How Fair Trade Works

Criticisms of Fair Trade

AFP/Getty Images

Fair trade products only account for a segment of overall sales for any given product, but advocates insist the programs foster better relations between developed and developing nations, improve workers' lives and set a positive business example. Who could possibly have a problem with that?

Critics of fair trade don't have issues with the positive impacts of the programs or the humanitarian intentions behind them, but rather some of the possible flaws in the long-term effects of fair trade.

One frequent criticism is that fair trade prices artificially inflate prices above the market value without doing anything to address real problems, like oversupply. The more coffee available for purchase, the lower coffee prices drop. Critics argue that all fair trade does in these circumstances is prop up underperforming farming or manufacturing practices.

Critics also charge that fair trade certification's emphasis on agricultural cooperatives (co-ops) discriminates against smaller farmers who are wary of becoming entangled with a co-op. These organizations typically involve a group of farmers who have banded together to command better prices for their crops. While these organizations exist to empower farmers, critics have accused some cooperatives of allegedly mismanaging fair trade proceeds.

How do fair trade advocates answer these charges? Supporters say fair trade was created to improve the lives of laborers; the movement wasn't intended to single-handedly solve global poverty problems. Farmer cooperatives, though far from corruption-proof, give many small farmers advantages they didn't have before -- like access to market information and a voice in their business dealings.

Theoretically, by empowering small farmers and laborers, fair trade can shift the power structure to favor the underprivileged. In addition, as fair trade wages allow workers to get out of debt and improve their communities, they can better position their communities for growth. Fair trade benefits more than 800,000 farmers worldwide [source: Global Exchange]. Certified products continue to appear on more shelves as mainstream acceptance of fair trade brands increases throughout the developed world.

Explore the links below to learn more about fair trade.

Related HowStuffWorks Articles

More Great Links


  • Downie, Andrew. "Fair Trade in Bloom." The New York Times. Oct. 2, 2007.
  • Economics A-Z. "Fair Trade." The Economist. 2008. (May 16, 2008)
  • Economics A-Z. "Free Trade." The Economist. 2008. (May 16, 2008)
  • Fairtrade Labelling Organizations International. "About Fair Trade." 2006 (May 16, 2008)
  • Fairtrade Labelling Organizations International. "Generic Fair Trade Standards for Small Farmers' Organizations." Dec. 17, 2007. (May 16, 2008)
  • Fairtrade Labelling Organizations International. "Shaping Global Partnerships." March 2007.
  • Fair Trade Toronto. "Coffee." (May 16, 2008)
  • Global Exchange. "Understanding Fair Trade." Feb. 5, 2008. (May 16, 2008)
  • Kornell, Sam. "The Pros and Cons of Fair-Trade Coffee." The Santa Barbara Independent. April 5, 2007.
  • Mitchell, Dan. "The Economist on 'Fair Trade.'" The New York Times. Dec. 16, 2006.
  • Shenck, Marcia Catherine. "Criticism of Fair Trade." Mount Holyoke College. Spring 2006. (May 16, 2008)
  • Van Loo, Rory. "How Rich Consumers Are Aiding Poor Nations." The World and I. May 2004. (May 16, 2008)