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Fair Trade – A rip-off or not?

09 May 2012

Fair Trade organizations around the world have been criticized for being a rip-off exploiting the kindness of people. We found out, what’s the situation in 2012 in Finland.

Statistics revealed

During 2011 Finns spent 100 million euros in total in products under the Finnish Fair Trade brand, Reilu Kauppa. Reilu Kauppa reports having paid roughly one million euros of “Fair Trade extra” to the developing countries. In other words, one percent of the total price of the product has been paid for the the stated purpose.

One percent is an alarmingly low amount. The good news is that the percentage of the whole price of the product is not the most relevant issue. The key thing is how big a portion of the increase in price caused by the Fair Trade label goes to charity.

The Fair Trade portion of the price

Our own recollection was that 20 % of the price of a product carrying the Fair Trade label would be because of the label. If this was correct, only 5 % of the extra price paid by the consumer would reach its destination. 95 % would vanish somewhere along the way.

To find out the actual numbers, we decided to compare the prices of the most common Fair Trade product: bananas. A series of visits into the supermarkets in Helsinki center proved, that the recollection wasn’t far from the truth.

At its highest, 8 % of the price increase caused by the Fair Trade label went to charity. At its lowest, only slightly over one percent. In the latter case part of the increase in price was due to the organic production methods.

Where has your money gone

If you bought a hundred euros worth of Fair Trade bananas in Finland in 2011, you funded the activity of Fair Trade by approximately 13 to 16 euros. Of this 12 to 15 euros Fair Trade and other organizations kept themselves. One euro they paid to the developing countries.

More in terms of charity can be achieved by avoiding Fair Trade products and donating the saved money to charity.

Sources

The paid leaflet “Hyviä Uutisia! – Reilun kaupan äänenkannattaja” (Good News! – The fair trade proponent), Metro newspaper 7.5.2012

Prices were verified by in-store visits on 8.5.2012.