Why Fair Trade May Be Our Only Hope

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Fair trade might now be necessary not only as a means of redistributing income, but also to feed the world. For more than a century, pundits have confidently predicted the demise of the small farm, labeling it as backward, unproductive, and inefficient - an obstacle to be overcome in the pursuit of economic development. But this is wrong. Far from being stuck in the past, small-farm agriculture provides a productive, efficient, and ecological vision for the future.

If small farms are worth preserving, then now is the time to educate the world’s policy-makers about the genuine value of small farm agriculture.

How many times have we heard that large farms are more productive than small farms, and that we need to consolidate land holdings to take advantage of that greater productivity and efficiency? The actual data shows the opposite - small farms produce far more per acre or hectare than large farms.

The discovery was first made in 1962 by the Nobel economist Amartya Sen, and has since been confirmed by dozens of further studies. There is an inverse relationship between the size of farms and the amount of crops they produce per hectare. The smaller they are, the greater the yield.

In some cases, the difference is enormous. A recent study of farming in Turkey, for example, found that farms of less than one hectare are twenty times as productive as farms of over ten hectares. Sen's observation has been tested in India, Pakistan, Nepal, Malaysia, Thailand, Java, the Phillippines, Brazil, Colombia and Paraguay. It appears to hold almost everywhere.

The finding would be surprising in any industry, as we have come to associate efficiency with scale. In farming, it seems particularly odd, because small producers are less likely to own machinery, less likely to have capital or access to credit, and less likely to know about the latest techniques.

There's a good deal of controversy about why this relationship exists. The most plausible explanation is that small farmers use more labour per hectare than big farmers. Their workforce largely consists of members of their own families, which means that labour costs are lower than on large farms while the quality of the work is higher.

With more labour, farmers can cultivate their land more intensively: they spend more time terracing and building irrigation systems; they sow again immediately after the harvest.

Another reason for the lower levels of yield on large farms is that they tend to be monocultures. The highest yield of a single crop is often obtained by planting it alone on a field. But while that may produce a lot of one crop, it generates nothing else of use to the farmer. In fact, the bare ground between crop rows invites weed infestation. The weeds then invest labor in weeding, or money in herbicide.

Large farmers tend to plant monocultures because they are the simplest to manage with heavy machinery. Small farmers, especially in the Third World, are much more likely to plant crop mixtures - intercropping - where the empty space between the rows is occupied by other crops. They usually combine or rotate crops and livestock, with manure serving to replenish soil fertility.

Big business is killing small farming. By extending intellectual property rights over every aspect of production; by developing plants which either won't breed true or which don't reproduce at all, it ensures that only those with access to capital can cultivate. As it captures both the wholesale and retail markets, it seeks to reduce its transaction costs by engaging only with major sellers. If you think that supermarkets are giving farmers in the developed world a hard time, you should see what they are doing to growers in the poor world.

As developing countries sweep away street markets and hawkers' stalls and replace them with superstores and glossy malls, the most productive farmers lose their customers and are forced to sell up. The rich nations support this process by demanding access for their companies. Their agricultural subsidies still help their own, large farmers to compete unfairly with the small producers of the poor world.

This leads to an interesting conclusion. For many years, well-meaning liberals have supported the fair trade movement because of the benefits it delivers directly to the people it buys from. But the structure of the global food market is changing so rapidly that fair trade is now becoming one of the few means by which small farmers in poor nations might survive.

A shift from small to large farms will cause a major decline in global production, just as food supplies become tight. Fair trade might now be necessary not only as a means of redistributing income, but also to feed the world.

What is Fair Trade?
The word ‘fair’ can mean a lot of different things to different people. In alternative trade organizations, “Fair Trade” is about more than just paying a fair wage. It means that trading partnerships are based on reciprocal benefits and mutual respect; that prices paid to producers reflect the work they do; that workers have the right to organize; that national health, safety, and wage laws are enforced; and that products are environmentally sustainable and conserve natural resources. Fair Trade is an alternative way of doing business - one that builds equitable, long-term partnerships between consumers in affluent countries and producers in developing regions.