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Markus Raschke

Fair Trade at a Crossroads?

Position-fixing between Niche Existence and Mass Market


From: Stimmen der Zeit, 11/2010, P. 743-752
webmaster's own, not authorized translation


    The idea of fair trade in Germany has its origin in an initiative of church youth organizations. MARKUS RASCHKE, expert on educational questions, advisor to the FAIR Handelshaus Bayern eG, and is in charge of fundamental questions in the Archdiocesan Youth Office of Munich and Freising, portrays the history of the movement and outlines possible development scenarios in view of the current global economic challenges.


In the center of Fair Trade is the partnership with groups of people who are marginalized by the global trade in goods. It sees itself as an alternative approach to the current world trading system and wants to produce more justice in the world economy by supporting small-scale producers in developing countries. Its instruments include the fair remuneration of employees, ensuring decent working conditions, long-term relations of cooperation, the circumvention of "exploitative" structures (i.e. structures producing discrimination), and a number of additional services which are to enable small farmers and small artisans from developing countries better to participate in the global market. Fair trade, while unconsciously yet nevertheless consistently following the theory of development of the Indian economist and Nobel laureate Amartya Sen, tries to optimize by means of corrective interventions the functioning of markets in favour of these producers that are disadvantaged in the world market.

Unlike other initiatives, Fair Trade does primarily not lobbying but is involved as commercial player. As a biased market participant, interlinked with critical consumers, Fair Trade wants to show new paths to an economy that is determined by ethical and solidarity-based options. Fair Trade organizations admittedly formulate regulatory requirements for a framework that sufficiently takes account of the participation opportunities of developing countries in the world market, in line with promoting development and poverty reduction. But the mainspring of the Fair Trade movement is to achieve by means of trade in goods effective improvements and concrete development steps on the producer side.

Nevertheless, it must be noted critically that in the first three decades (1970-2000) this action was too much limited to a social and economic niche. In the following, after a brief historical review, I will therefore try to find out what has shaped the development of this approach and whether the current transition to a Fair-Trade industry offers a promising scenario.



From Action to the Market

In Germany the idea of Fair Trade originates in an initiative of church youth organizations. They understood the "Action Third World Trade" launched in 1970 as an action-oriented model for educational work on issues of development policy. Youth groups were called to sell at bazaars craft products "from the Third World", in order to inform themselves and others about the problems of development. With "Indian Coffee" from Guatemala and the action "Simba Singa Tea", one focused on global [weltmarktrelevant] consumer products, in order to facilitate the communicating of global economic problems. From 1978 on, the action "jute instead of plastic" gained renown. Jute bags became the paragon of an alternative lifestyle, which saw the interconnection between development and environment problems. In the wake of the leftist Sandinista revolution in Nicaragua, in the 80's "coffee from Nicaragua" became a political commitment and a symbol of a new social order.

Although since the mid-70s a number of so-called alternative import organizations were founded - to date GEPA, El Puente and dwp are the most important ones - and until by 1990 about 550 volunteer-run world shops and 5000 action groups emerged, the initiative continued moving in a market niche. The question of cooperation with the representatives of conventional trade structures therefore became pressing. With the founding of the seal organization TransFair e.V. in 1992, an important prerequisite for access to the mass market was created: an independent product label. Concomitant with the introduction of the label the term "Fair Trade" was born.

The new competition in the supermarkets spurred the World Shop movement to profiling and professionalization. With processed products the import-organizations offered a wider range of products, and in the volunteer-run World Shops the actions and political campaigns have been intensified: Whether banana campaign against EU regulation, "Made in Dignity" for decent working conditions, food sovereignty of developing countries - there was no development policy issue too complicated for them to carry it to the street or to put it in the shop window.

In the past five years, Fair Trade has experienced a new and enormous boom: processors, supermarket chains, discounters and multinational food companies have discovered Fair Trade. They subjected some of their products to the criteria and the control of the meanwhile international Fairtrade label, or even introduced their own Fair Trade brands. Since 2005, sales growth ranged annually between 22-38 percent, and since then the number of supermarkets offering Fair Trade products rose from 24.000 to over 30.000. Provided the announcements of multinational coffee and candy companies have to be taken seriously, they will offer in the coming years far more products with the Fairtrade label.



Fair Trade as Solidarity Movement

This outline of the history of Fair Trade {1} shows that a campaign of church organizations initiated a solidarity movement which in turn through growth and differentiation at last led to changes towards a market sector of its own. Let us first have a look at the movement character of Fair Trade.

The key points of social movements include a collective actor, permanence, and far-reaching goals. Their aim is to change social or other framework conditions or to prevent such changes. Further features include a low role specification, variable forms of organization and action, a high symbolic integration, and the mobilization of support. Without being institutionalized in a single organization (and thus to dissolve as a movement), a social movement forms its own organizations. These contribute - on the basis of a division of labour and partly competing with each other - to the achievement of the target. The movement is also in contact with other organizations. It is able to mobilize them for support, but without allowing them to become carrier of the movement {2}.

Distinctive mark of a movement - and thus in contrast to single-issue groups - is the fundamental nature of its objectives. The Fair Trade movement tries to achieve them at two levels: on the one hand by information and creation of awareness, and by trading and selling on the other hand. The Two Pillars Theory of education and sales {3}, which was already early set up by the "Aktion Dritte Welt Handel", has its theoretical background in the effort of social movements to mobilize people and, as public dimension, in their orientation towards actions.

With the duality of awareness-raising and selling, the Fair Trade movement has developed a modus vivendi. It was thus able to compensate for the precarious state of resources, typical for social movements, by public-oriented actions. Mobilization - and this, too, seems typical of social movements - in terms of content relies admittedly on "ad extra", though it socially unfolds its strength above all "ad intra". This can be seen also from the educational work in Fair Trade. It calls for a clear external orientation, although it became particularly effective inwards, namely among the committed people {4}. Also the organizational structures in Fair Trade clearly reflect the approach of social movements. In addition to the associations of the movement, as e.g. import companies, seal initiative, grassroots groups and their associations, we find "mobilized associations". They were important mobilizing players for Fair Trade or even initiated this action resp. movement but did by no means merge in the movement.



In the second and third decade of the Fair Trade movement, the cooperation of 'mobilized associations' and associations of the movement can be characterized above all as a conflict trap. However, from a theoretical and temporal distance it applies that 'mobilized associations", such as the church aid agencies and youth associations have substantially shouldered the building of the associations of the movement. They have thus made an essential contribution to the institutionalization of Fair Trade and have enabled the development of a (temporary) action to an (unlimited) solidarity movement. At the same time, the importance of the grassroots organizations of the movement must not be underestimated. For they are the mother soil, without which no movement would have sprung from a campaign. Thus, the conflict-laden interaction has finally to be regarded as the positive reason of the achieved social rootedness.


Two Social Backgrounds and an Old Conflict of Objective

The Fair Trade movement originates in both the churchly and in the student milieu. This explains its socio-structural heterogeneity. Already in 1976 Franz-Josef Stummann observed accurately and at the same time instructively a differentiation within the Third World movement. He distinguishes between groups and representatives of an "Integrated Action Third World" who support in agreement the work of relief organizations and supporters of a "critical action Third World" who disassociate themselves from official institutions and aspire to a "New Society" and "correct consciousness" {5}. This sociological division explains finally the conflict as regards the vision within the Fair Trade movement, which took often a highly conflictual course between the poles of changing or overcoming the system.

The highly-charged internal debate about the "real solidarity" runs like a thread through the history of the Fair Trade movement since the early 70's until today. Whether in the assessment of the relationship between education and selling during the action "jute instead of plastic" end of the 70s, in the debate on the most effective form of support for the Sandinista model of society in Nicaragua in the 80s, or in the debate about the political correctness of cooperation with the conventional trade in the early 90s, resp. with discounters and multinational corporations in the past decade - the question of priority between educational mandate and expanding trade and the area of tension between ideological correctness and economic orientation were found to be fundamentally insoluble, although the balance pragmatically shifted constantly in favour of the latter.



However, the lines of conflict shall not be glossed over belatedly. They are finally responsible for ensuring that Fair Trade far too long remained in a niche existence, and that the mobilization of the population for its concern was neglected due to internal squabbles. Perhaps the Fair Trade movement has thus contributed to the fact that today commercial companies have sufficient potential to supply with goods an ethical market segment that has now become attractive. On the other hand, the orientation towards selling and revenues, which latently gained eventually priority, has also neglected the economic, social and consumption-critical actions. With it the Fair Trade movement, probably rather unintentionally, let new globalization-critical campaigns and networks, such as Attac have the place. These keep up now the social and political debates around the world, which in the 80s and 90s were at home in the German-speaking world shop scene.


Wish and Worry: Overcoming the Niche Existence

The leading development perspective and vision of the Fair Trade movement was for a long time to find the way out of its niche in market and society. However, this concern was both wish and worry. Besides the conviction of one's own ideas, the longing for recognition found expression in it. But the way into the mass market demanded (and demands to date) compromises and decisions that large sections of the movement could make only with gritted teeth. The cooperation with supermarkets, with discounters and multinational corporations meant always also to cooperate with those who had been made responsible for situations of injustice and exploitation and who thus indirectly were the reason for one's own commitment.

At the same time, however, the solidarity movement failed (and fails) to recognize that its vision to make Fair Trade a serious economic factor requires a consistent impetus for growth - prior to other goals and methods. This meets admittedly with broad approval - in the sense of an improvement in living conditions as extensive and noticeable as possible and the producers' access to markets as well as in the horizon of a just world trade order. However, in its 40-year history the Fair Trade movement has insufficiently learned to cope with its reservations regarding free riders, the possible dilution of its principles, or the risk of losing its credibility - and not per se to associate new actors with those risks.



In view of such concerns it should be recalled that Fair Trade has not been founded as a company, not as a product brand, and not as a trade chain but as a solidarity campaign, out of which distribution and import companies, brand label, and retail trade (World Shops) developed. The solidarity action became a continuously operating social movement, one of its features is pluralism. Seen from this perspective, free riders would not be "wrong" but self-realization of the pluralistic nature of this movement; it would be an opening of the idea beyond the traditional milieus.


On the Threshold of the Fair Trade Industry

The efforts to extend trade and to "conquer" the market in the various stages of the Fair Trade movement lead to the assumption that such a development will lead to a change towards a trade sector. This does initially not correspond to the traditional industry classifications, but it is nonetheless compatible with the usual descriptions, according to which a group of companies that manufacture or sell similar products or provide similar services are subsumed under the concept of sector or industry. The development of the Fair Trade movement towards a fair trade industry is on a line of continuity - not only with regard to winning as many as possible "fair" consumers, but also concerning the charter of Fair Trade.

In the history of Fair Trade there are three major anchor points for it: first, the a priori resulting organizational division of the retail level (world shops) from the import and wholesale level (GEPA, El Puente, dwp), secondly the opening for the conventional commercial structures, deliberately aimed at, by the introduction of an independent label award (TransFair), and thirdly, the (ensuing from it) professionalization efforts of the world shops. This, taken together, can be understood as a normal differentiation and profiling of functions within a market sector.

Such a process of change may initially trigger fears in the original, politically and solidarily motivated circles of Fair Trade, but on the other hand it also means opportunities - in the sense of the movement. These must be clearly distinguished and assessed. For a Fair Trade industry where also in this country increasingly more people want to earn their living would certainly lead to an increase in revenues and sales in the interest of producers; it does not contradict the spread of a fair consumption but can advance it. In the sense of "help through fair trade" this corresponds to the decades-long concern of the Fair Trade movement.



Anyhow, the change towards an industry sector would entail a changed role for the volunteer work, especially in the field of (churchly) action groups, and so perhaps also in the field of awareness-raising work {6}, because an industry-like development could also mean a further professionalization and profiling in Fair Trade's information, education and campaign work. It is nevertheless questionable, to what extent its character will be changed by a possibly necessary economic viability which will influence its decisions. In the worst case developmental awareness and information on product and producer could degenerate to a mere advertisement for buying Fair Trade products. However, this is not an inevitable scenario. It can rather be expected in a positive way that it is possible to communicate via relevant advertising channels and messages the concerns of the Fair Trade movement to a broader target audience, both in theory (awareness-raising) and in practice (determining our buying behaviour) {7}.


Challenge: Mastering Change

Basic trends such as the moralization of markets {8} and the orientation of lifestyle towards health and sustainability (LOHAS), which expressly include also Fair Trade {9} suggest that the growth trend in Fair Trade has not yet reached its apex. Market research data from 2009 {10} show that there is still an unreached "potential of buyers". Despite a significant shift from non-buyers-sympathizers to occasional buyers, the group of those who do not buy the products but regard the idea as worthy of support includes 29, 7 percent of the German population. It is therefore in the same range as those 30.7 percent who buy occasionally (several times a year) or regularly (at least monthly) fair products.

The expectation of a continuing growth trend is a major challenge for the Fair Trade movement - not only because every kind of growth process has to be mastered. There is a fundamental pressure to change on the movement. In particular, because the demands placed from outside on Fair Trade as a social movement are continually rising: through growing social acceptance, increase in public and media attention, and not least in the economic area through sale, trade and marketing. The voluntary work is especially affected from it, because a significant readiness for change is required to be able to keep up with the requirements. On the other hand, the external pressure cannot be reduced by ignoring it or by assessing it pessimistically. The scope of this pressure for change can be outlined on the example of Fair Trade in the U.S., where the Fair Trade label of "radical solidarity movement" has meanwhile developed to a "mainstream trend" in retail trade {11}.



The Downside of this Development

The fact that also those Fair Trade organizations which have been active for decades can only partially participate in this development is of importance for development policy. They stand in a special way for cooperative trade and long-term development assistance, because they are not only interested in selling the products but also in development and change as regards their partners in the countries of the South. That's why they did not confine to fulfilling the criteria for labels but dealt flexibly with the conditions of the producers.

The negative effects of such growth processes are reflected in the practice of the partners in the South. Small producer organizations, still in the development stage, are in danger of failing to meet the needs of a fair trade-mass market with large quantities, professional requirements, efficiency requirements, and a consistently high product quality. But Fair Trade has been established in order to create opportunities especially for disadvantaged small-scale producers. There is increasingly criticism by long-standing producer organizations. They fear that inexperienced and small organizations could be marginalised even within the Fair Trade industry.

Solidarity with small farmers has hardly priority for multinational corporations. What matters for them is the participation in an increasingly attractive ethical market. This in itself would not be the problem (and to be motivated by reasons of humanity should not be denied on principle also corporate managers), as long as the market pressure has not the result that the setting of standards, the monitoring of labels, the choosing the producers, and the relations with suppliers are only orientated towards the wishes of influential and affluent customers and marketers. In some cases, the reports of representatives of producer organizations about this are already very critical, and this should rightly be carefully monitored and accompanied by the solidarity movement.


Identity Conflict: Alternative or Model?

Besides the fact that the Fair Trade movement is trapped in its social background, the study "Development Effects of Fair Trade on Development Policy" diagnosed ten years ago an unresolved or ambiguous construction of identity:



"The demarcation of Fair Trade cannot be explained by a psychologically comprehensible (self-)limitation to one's own milieu, but it essentially results also from a conceptual ambiguity which, in short, reads 'Fair Trade as an alternative or a model'." {12}

In the so designated area of tension it is about the question of whether Fair Trade sees itself rather as a model applicable to the conventional trade or whether it is downright an alternative to the conventional market. Is, what matters, that a trading system is practiced which is self-contained and has its own criteria, logics, actors, structures and roads, hence a system that precisely by this exclusivity expresses its exemplary character and therefore calls the dominant trading system into question? Or is, what matters primarily, that the conventional market is imbued with the requirements of a fair and equitable business practice and with Fair Trade products, and that it is possible to prove that Fair Trade, even under normal market conditions (and not only in the special area of an alternative model) is a practicable and realistic alternative?

In other words: Is Fair Trade essentially a symbol of a more equitable world economy, or is it its instrument? In the latter case, the conquest of distribution channels and market shares would be the unavoidable necessity in pursuing the goals of Fair Trade; in the first case, precisely this could mean a violation of its symbolism.

In this question of identity, however, the market development has deprived the Fair Trade movement of the decision-making power. Due to the fact that the players in conventional trade increasingly take possession of Fair Trade and (in the future) will also economically dominate it, the option of an "alternative to the existing trading system" will resolve itself, and the absurdity of the idea of a "symbol for change" could virtually be demonstrated. The other option, to be a model and instrument of a fairer world trade, is nonetheless also no automatism. It is possible that in future a new configuration of the tasks is deduced from it - between the Fair Trade movement and the Fair Trade sector: here the industry which economically and commercially operates Fair Trade, and there the movement which critically accompanies and supervises the industry with regard to the effects of its economic activity on development and equity. This would, at a different level, correspond to the well-known task sharing between business and NGOs.

In order to avoid this future scenario of the Fair Trade solidarity movement, it is necessary that both volunteers and professionals re-think the question of by what means they want to counter the creeping loss of market share in the booming Fair Trade market. Otherwise, the repeatedly feared disintegration of Fair Trade movement and Fair-Trade industry might be inevitable.




{1} See S. Stricker, Weltweite Gerechtigkeit konkret. Die fast dreißigjährige Geschichte des "Fairen Handels", in: HerKorr 50 (1996) 362-367. For a detailed historical account in Germany, see M. Raschke, Fairer Handel. Engagement für eine gerechte Weltwirtschaft (Ostfildern 2009) 37-158; for Switzerland: K. J. Kuhn, Fairer Handel u. Kalter Krieg. Selbstwahrnehmung u. Positionierung der Fair-Trade-Bewegung in der Schweiz 1973-1990 (Bern 2005).

{2} See J. Raschke, Soziale Bewegungen. Ein historisch-systematischer Grundriß (Frankfurt 1985) 77,205; D. Rucht, Modernisierung u. neue soziale Bewegungen. Deutschland Frankreich u. USA im Vergleich (Frankfurt 1994) 22,76f.

{3} See M. Raschke, Entwicklungspolitische Bildung im Fairen Handel. Selbstverständnis u. Perspektiven, in: Praxis Politische Bildung 7 (2003) issue 4, 274-281.

{4} See M. Ramminger u. L. Weckel, Dritte-Welt-Gruppen auf der Suche nach Solidarität (Münster 1997) 72f.

{5} F.-J. Stummann, Aktion Dritte Welt. Eine Fallstudie zur "entwicklungspolitischen Bewußtseinsbildung" der Jugend (Frankfurt 1976) esp. 109, 169, 254f., 286.

{6} About it in detail, Raschke (note 1) 461-486.

{7} About the movement-specific interaction of education, advertising and political campaigns in Fair Trade see Raschke (note 3) 278-281.

{8} See N. Stehr, Die Moralisierung der Märkte. Eine Gesellschaftstheorie (Frankfurt 2007).

{9} E. Wenzel, C. Rauch and A. Kirig, Zielgruppe LOHAS: Wie der grüne Lifestyle die Märkte erobert (Kelkheim 2007) 103-107.

{10} See V. Lübke, Marktforschungsdaten zum Fairen Handel 2009, online auf ‹›.

{11} A. Nicholls & Ch. Opal, Fair Trade. Market-Driven Ethical Consumption (London 2006) 142; quoted from Fair Trade. The challenges of transforming globalization, ed. by L. T. Raynolds, D. Murray & J. Wilkinson (New York 2007) 24.

{12} Entwicklungspolitische Wirkungen des Fairen Handels - Beiträge zur Diskussion, edited by Misereor, Brot für die Welt and Friedrich-Ebert-Stiftung (Aachen 2000) 287.


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