The Disadvantages of Fair Trade

Many groups are always talking about the advantages but only a few out there who actually admit that there are also disadvantages of fair trade. Their claims actually have merit given them it is rare for something to have purely positive effects and no negative ones.

Take for instance the points of sale when it comes to fair trade. Though many developing countries are continuing to sale their products on the market most of them continue to be sold on specialized. Despite their best efforts only a few have managed to reach the mainstream distribution channels. Take soap. Soap being sold through fair trade is clearly more environment friendly and would benefit not only consumers but also those who manufacture them. However these kinds of soaps remain to be sold in specialty shops and not much in commercial stores.

One solution suggested to counter this one of the many disadvantages of fair trade is to offer online shopping. This is a good idea considering that the products come from developing countries. The problem is that the price will likely go up due to shipping fees and may not be affordable to the average consumer who just wants to buy one or two bars of soap.

Tariffs or the tax put on exports and imports is another one of the disadvantages of fair trade. In most countries, the tariff for non-processed good remains lower that processed ones. What this means that instead of exporting roasted coffee for instance, a farmer may opt to simply export coffee beans in order to remain profitable. This choice however brings to light two issues. First the beans will be processed by another company which means it has lost its fair trade capability. Second because it will be more profitable to export raw materials or non-processed goods, developing countries may become hesitant to put up facilities needed for processing. Not only do they lose to multinational companies but they also encumber their possible development.

Another issue is on the use of the certification. In the example above, the famers decide to export the coffee beans. The company that buys can have the certification on its final product but it is the one that enjoys all the benefits derived from it, from a better corporate image to the profits. Companies using the certification also tend to confuse consumers as to where the product actually comes from. One can argue that this is unfair but it is hard to find a legal way to stop it. If a company for example wants to buy all the coffee beans in a particular county, should anyone stop it?

We still have a long way to go if we are to fully maximize what fair trade is all about. Despite the disadvantages of fair trade, it is important to keep in mind that there will always be ways to solve them.

5 thoughts on “The Disadvantages of Fair Trade”

  1. i’m looking for info for my school powerpoint, but i don’t understand what these things mean, please can you explain things to me?

  2. Hi there James,
    I am happy to try to make things clearer for you. Which part of the topic “The Disadvantages of Fair Trade” did you not understand James? Hopefully I can make it easier to understand for you school project.

  3. Can you please share some of your resources for your information? My students are writing about pros/ cons of fair trade.

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