Free Trade is Fair Trade

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Whereas in Africa people live on less than $1 dollar a day, Europe subsidizes each cow with $2 a day. HIV/AIDS has been a topical issue dominating the agenda of trade meetings and deliberately swaying African countries from key issues such as the United States of America blocking textiles from poor countries and the European Union blocking foods. It is estimated that rich countries spend $ 1 billion per day subsidizing their agricultural sector. A United States of America development expert observed that it is a democratic right for a country to subsidize her products and where possible come up with an efficient way to disburse aid to the poor. The present trend has led to expensive food in developed countries and poorer farmers in developing countries. 50 developing countries heavily reliant on agriculture for a third of their exports out of this 50, 40 depend on agriculture for half of their export earnings.

Concerned with this anomalies, a fair trade initiative was set up to facilitate a better deal for marginalized and disadvantaged third world producers by empowering consumers to take responsibility for the role they play when they buy products from the third world countries. One of the initiatives is focused on ensuring that they bypass exploitative middlemen and work directly with producers, environmental concerns and that big multi nationals respect workers rights. The danger however is that there FAIR TRADE labeling on Coffee, tea, banana, juice, sugar and honey products is creating a new “middle man” for the poor farmers. On top of marketing products basing on pity, it flouts the basic ethics of trade, which is basically a choice driven activity. Farmers will find their products not selling unless they have a “fair trade label” creating a new level of dependency and sustaining farmers deeper into an industry that may no longer be lucrative. Plunging farmers in the abyss of emotions will not help. The question is who will set the fair price?


Trade is a natural, voluntary interaction of people for mutual benefit. Free trade is simply letting people sell and buy without restrictions. People trade because they produce; governments produce nothing save for service to her people and should therefore play a minimal role on trade issues. Free Trade is fair trade because voluntary exchange improves economic progress by promoting efficient use of resources and by providing a continuous stimulus for innovative improvements. The poor of the world have found friends in International Non Governmental Organization that have managed to highlight their plight to the rich nations. Setting up with good intentions, some of the activities of these NGOs have tended to be counterproductive.

Farmers in Kenya have for a long time been battling middlemen who deny them profits and subject them to controls that sometimes kill the very industry they set out to promote. “I want to sell my tea to whoever I want, I want the freedom of choice that is why I sell to ‘Mang’irito,’ convenience and good price is what will drive my decisions” observed David Langat a farmer in Litein when the Kenya Tea Development Authority attempted to bar private tea buyers that attracted farmers by buying tea on the “pay as we pick” basis. In an attempt to discredit the liberalization of this sector, the pick-up boys were nicknamed ‘Mang’irito’ a Kalenjin word for “beastly plucking.”

The most dramatic event was a recent case where a coffee farmer Mr. Moses Mbugua sought to be allowed to market his coffee at the auction but was barred by the Coffee Board of Kenya. This happened despite the fact that the government recently instituted an Act [Coffee Act 2001] that empowers growers to select marketing agents of their choice.

Although Kenyan agriculture is predominantly smallholder, institutions that serve this sector have remained geared towards a large-farm sector as inherited from the colonial government. The government has been slow to dismantle these structures despite their being expensive and unresponsive to farmers needs. The Cotton Industry went down largely because of the Cotton Board inefficiency, recent fiasco at the Kenya Cooperative Creameries disorganized the milk sector, inefficient sugar industry that makes Kenyan consumers to pay up to three times the world price and where farmers bear the cost of losses when companies harvest the crop late has made it difficult for this sector to compete with external markets, institutional struggles within the Kenya Planters Co-operative Union almost derailed the coffee industry making it one of the highly charged politically. The flower industry has specifically given the smallholder farmers a raw deal through exploitation by middlemen and the latest European Union imposition of monitoring of maximum residue limits. [MRL]

Members of parliament and smallholder farmers through Coffee and Tea Parliamentary Association [COTEPA] have continued to express dissatisfaction with the institutional arrangements in this sector. Kenya Tea Development Authority has a legal monopoly and exclusive control over the provision of extension services, planting materials, fertilizers, green leaf collection, quality control and marketing of smallholder tea. KTDA holds up to 75 percent of the payments due to farmers for 4 to up to 16 months resulting in demoralized, cash strapped farmers and over charging on purchases charged to farmers. In some cases farmers opt for Savings and Credit Cooperatives [SACCO Societies], which charge high interest rates resulting in negative payments during the tea payments at the end of the year.

The concerns of fair trade groups is genuine given the fact that farmers in Kenya are disillusioned either because of corrupt officials and or poor policies that seem not to value the producers. Some coffee producers pulled out of the industry and tea and sugar farmers are known to sell the fertilizer supplied by the “do good monopolists.” To simply replace the national “do gooders” with international ones does not help out in the long run. The fair trade initiative will be of great help if it addressed the democratic nature of agricultural subsidies. Sensitize the American and European voters about the impact of their subsidies on the very people they purport to be concerned about and let them vote against this policies that enhance dependency.

They could also use their influence to pressurize governments in poor countries to rethink their policies that make it difficult for their farmers to reap maximum benefits from their products. Let farmers of Mr. Moses Mbugua’s persuasion sell directly to the market, let others join up in voluntary cooperatives to market their products. Above all let the poor farmers have the freedom to choose to stay in an industry or quit if it doesn’t serve them well. To simply advocate for fair prices that will sustain an industry artificially is to imply that people in the poor countries cannot be innovative. Free trade offers more opportunity for farmers and those who may want to move to another trade, it is human and it respects human action.

”’James S. Shikwati is the Director of Inter Region Economic Network [IREN Kenya]. He can be reached at P.O. Box 135 GPO Code 00100 NAIROBI KENYA, Phone/Fax 254-2-2723258, Cell 254-733-823062 or by email at:”’ ”’His Web site is found at”’