Fairtrade certification in Latin America: Challenges and prospects for fostering development

Fair Trade critiques historical inequalities inherent in international trade and promotes the wellbeing of disadvantaged producers in the Global South. This chapter analyzes Fairtrade International certification and its efforts to foster development particularly in Latin America. Fairtrade certification originated in the labeling of coffee produced by Mexican cooperatives. Although Fairtrade now encompasses 20 certified commodities produced in 53 countries which generate US$ 8 billion per year, Latin America remains the locus of production and coffee the most important product. The chapter outlines Fairtrade’s successes and challenges in seeking to promote rural development in Latin America. In the short term, Fairtrade promotes wellbeing and empowerment by guaranteeing favorable prices for farmers, better wages for hired laborers, and a social premium to support community development. Yet we argue that potentially more significant is Fairtrade’s long term impacts in promoting development though the capacity building support it provides to producer groups. As we demonstrate, a central way in which Fairtrade International enhances development is by facilitating the availability of credit. In addition to mandating that buyers provide pre-financing, Fairtrade certification enhances producers’ access to ethical and commercial lenders. Fairtrade International has collaborated with ethical credit organizations to launch the Fairtrade Access Fund, a new source of long-term credit for producers on Latin America. Though by no means a panacea, we conclude that Fairtrade provides an important avenue for helping to foster development in Latin America and around the world.