Also, I anticipate that over time there will come pressure to bear on the pre-financing idea as money, especially trade credit, remains tight in the developed world and may become relatively easier in the developing world over the next 5 – 10 years compared to the EC and USA. The idea of pre-financing is based on the obverse, i.e. the developing world with high interest rates and small credit markets can gain access to the “more efficient” Western capital markets – this still holds water but it is getting a weaker argument day-by-day and year-by-year.

The justification for this speedier process is commercial. Farmers get the benefit of increased access to markets through the use of the Fairtrade brand. Similarly, it is less onerous on the Fairtrade network in terms of monitoring and oversight. These new Easy Entrance standards come with the slightly lame “Meanwhile producers and traders are also explicitly asked to ensure that any negotiated price covers the costs of sustainable production of the processor”, which seems highly subjective. Fairtrade starts to read more like some of the other fair-trading systems competing for the same social dollars/pounds.

For me, it’s like an analogy from the UK labour markets. After many years of campaigning, the minimum wage was introduced into the UK in 1 April 1999. However, Britain is now in a recession with unemployment now standing at 7.8% or 2.44 million. Now, classical market theory would suggest that as unemployment rises the supply of available labour increases for the number of jobs in the economy, so the wage level must necessarily fall and then the labour market can clear. In Britain, however, we have the minimum wage and this prevents such a collapse in wage rates (in fact they went up in June – July), but classical economics argues that this impediment prevents the labour markets working efficiently and so may be keeping wage levels artificially high. I don’t hear anybody arguing very loudly for the removal of the minimum wage to ease the problems within the UK labour market, even if it could widen the commercial prospects for the UK economy and improve the job possibilities for those out of work.

Whenever there are media-driven articles against Fairtrade, the grumbles seem to come from Fairtrade farmers who have not reaped the anticipated benefits available from the Fairtrade system. This is because Fairtrade is not a sugar daddy; it’s a commercial system and you have still got to sell what you have grown via the Fairtrade system. Many commodities have more Fairtrade supply than there is available demand for Fairtrade products – tea, pepper and vanilla being examples – which may mean that some of your crops may not get Fairtrade prices and need to be sold in the normal open market. However, the theory is that your overall sales price will be higher and that as the market grows you will be able to sell more.

If, however, you increase the number of suppliers into the market, you increase competition for the available demand and so either more crops fail to be sold through the Fairtrade network or there is pricing pressure downwards. If there is no minimum price and it is a negotiated price, prices will drift below the theoretical sustainable price; why because that’s the way markets work and no-one really can expect commercial enterprises to sit down and calculate a “negotiated price that covers the costs of sustainable production of the producer” except perhaps after the event to justify oneself.

That’s what some of the Fairtrade premium is meant to pay for, paying people to have the time and inclination (as I imagine it is a fairly boring task) to work these things out and to monitor them.

I hope this issue gets discussed at the FLO Board meeting in Nairobi on the 15th Sept and that people’s concerns are registered. It would be a shame if these big changes to the fundamentals of Fairtrade are not noticed by the grassroots Fairtrade campaigners. I notice that new standards for melons and sweet potatoes have been treated the same way to speed up Fairtrade certification. I can see both sides of the argument and I understand that minimum prices are very tricky to calculate across different countries but that just leaves the social premium and good practice standards and that’s not what has made the Fairtrade system unique.

Good luck with getting your voice heard!