The sale of Fair Trade products has risen 81 per cent to £493 million since 2006. Rather than representing an ongoing consumer trend in the UK, one of the worries about the rise in the popularity of the Fair Trade product is that it’s trendy to think ethically at the moment – fashions can come and go very quickly.
The Fair Trade brand is just one among a number of ethical trade marks, but the major concern is whether its approach is sustainable for ethical business in the UK. As consumers become wiser about ethical buying, they are likely to make more informed decisions on the products they purchase. In a global downturn, consumers understandably become more price conscious and will look carefully at the brands they buy in terms of cost and approach. Business in the UK will inevitably have to respond to the interests of the consumer.
Fair Trade is a model that offers only a small number of farmers a higher, fixed price for their goods. These higher prices come at the expense of the great majority of farmers who are left even worse off.
The most effective poverty reduction strategy is to support direct investment in developing countries and free trade, which doesn’t establish such barriers. For entrepreneurs that are looking to make charitable investments as part of their business model, they should work to encourage entrepreneurship in the developing world.