, 2001  Globalization Backlash
Jun. 09, 2000  World Trade
Jan. 29, 1999  International Monetary Fund
May 29, 1987  Third World Debt
Jun. 22, 1984  Bretton Woods Forty Years Later
Jan. 21, 1983  World Debt Crisis
Apr. 18, 1975  World Financing Under Stress
Sep. 08, 1971  World Money Crisis
Jul. 30, 1969  International Development Financing
Mar. 11, 1964  World Trade Parleys
May 23, 1962  Farm Products in World Trade
Apr. 27, 1945  Bretton Woods Agreements
Oct. 05, 1932  World Trade, Tariffs, and War Debts
BROWSE RELATED TOPICS:
Exports and Imports