According to a report by researchers at the Research Institute of Organic Agriculture, in 2015:
… values for total [food] retail sales are not available for all countries. …
The global market for organic food (expressed in retail sales) was 75.7 billion euros in 2015. In 2015, Fairtrade retail sales were at 7.3 billion euros … [and] the countries where organic products have the highest share of the total [food] market are Denmark (8.4 percent), Switzerland (7.7 percent), Luxembourg (7.5 percent), and Sweden (7.3 percent).
Regarding Fairtrade products, in 2015, Switzerland and Sweden were the countries with the highest share of the market, accounting for 1.7 percent and 1.5 percent of their total market, followed by Finland (1.3 percent) and Ireland (1.2 percent).
All of the above would suggest the total food market where there is a presence of Fairtrade (aka Fair Trade)of circa750 billion euros, of which Fairtrade sales are probably on average between 1% and 2%.
It’s perhaps questionable how much influence Fairtrade has on the food market as a whole in each country where it’s present. However, the cited benefits of Fairtrade are not generally expressed in terms of altering markets (eg market prices), but are expressed in other ways, eg:
· Providing a minimum price to producers when market prices are volatile (and by implication fall too low to enable workers and their employing organisations to flourish)
· Providing a price that enables producers to invest resources in improving workers’ conditions and community projects
· Improving “access” to markets (buyers) ie making the buyers more likely to buy from a particular producer because of the Fairtrade certification of the products
· Encouraging sustainable agricultural practices with strong benefits for the environment
· Encouraging worker democratic participation, particularly via worker cooperatives owning the means of production
There appears to be relatively little literature on the impact of the Fairtrade movement on market competition. There seems to be some evidence that it has had benefits in terms of the workers’ rights and conditions, and stability of their earnings, in producer organisations that are Fairtrade certified.
The acid test, however, will be whether, in the long-term, the apparent market penetration of about 1% can be increased to a much more substantial proportion. Until then, it’s difficult to discount the possibility that all Fairtrade will ever be is a small partial substitution for international aid.
So, what speculation could we make about the impacts if Fairtrade became, say, 95% of food sales instead of the current 1%?
· All relevant producers would be protected by the minimum price, so there would be stability for producers’ livelihoods
· Workers’ conditions would (at least in the short term) be enhanced
· The balance of power between buyers and sellers would (potentially) fundamentally shift, but only in sectors for food staples – substitutable or luxury foods would potentially become sectors that might price themselves out of the market (see more comment below)
· Who would provide the large amounts of subsidies that would be involved at that scale? Governments? (is this like the Common Agricultural Policy in the EU?) The subsidies would be very substantial, so it’s doubtful the Fairtrade Foundation could provide all the subsidies from consumers through product pricing alone.
· There would no longer be a meaningful free market price for food, which could lead to major inefficiencies and disincentives in the food production, distribution and consumption systems, with unintended supply surpluses and deficits arising at large scale
· How would the markets be regulated, and who would set the minimum prices, and on what bases?
· Would consumers ultimately accept those prices, or would this essentially kill market sectors for one food type after another, until all that was available was food produced in sectors outside the sectors covered by Fairtrade, or in state-sponsored monopolies?
Neo-liberal capitalist economics might respond as follows:
“Perhaps it’s just as well that Fairtrade operates ‘at the margins’ rather than as a mainstream market management system. There is a risk that, if it becomes anything more than a side-show, then there might well be serious unintended consequences for food supply and demand at global scale.”
Progressive economics might respond in a different way as follows:
“Its about time we took a global view about how to maintain a sustainable food system within planetary limits, distributing the outputs and the economic benefits more equitably among consumers and producers, wherever they are in the world, rather than perpetuating the gross distortions brought about by colonialization and the continuing control of land and capital by wealthy nations, corporations and individuals. Helping Fairtrade to grow until it is large enough to start to change mainstream market dynamics is one way we can test whether such improvements can really be made without unintended consequences. We have to try new things because ‘business as usual’ is driving us demonstrably in the wrong direction on so many dimensions of planetary sustainability”
The Planetary CFO - working towards a sustainable World Balance Sheet.