2023-12-19 19:20:42
Despite high inflation on food products, fair trade has held up in France. Many consumers remain committed to making their purchasing actions responsible, but they hardly realize that in reality, the bonuses granted to better remunerate producers are far from being able to bridge the income differences that exist between farmers around the world. For the same work, a producer from a poor country earns 70 times less than a producer from a rich country.
These differences fundamentally lie in considerable differences in productivity. How, in these conditions, can we ensure fair remuneration for farmers’ work if their products are paid at the same price? Certainly, regaining market power against the giants of the cereal trade or the large coffee and cocoa traders is a useful option that fair trade promotes, but the challenge is to modify the way of calculating the price, so that it is fair – that is to say it integrates the right to fair remuneration, to a preserved environment and to a decent standard of living. It is particularly at the heart of requests from African countrieswho hope by February 2024, when the 13e ministerial conference of this body, developments in the rules of the World Trade Organization (WTO) with regard to agriculture.
Two partial answers
The income gaps and the miserable conditions of many farmers, particularly in the South, raise questions about the foundations of such unequal remuneration for agricultural work. Fair trade and other forms of income support for farmers are intended to be answers, but these remain limited.
The promoters of Fair trade are committed to partnership standards with today more than 3.5 million producers across 84 countries around the world. They play on the fact that in certain sectors, coffee for example, it is possible to multiply by 3 or 4 the price paid to the producer with an increase of only 15 to 20% of the retail price. This leverage effect may seem attractive to ethical consumers ready to make a financial effort. However, these more expensive labeled products take on the characteristics of a luxury good: they remain niche products whose sale depends on consumers enjoying a high social position. Any expansion to other buyers would result in a drop in prices.
Public policies to support agricultural income, for their part, have been the traditional paths taken by States to support farmers, whether through direct aid or price regulation systems. They are often coupled with market management policies and customs protections. They inspire proponents of neoprotectionism, particularly in Africa, who see it as a means of supporting agricultural income by protecting themselves from fluctuations and the low level of world prices. Today, customs tariffs in Africa remain low, less than 15%. Furthermore, can protective measures be enough to close the considerable income gap that exists between the world’s farmers and which lies in the enormous differences in productivity between farmers?
The weights of the most productive countries
According to World Bank data, the richest 10% of countries produce agricultural value added per worker 70.4 times higher than that of the 10% poorest countries. This measure includes differences in income support but they remain minor ; added value therefore reflects productivity. This means that because a farmer will have taken 70 times longer to produce the same product due to lack of favorable conditions, he will receive a remuneration for his work 70 times lower than a very productive farmer as long as the product is paid at the same price. .
However, international agricultural markets are dominated by high-income countries : they are the ones who have the highest agricultural labor productivity and who can more easily export their surpluses. They easily compete with substitutable products from low-income countries.
International prices are thus set by the farmers with the highest productivity and sometimes incorporate aid from their States (for storage, export or production) which increases supply and facilitates sales. Other producers must align themselves to either sell internationally or remain competitive in the face of competing imports: wheat from Russia, Ukraine, Argentina or the EU vis-à-vis local African cereals, bananas. from Ecuador versus those from West Africa for example.
This moves away from the commonly held idea of fairness. The question of fair remuneration for agricultural work must therefore be addressed through a more general reflection on prices and therefore the rules of trade.
The single price, a dogma to be reviewed
For the World Trade Organization (WTO), a transaction is fair if it follows a non-discriminatory procedure which can be reduced to two principles : equality of opportunities for access to the market for all actors and, once the market has been entered, equality of opportunities to respond to demands. However, in reality, the least efficient farmers find themselves receiving lower remuneration for an effort equal to those of the most efficient. Furthermore, access to land and financing for farmers in the South and farmers in the North is different. A procedure deemed fair by the WTO actually creates a situation that creates income inequality since products are paid at a single price.
Taking into account the negative externalities linked to agricultural production could already renew the discussion of the fair price. For example, there are studies on hidden societal and environmental costs of some agricultural sectors – such as café where the cacao. They show how the price considerably undervalues the real value of production: no consideration of the cost of CO emissions2 or water consumption, social conditions and decent income… Sustainable practices would divide hidden societal costs by 2 to 6. Quantifying the negative externalities of agricultural production invites us to question the price of economic justice, which guarantees the rights to a preserved environment, to a decent standard of living and which does not jeopardize the quality of life of future generations.
The discussions around the Carbon Adjustment Mechanism at the borders of the European Union had highlighted the obsolete nature of WTO agreements, who defend the laws of a market indifferent to the social and environmental costs of commercial activities. It remains to modify the concept of dumping carried by the WTO. A draft decision carried by the United States in December 2020 proposed:
“The failure of a government to adopt and enforce laws and regulations that provide environmental protection at or above basic standards will constitute an actionable subsidy. »
The proposal targets social and environmental dumping which could give rise to an import tax on this product. Ultimately, it is the notion of a single competitive price, supposedly guaranteeing (commercial) fairness, which is being called into question even within the WTO. It is opposed to that of a price which would ensure fair remuneration for work and would therefore guarantee fairness consistent with human dignity as expressed in the Universal Declaration of Human Rights.
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