Fair trade: quality, market and conventions

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Abstract

This article analyses Fair Trade, its evolution and the challenges it faces, in the light of the convention theory and its application to the ambit of agro-food.

The article reviews the different meanings and models of what has come to be called Fair Trade, since its beginning as alternative trade, considered as the prototype of a “civic coordination”, to its insertion into the large distribution channels through the labeling strategy, that is, when it is reinforced by “market coordination”. It discusses the possibility of Fair Trade being re-absorbed by the market logic and captured by the dominant actors of the food system who, attracted by its success, have already adopted strategies to win the promising niche market for themselves, while producers preoccupied with the struggle for survival and looking for the possibility of increasing sales volumes, require to move beyond the limits of marginal distribution circuits and to enter the market full steam.

To counter this risk, one key element in strengthening Fair Trade is to empower the label as a base for network legitimacy and a product of social interaction. This means to reinforce the civic coordination by public authority through the state recognition and the institutionalization of their symbol. On the other hand, it is important not to lose sight of the social interactions on which Fair Trade was built and of the importance of mobilizing them, since those who control the mechanisms of this social interaction have the power to impose their legitimate vision of the quality. In this sense, the article integrates the issue of power largely forgotten in the studies on quality.

Introduction

This paper discusses one of the alternative agro-food networks, Fair Trade, which is an experience in progress. This network links producers of the South with consumers of the North and attempts to help the producers elude the full weight of the market forces. The existence and the operation of this network exemplify the limitations of the paradigms of neo-classical (or standard) economics in explaining economic behavior in general, and agro-food markets in particular, and reveal how the actors adjust their economic decisions in the framework of mechanisms of coordination and institutional agreements. These agreements or coordination articulate, beyond individual decisions based on prices, by reference to quality criteria and common systems of evaluation: the definition of quality requires, in fact, a coordination among the actors, which is operationalized by institutional devices (Sylvander, 1995, p. 171).

To study the case of Fair Trade, its evolution, and the challenges it faces in its attempt to win space in the market, our framework draws on convention theory and its application to the ambit of agro-food, mainly following the works of Thévenot, Valceschini, Eymard-Duvernay, Sylvander, Thiébaut, but also other authors who have embraced these contributions, such as Wilkinson.

Building on the foundational work of Boltansky and Thévenot (1991), convention theory attempts to introduce sociological considerations to economic analysis (Rallet, 1993). According to the theory of conventions, quality is one of the spheres in which economic activity is regulated by procedures that go beyond regulation by price (Sylvander, 1993). Contrary to the neo-classical theory in which the prices mechanism encapsulates all the required information about a product (Wilkinson, 1997), the theory of conventions perceives quality as the fundamental concept for the analysis of economic life, as well as being the key axis of current competitive strategies (idem) in this post-Ford period. At the same time that we observe deregulation policies in the agricultural sector, re-regulation appears in other spheres of the sector, specifically in concerns about health, food and environment (Watts and Goodman, 1997, p. 13). All of these questions articulate around the diverse senses of quality (Regnier (2001), [19]Renard (1999a)). Quality is an endogenous social construct that contributes to coordinate the economic activity of the actors. It can be constructed by two routes: the introduction of collective institutions that establish rules for quality and the means to uphold them or the acknowledgement of forms of local ties among actors that allow them to communicate and negotiate. In reality, these two routes often cross (Sylvander, 1995; Murdoch and Miele, 1999).

Justified agreements are defined as situations in which, to mobilize others (in the economic field), an actor must provide justified arguments that refer to common principles (Eymard-Duvernay, 1995, p. 45), which are common systems of evaluation or grading. These common principles can be of different orders, called by French authors “les grandeurs,” and translated as “worlds” in English (Wilkinson, 1997). The actors coordinate themselves by reference to these common principles, and each “world” has its specific mode of evaluation of quality such as the product standardization found in the “industrial world” of mass production and the more personalized and place-based ties of the “domestic world” (Wilkinson, 1997).

Several authors contributors to convention theory identify the existence of six types of conventions, arising from the six types of justification that serve to coordinate action; these justifications were elaborated originally by Boltansky and Thévenot (1991). In our paper, we will adhere to Renard (1999b), Sylvander's (1994) application to the agro-food sector, where he distinguishes between four ways to define quality:

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    Industrial coordination, which rests on standards, norms, objectivized rules, and testing procedures.

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    Domestic coordination, based on face-to-face relations, on trust of people, places or brand names.

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    Civic coordination, which rests on the adherence of a group of actors to a set of collective principles; it structures its economic relations: Fair Trade is the prototype of this coordination.

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    Market coordination, or coordination by market laws, basically through the mechanism of prices.

Today, we observe the advance and proliferation of the industrial-market type conventions. Nevertheless, the devices of coordination are varied and offer possibilities not only of commitment, but also of tension among these diverse orders (Thévenot, 1992). Products of a specific quality that rest on “domestic coordination” (such as those linked to a specific regional origin), or “civic coordination” (such as organic products), require institutional certification1 that guarantees its quality, thus giving way to an industrial-type imperative, the objectivization of quality. Once defined, this certification leads to industrial product standardization (Sylvander 1995, p. 174, 179). In addition, as the consumption of civic quality products increases, it may be necessary to reinforce weak civic coordination with market coordination (Thiébaut, 1995, p. 131). Although the strategy of differentiation involving the adoption of quality labels allows actors to avoid price competition among identical products (market coordination), the trivialization of labels and other symbols of recognition may lead to their re-absorption by market logic. Specialists in marketing make strategic use of other “qualifications” to produce symbols when they presume a tradition, foster confusion among labels, or invent ecological seals above and beyond the particular regulatory bases and technical norms of these worlds (Thévenot, 1992). This reveals the danger of reducing the qualification of the goods to simple symbols.

Today, many cases can be found to illustrate the strained relations between domestic coordination and market coordination. For example, the denunciation by advocates of market coordination of the products labeled by Denomination of Origin, as in the case of the French A.O.C. system, and protected by regional legislation (Thiébaut, 1995). In the same way, commitments between the civic and market worlds may be subject to intense strain since, by definition, they are contradictory: civic qualification rests, in fact, on values that imply severe criticism of the benefits of the market (Thévenot, 1992).

All of this implies that quality is not simply a dimension of competition, but an object of collective understanding and negotiation (Valceschini and Nicolas, 1995, p. 30). However, when speaking of coordination, there is the danger of forgetting that, even when talking of consensus, power relations do exist and are expressed in the organization of the institutional framework which channels confrontation among particular interests (Linck, 1999, p. 20). Confrontation is channeled, but it does not disappear. Building relationships of coordination is not exempt from tension. Power is, however, largely forgotten in the studies on quality (Deverre, 1995). As the case of Fair Trade reveals, behind the management of quality2 lie the question of the legitimacy of their symbols and the mechanisms of control over the interactions that produce them.

We begin with a review, inserted into historical diachronics, of the different meanings and models of what has come to be called Fair Trade.

Section snippets

The alternative trade: a civic coordination

The word “alternative” was used to denote difference. Alternative trade operates under a different set of values and objectives than traditional trade, putting people and their well-being and preservation of the natural environment before the pursuit of profit. Alternative trade …tends to distribute the products through the alternative distribution channels of World Shops (IFAT).

The organizations that promote alternative trade, as we know them today, emerged in the 1960s in the context of

Fair trade labeling: the strengthening of a civic coordination by the market

The first fair label,4 with the name Max Havelaar, was created in the Netherlands in 1988 after a long discussion within an NGO over how to respond to a very concrete petition from a Mexican cooperative of coffee producers, who requested help in marketing their product in Europe. This reflection led to an analysis of the concrete limitations of alternative trade as it existed at that time. Although this type of trade

The success of Fair Trade

The strategy of placing products with the label of guarantee on the market has resulted in spectacular growth of “fair” trade: in Europe alone sales were 250 million dollars in 1995 (EFTA, 1998).

All of the products with the equity label have registered, in a greater or lesser measure, advances in the different countries where they are sold. In Denmark, for example, sales of equity coffee have grown 20% yearly (Belling, 2000). In Great Britain, Cafedirect grew by 55% in 1998 alone7

An inherent contradiction of the model: the compromise between civic and market coordination

Though blurred by the uniform term, “Fair Trade,” tension remains between two visions: one, a more radical conception that sees “fair” trade as a tool for modifying the dominant economic model, and the other, more pragmatic, that emphasizes the insertion of products from the South under fair conditions in the markets of the North (Raynolds, 1999). For the first group, more politically and ideologically linked to militant movements, the label is merely a tool of transition, and the challenge

Is fair trade being reabsorbed by the market?

The concern that Fair Trade is being reabsorbed by the market is not idle speculation but rather is sustained by the growing interest of certain sectors of food production and distribution in fair trade.

Indeed, the success of Fair Trade Labeling in developed countries is attracting dominant actors in the food system, who have already adopted strategies to “get on the bandwagon”. This may be done either to counteract the impact of fair trade on their sales by launching campaigns to confuse

Empowering the label, professionalizing certification: to reinforce fair trade by industrial coordination

It can be considered an achievement if large operators participate in the fair trade initiative without eroding the legitimacy of the label, its meaning and the certifying organizations. On the other hand, isolation in marginalized circuits also adds to the danger that large operators will launch their own “fair” brands, creating doubt among the consumers. The dilemma is a difficult one to resolve. It is essential to ensure that the label is clear, that the guarantee represents what it says it

The challenge: to strengthen social and symbolic capital

This market niche is distinguished by its emergence from the mobilization of the associative sector and is sustained by public opinion.

Fair Trade symbolised by the label produces interactions. As the sum of collective practice, it constitutes a network and produces identity. Its power clearly emanates from the social relationships that sustain it, which are its social capital, and from the strength of the label, its symbolic capital. It is about power which springs from the creation of social

Conclusions

Fair Trade is an example of how economic relationships do not necessarily eliminate the possibility of cooperation among its agents to construct rules and mobilize collective resources: coordination among economic agents is not founded exclusively on relations of free competition nor on the mechanics of classical economic paradigms (Linck, 1999, p. 15).

Fair Trade products represent a market niche based on the image of solidarity with small producers of the Third World and equity in trade

Acknowledgments

This article benefits from the comments and the language corrections of David Goodman.

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