Why is DFID not doing more to support the Fairtrade Foundation?

Related pages: Millennium Development Goal 8: Aid, Trade, Growth | White paper speech on growth and poverty reduction (19 Jan, 2006) | Back to Fair Trade Fortnight 2006 | Fair Trade factsheet

The UK government is a strong supporter of fair trade products. They help farmers and other producers earn a decent living and get more of the final value of their product.

Many government departments, including DFID, use fair-trade tea and coffee. DFID supports fair-trade certification schemes and has given over £1million to the Fairtrade Foundation

There are now over 400 producer groups who spread the benefits of fair-trade to around 5 million people in developing countries.

A good example of how fair-trade helps is the Kuapa Kokoo cocoa growers in Ghana. The farmers own a stake in the Day Chocolate Company that makes and sells Divine chocolate and receive a share of the profits from the sales of Divine. Read our feature on Towards a better deal on trade (March, 2006) for links to this and other case studies.

There are now over 800 certified fair-trade product lines and sales are growing. In 2004 the estimated UK retail sales of fair-trade products was £140 million, about a 50% increase on 2003. This makes the UK the largest market for fair-trade in Europe.

DFID recognises the significant role that Fairtrade has had in raising awareness of the development issues surrounding commodities trade. However, the UK market for fair-trade products is still small compared to overall retail sales. Fairtrade remains only part of the solution to the complex problems surrounding commodity price fluctuations and market access for poor producers.

Many Fairtrade activities are still supported by donors and, although many have been very successful, lack sustainability. These activities include the development of the FT label, marketing campaigns, and in some cases, price subsidies. The challenge is to reform to the pattern of trade in ordinary markets. This will encourage more businesses to adopt similar practices and benefit more small-scale producers.

Developing countries say that supermarket standards can be even more exacting than official standards. The Commission for Africa report explains how this can lead to the exclusion of small farmers and the concentration of business in the hands of large firms.

• Read our Fair Trade factsheet

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What is DFID doing about improving the role of agriculture in poverty reduction?

DFID launched a new agriculture policy in December 2005. This highlights the importance of agriculture for poverty reducing economic growth in developing countries. High value fruit and vegetables offer potential for growth where demand is strong. However, these markets remain relatively small with low growth potential. DFID recognises that local and regional markets, particularly for staple grains, will provide greater opportunities for many poor countries.

To help implement our agriculture policy DFID will be working with food retailers and others to help create opportunities for producers in developing countries to participate in export markets.

DFID also supports work to increase the participation of developing country producers and companies in agricultural exports from Kenya, Mozambique, Tanzania and South Africa.

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