LATIN AMERICA:
Recession Challenges Fair Trade
By Diego Cevallos*
MEXICO CITY (IPS/IFEJ) - The world economic recession is threatening
the progress Latin America has made in fair trade. The leaders of
this alternative form of exchange are making emergency contacts in
order to assess the situation and come up with strategies to
confront it.
Most of the representatives of fair trade organisations interviewed
for this report believe the recession's impact is inevitable, but
there are some who see the crisis with optimism, such as networks in
Argentina and Brazil who go so far as to predict improvements in
this sector.
Ruben Ravera, spokesperson for the Argentine Fair Trade Network, is
among those who see a gloomy outlook. It is very likely that because
of economic contractions "the consumer's commitment to fair trade
will decline," he said.
Eduardo Rojo, director of the citizen's group Comercio Justo (Fair
Trade) in Mexico, notes that "there is a sense of desperation and
emergency in all parts" of the networks dedicated to this sort of
exchange.
Rojo warned that although "the impact of the product prices isn't
being felt yet, the negotiations for putting the products on the
market are increasingly difficult."
Fair trade is based on alternative market channels created in the
1980s between consumers - mostly in the industrialised North - and
small farmers and artisans in the nations of the developing South,
eliminating the big corporations from the middle and establishing
new rules for production and labour.
An estimated 1.4 million people are dedicated to producing goods and
commodities for fair trade.
The buyers pay higher prices, which remunerate an activity certified
through a variety of mechanisms, ensuring respect for the
environment, higher wages, more equitable social organisations and
the production of higher quality goods - mostly organic when it the
product is food.
Global fair trade sales in 2007 reached 2.9 billion dollars, twice
the total for 2005, according to data from Fair Trade Labelling
Organisations International (FLO), based in Germany.
Although there are not consolidated data available for 2008,
Gabriela Frers, Latin America regional director for the World Fair
Trade Organisation, said that some groups that sell in Europe,
Canada and the United States have reported a five-percent decline
for last year.
"The financial crisis that started in the United States is
generating a recession in the other countries of the North, the
principal consumers of fair trade, which means it will surely have
repercussions in sales," Frers said from her offices in Paraguay.
Sugar, cacao, coffee, bananas, flowers, fruit, honey and tea are
some of the main products moved through fair trade.
According to Frers, 64 percent of Latin American sales are to other
countries, mainly the United States, Canada, Spain, France, Italy
and Britain.
As a result of the crisis, dialogue has begun among organisations
that are active in the alternative markets. They have set their
sights on defining strategies to deal with the new situation, said
Mexican expert Rojo.
There are no precise estimates of how many Latin American producers
participate in fair trade, but in Mexico alone (one of the leading
countries in the sector), some 50,000 rural families are engaged in
the alternative markets. Eighty to 90 percent of Mexican sales,
especially organic coffee, go to markets in the wealthy countries of
the industrialised North.
But not all countries' fair trade endeavours rely on exports. In
Brazil and Argentina, for example, domestic sales have sustained
fair trade production.
In Brazil, "the solidarity economy, similar to fair trade,
represents 3.0 billion reais (about 1.3 billion dollars), or 1.5
percent of gross domestic product, and has 22,000 entrepreneurial
projects," said Rosemary Gomes, president of Faces do Brasil, a
network of groups that work in that sector.
"The solidarity economy and its commercial network in the internal
market have not yet suffered from the crisis, but the exports have,"
she said.
As a strategy, South-South fair trade has already been promoted,
especially for food products, complying with food sovereignty
principles, for example, among Latin American countries, Gomes said.
FLO is promoting diversification of trade in South America and
Mexico, as well as domestic markets in competing with the major
supermarkets, a strategy that the crisis should intensify.
Even producers who export feel more protected under fair trade
regimes, because of the "advantages of prices and the payments
established before production." In addition, they benefit from
public policies, such as supports for family farming, which is why
the crisis is not pressing them to abandon the system, according to
Gomes.
In past crises, of the organic coffee producers, "only those who
were involved in fair trade survived, because the prices were kept
stable," she said.
Overall, the hardest hit will be "social rights" due to the
precariousness of employment and the living conditions of the
farmers, said Gomes.
Edson Marinho, business manager at Ética: Comercio Solidario, a
Brazilian fair trade group made up of non-governmental organisations
and social movements, reported that sales to Europe of dried fruits,
especially mango, suffered a decline in 2008, although that can be
attributed in part to excess supply.
One person who does not see problems on the horizon is Marcelo
Paranhos, director of the Mango Association of Brazil, which has 80
farmer members who grow 500 hectares.
In 2008, their mango harvest reached 3,500 tonnes; 40 percent was
exported, and a third of that was through fair trade arrangements.
"This year we have a good projection for results... we hope to
double the fair trade exports," said Paranhos.
The recession is an opportunity, he says, to add value, seek new
markets at home and abroad, sell packaged products and lower costs.
All of this "is possible is only possible because we are involved in
fair trade."
A similar approach is on the mind of María Minuet, president of the
Argentina Association of Women Microentrepreneurs, which produces
natural fibres and cosmetic creams based on native plants.
"We don't see a risk. We have competitive products, contacts outside
the country, and we aren't proposing sales of large-scale
production," she said.
Sebastián Homts, of the group Art and Hope of Argentina, described
fair trade in his country as something new and little known. His
group does not export but has three shops in Buenos Aires where it
sells products made by some 500 indigenous families from eight
different ethnic groups.
Homts said that with a company that is able to disseminate the
benefits of fair trade the sector will remain relatively healthy in
the middle of the storm.
But those optimistic voices are not quieting the warnings.
"The consequences of the global crisis have the same negative
effects on our networks. The reduction of exports from Latin America
is already a fact, and that includes the fair trade products," said
Frers, whose group sold 44 million dollars' worth of products in
2007.
To confront the economic storm clouds, Frers and Rojo are working to
boost local markets and build closer ties among fair trade
organisations.
With reporting by Mario Osava (Rio de Janeiro) and Marcela Valente
(Buenos Aires). This story is part of a series of features on
sustainable development by IPS - Inter Press Service and IFEJ -
International Federation of Environmental Journalists, for the
Alliance of Communicators for Sustainable Development (www.complusalliance.org). |
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