History of Fair Trade - Handcrafts Vs. Agricultural Goods

Handcrafts Vs. Agricultural Goods

In the early 1980s, Alternative Trading Organizations faced a major challenge: the novelty of some fair trade products started wearing off, demand reached a plateau and some handicrafts began to look “tired and old fashioned” in the marketplace. The decline of segments of the handicrafts market forced fair trade supporters to rethink their business model and their goals. Moreover, fair trade supporters during this period became increasingly worried by the impact of the fall of agricultural commodity prices on poor producers. Many then believed it was the movement's responsibility to address the issue and to find innovative remedies to address the ongoing crisis in the industry.

In the subsequent years, fair trade agricultural commodities played an important role in the growth of many ATOs: successful on the market, they offered a renewable source of income for producers and provided Alternative Trading Organizations the perfect substitute to the stagnating handicrafts market. The collapse of the International Coffee Agreement in 1989 fueled the extraordinary growth of the fair trade coffee market, providing a powerful narrative for a new breed of fair trade brand that engaged producers directly in consumer operations. Cafédirect is a good example of this new thinking and was the first fair trade brand to be found in UK supermarkets. Dedicated to the mainstream, Cafédirect created focused on consumer engagement and language and built a reputation for quality, justifying its premium positioning with the tag-line "We pay more, so you get the pick of the crop".

The first fair trade agricultural products were coffee and tea, quickly followed by dried fruits, cocoa, sugar, fruit juices, rice, spices and nuts. Coffee quickly became the main growth engine behind fair trade: between 25 to 50% of the total alternative trading organization turnover in 2005 came from coffee sales.

While a sales value ratio of 80% handcrafts to 20% agricultural goods was the norm in 1992, in 2002 handcrafts accounted for 25.4% of sales while commodity food lines were up at 69.4%. The transition to agricultural commodities was further highlighted in 2002, when Oxfam decided to abandon its loss-making handcrafts trading program after 27 years of existence. Oxfam’s move had significant consequences on the entire fair trade movement. Some ATOs saw this as an opportunity to restructure and partner up with mainstream businesses in an effort to find economic efficiencies and broaden their appeal, while others (such as Alternativ Handel in Norway), unable to adjust to the market and plagued by financial difficulties, were forced to close.

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