Good as Gold? The Value of Fair Trade

On 31 July 2010 The Independent newspaper reported that the world’s first certified Fair Trade gold was being produced in Colombia. Around 200 families are currently part of the Oro Verde program, which gives producers a 15% premium above the market rate. The program also aims to be ecologically friendly – producers “cannot use toxic products like mercury, must not kill fish and other aquatic species, must restore any layer of soil that is removed and fill it so that it is suitable for replanting.” This approach contrasts with the damage caused by conventional gold mining, which typically uses toxic mercury to separate gold from alluvial sands. Oro Verde won the 2009 Seed prize – sponsored by the United Nations and the International Union for Conservation of Nature (IUCN) – for promoting sustainable development.

A 2008 article by Anne Le Mare reviewed the impact of Fair Trade schemes on the social and economic development of producers. Le Mare notes that the value of Fair Trade schemes depends on observers’ perspectives: a study by Oxfam highlighted improved socio-economic development, including more children in school and greater gender equity, while a study for the UK’s Department for International Development (DFID) focussed on economic aspects, highlighting capacity building and trade facilitation.

Overall, Le Mare’s survey of the literature identifies as common themes a range of individual benefits to producers (including increases in self-esteem, economic position, improved health and better diversification of livelihood); alongside benefits to producer organisations (including increased institutional capacity, and better market access and diversification). However, the studies also suggest that building and maintaining the partnerships and networks involved is difficult and time-consuming, and particularly in a context of volatile commodity prices, marginalised areas need more support from a range of actors, including local and national governments. Le Mare concludes that “”[w]hile Fair Trade has brought positive benefits, it cannot, on its own, solve the complex problems of marginalised areas,” and should be seen as part of a diversified development strategy.