Fair Trade and cooperatives are natural partners as both aim to promote sustainable well-being of small-scale producers based on democratic and equitable participation by members. Cooperatives are a fundamental part of the Fair Trade movement in that the majority of Fair Trade producers are members of various cooperatives. Cooperative principles meet Fair Trade standards such as freedom of association for members, democratic decision-making and elimination of unnecessary middlemen who reduce producer income. Like the Fair Trade movement, the cooperative movement involves partnership between members in industrialized and developing countries.
The Fair Trade avenue is highly relevant for cooperatives of small-scale rural producers who often work in adverse agro-ecological conditions with limited access to production resources, markets and services. Small-scale agricultural and rural producers now face increasing market competition as a result of farm trade liberalization and globalization which also threatens local control over traditional knowledge. Large-scale international food retail centres are entering national markets and setting variable food standards and prices as well as new marketing conditions that affect small local producers. In addition, developing world agricultural and rural producers face non-tariff trade barriers in developed countries such as food safety, product quality, environmental and labour standards.
As members of a large national or international Fair Trade cooperative network, cooperatives can avoid falling into the so-called “fair-trade trap”, i.e. becoming dependent of a few industrialised country buyers. The century-old cooperative movement is well organized, deep-rooted and wide-spread and Fair Trade networks can benefit from partnering with cooperatives.
There is need for development of Fair Trade knowledge centres to promote information exchange among cooperatives on Fair Trade-related opportunities, capacity building and networking. There is need for capacity building at the local community level for promotion of Fair Trade-based income and employment generation through agricultural cooperatives. A cooperative Fair Trade development strategy could focus on clustering and integration of agricultural cooperative business activities aimed at up-scaling, specialization, diversification of Fair Trade products and services.
FAO-NEDAC Seminar on Fair Trade, New Delhi. (Download Report)