Fair Trade History

The current fair trade movement was shaped in the years following World War II. A number of religious groups and various politically oriented non-governmental organizations (NGOs) initiated the early attempts to commercialize in Northern markets goods produced by marginalised producers.

The Mennonite Central Committee (MCC) and SERRV International were the first, in 1946 and 1949 respectively, to set up fair trade supply chains in developing countries. The products, which almost exclusively included handicrafts ranging from jute goods to cross-stitch work, were mostly sold by volunteers in "ethnic stores" or "charity shops". Internationally applicable fair trade principles hadnt been formulated by then and the goods simply indicated that a donation had been made.

The fair trade movement as we know it today was shaped in Europe in the 1960s. Fair trade during that period was often seen as a political campaign against neo-imperialism: radical student movements began rallying against multinational corporations and the darker side of traditional business models started to emerge.

The global free market economic model also came under attack during that period and fair trade ideals, based on the Post Keynesian approach to economics where price is directly linked to the actual production costs and where all producers are given equitable access to the markets, gained popularity. The slogan at the time, "Trade not Aid", won international recognition in 1968 when it was adopted by the United Nations Conference on Trade and Development (UNCTAD) to put the spotlight on the establishment of fair trade relations with the developing world.

In 1965, the first Alternative Trading Organisation (ATO) was established: the same year, British NGO Oxfam launched "Helping-by-Selling", a program which later matured into Bridge. The scheme sold imported handicrafts in the UK Oxfam stores and from mail-order catalogues with a circulation of nearly 100,000 copies. The program was initiated to support the work of cooperatives and community enterprises in the developing world and it became very successful. It remained one of the largest and most influential in the sector until it was shut down in 2002.

The year 1969 witnessed the opening of the first Worldshop in the Netherlands. The initiative sought to bring the principles of fair trade to the retail sector by exclusively selling fairly traded goods, such as handcrafts, made in "underdeveloped regions". The first Worldshop was run by volunteers and was so successful that a number of similar shops soon went into business in the Benelux countries, Germany and other Western European countries.

Throughout the 1960s and 1970s, important divisions of the fair trade movement strived to find markets for products from countries that were excluded from the mainstream trading channels for political reasons. Scores of volunteers sold coffee from Nicaragua and Angola in Worldshops, in the back of churches, from their homes and from stands in public places, using the fair trade products as a vehicle to deliver their message: give a fair chance to disadvantaged third-world producers on the worlds market, and you will support their self-determined sustainable development. The alternative trade movement flourished, if not in sales, then at least in terms of scores of ATOs being established on both sides of the Atlantic, of dozens of Worldshops being set up, and of well-organised actions and campaigns targeting exploitation and foreign domination, and promoting the ideals of Nelson Mandela, Julius Nyerere and the Nicaraguan Sandinistas: the right to self-determination and independence, to equitable access to the worlds markets and consumers.

In the early 1980s, ATOs faced a major challenge: the novelty of some fair trade products started to loose its edge and demand reached a plateau. The decline of the handicrafts market segment pushed fair trade supporters to rethink their business model and their goals. Also, fair trade supporters during this period became even more worried by the impact of the fall of agricultural commodity prices on poor producers. Many then believed it was the fair trade movements responsibility to find ingenious remedies to address the ongoing crisis in the industry.

In the following years, fair trade agricultural commodities played a vital role in the growth of many Alternative Trading Organisations: successful on the market, they offered a renewable source of income for producers and provided ATOs the perfect substitute to the stagnating handicrafts market. The first fair trade agricultural products were tea and coffee, soon followed by dried fruits, sugar, cocoa, fruit juices, rice, spices and nuts. Coffee swiftly became the main growth engine behind fair trade: between 25 to 50 % of the total ATO turnover in 2005 came from coffee sales.

Whilst in 1992 the usual sales value ratio of fair trade goods was 80 % handcrafts to 20 % agricultural goods, in 2002 handcrafts totalled 25.4 % of sales while commodity food lines were up at 69.4 %. The shift to agricultural commodities was further highlighted in 2002, when Oxfam abandoned its loss-making handcrafts trading program after 27 years of existence. Oxfams move had considerable consequences on the entire fair trade movement. Some ATOs saw this as an opportunity to restructure and collaborate with mainstream businesses in an effort to achieve economic efficiencies and broaden their appeal, while others (such as Alternativ Handel in Norway), unable to adjust to the market and beset with financial difficulties, were forced to shut down.

Today, many ATOs still sell handcrafts exclusively-which they consider culturally and economically preferable to agricultural commodities. Although these are still considered fair trade flagship products, academics have called them a niche market that now only appeals to relatively small segments of the population, chiefly fair trade core supporters who buy products on the basis of the story behind the product.