The Fair trade movement started around 1964 and since then it has evolved to become a large worldwide value chain organization that trades in diverse products from 800 organizations and a million small producers, from southern countries to developed countries. A large value chain structure that includes cooperatives, certifier organizations, social banks, roasters, wholesale buyers and retailers.
In this article we argue that at the regional level, and particularly in the case of Nicaragua and Central America, fair trade organizations around coffee are undergoing a process of regression in the last 10 years, despite or possibly precisely because of its success in terms of trade volume as well as significant international donor investments in fair trade-related higher level cooperatives. Based upon original qualitative research and the scrutiny of a myriad of quantitative primary data obtained from our deep involvement with cooperatives in Nicaragua and Central America, we see that while transparent and democratic organization is pursued, real world structures tend toward just the opposite.
More importantly, we also demonstrate that the lack of transparency, accountability and effective governance structures ends up blocking small producers’ access to better prices for their products as well as other theoretical advantages of fair trade (e.g. credit), thereby also impeding improvements in their productivity and sustainability, and ultimately reducing the support for the cooperative organizations, thus undermining the whole fair trade solidarity movement in favor of social and environmental justice. Among other things, we present analysis of the distribution of value added within the chain, the widespread practice of side-selling by members, as well as the practice of cooperatives buying coffee from non-members; the use and abuse of technical coefficients in cooperative coffee processing plants; dubious commercial arrangements of cooperatives with private traders.
Besides presenting our analysis of the current involution process and its consequences, we also reflect on what the fair trade organization could do to redress these negative, threatening evolutions and restore the original principles and practices of the fair trade movement. In response to that regression, we propose a path toward the re-invention of the fair trade movement.
Key words: fair trade, rural societies, mechanism, movement, institutionalization, intermediation, Central America
8. Social enterprises, sustainable transition and common goods
6EMES_Mendoza_Bastiaensen_Re-inventing-FT-CentralAmerica.pdf 