A History of Fair Trade in Contemporary Britain

From Civil Society Campaigns to Corporate Compliance

Matthew Anderson

• Publisher: Palgrave Macmillan
• Year: 2015
• Print ISBN: 9780230303812
• eBook ISBN: 9781137313300
• Topic: Business
• Subtopic: Business Ethics
• Index: Business

This book offers an original contribution to the empirical knowledge of the development of Fair Trade that goes beyond the anecdotal accounts to challenge and analyse the trading practices that shaped the Fair Trade model. Fair Trade represented a new approach to global trade, corporate social responsibility and consumer politics.

1

Oxfam ‘Helping by Selling’: Charity, Trade and Advocacy

The Fair Trade movement has defined itself as, ‘driven more by the desire to make a practical difference to the lives of people’, than by, ‘a need to conceptualise generic solutions to the problems of trade and development’.¹ For an international development agency such as Oxfam, this practical focus on poverty relief has been central to its institutional vision and values, and is enshrined in its charitable objects. But Oxfam’s Fair Trade programme also developed and evolved alongside a sharpening intellectual and political critique of trade and development. Oxfam’s Commercial and Deputy Director throughout the 1970s, Guy Stringer, recognised the potential of Fair Trade as a new form of advocacy.² He argued that ‘it will almost certainly be impossible to dramatically change western-based, capital-serving trade systems merely through critical attack.’³ As Oxfam’s trading operations developed there was a growing belief that its international trading partnerships could be reinvented as a practical demonstration of the possibilities of a ‘socially ideal’ trade system.⁴ Although Oxfam was not always able to articulate a consistent or generic solution, its ambition to offer a genuine alternative to the increasingly dominant free trade, market-led ideology, was fundamental in shaping its involvement with Fair Trade. For Oxfam, Fair Trade offered both a practical demonstration of ‘alternative trade’ and a political challenge to the status quo.

Oxfam, through its subsidiary Oxfam Trading, was directly involved in ‘alternative trade’ or ‘fair trade’ for over 30 years.⁵ During this time Oxfam’s trading model evolved and adapted to take account of commercial pressures, political constraints and shifts in development thinking. By the mid-1970s Oxfam had established a set of principles that would guide its international trading operations and provide a model for Fair Trade. These principles covered four main areas: (1) payment of fair prices; (2) prepayment of up to 40% of the value of the purchase order; (3) distribution of profits in the form of dividends and grants; (4) a programme of producer services.⁶ Negotiating the complexities of international trading, often hampered by limited resources and poor communications, was a challenging operation. And as Oxfam staff were only too aware, ‘the reality does not always meet up to ideals and practising fair trade is fraught with difficulties’.⁷

The history of Oxfam’s involvement with Fair Trade has been a surprisingly neglected field. While many academic studies of Fair Trade include some reference to Oxfam, few have critically engaged with the empirical evidence found within the extensive archival sources. This is a missed opportunity to investigate and contextualise the intense internal debates about the direction and function of its commercial policy. The result is an overly idealised portrayal of Oxfam’s early trading programme and this is particularly problematic when Oxfam is then identified as a potential benchmark to consider contemporary questions about ‘authentic’ or ‘alternative’ Fair Trade.⁸ While Oxfam has undoubtedly played a pivotal role within the wider story of the Fair Trade movement, the existing narrative is too often simplified and therefore overlooks many of the challenges and complexities involved in realising a model of trade that represented a genuine alternative. A detailed historical assessment of Oxfam’s Fair Trade company presents an opportunity to explore a range of discussions that inform contemporary political debates about Fair Trade, such as: How efficient is Fair Trade at delivering international development? Is Fair Trade able to engage with the poorest producers? To what extent is Fair Trade ‘charity’?⁹

Oxfam Trading and the historical narrative of Fair Trade in Britain

The historical narrative presented in the current academic literature broadly argues that the 1950s and 1960s represented a new approach to international trade and that the post-war period was the moment that ‘the concept of Fair Trade began to take shape’.¹⁰ The story of Oxfam’s trading ventures has frequently been cited to illustrate this narrative. Gavin Fridell, for instance outlines how, ‘In Europe, Oxfam UK was at the head of the Fair Trade network. … In 1950 [sic], it began selling crafts made by Chinese refugees, and in 1964 it created its first alternative trade organisation (ATO) to import crafts and commodities directly from artisans and producers in continental Europe’.¹¹ William Low and Eileen Davenport, investigating the ‘alternative’ character of Fair Trade argued that, ‘The principal of linking income generation for marginalized groups through the sale of their own handcraft products had become the dominant paradigm by the late 1950s. Oxfam, for example, used a network of second hand shops to raise money for its relief efforts, and in the late 1950s started to sell crafts made by Chinese refugees alongside second hand goods’.¹²

As has been identified in the accounts above, Oxfam’s international trading can be traced back to the late 1950s when pincushions, made by Chinese refugees seeking asylum in Hong Kong, were brought to the United Kingdom and sold to Oxfam supporters. In December 1964, these relatively ad hoc trading arrangements were formalised with the establishment of Oxfam Activities Ltd. And in 1967 Oxfam’s imports from the ‘Third World’ were consolidated to form Helping by Selling (HbS). While the story is familiar, the retelling of these events, both within Oxfam and publicly, has been affected by a type of ‘institutional teleology’.¹³ This is not an institutional failing of Oxfam per se, indeed research by Tom Buchanan has shown that a certain ‘mythologisation of events’ is commonplace in the foundation of voluntary sector and human rights organisations.¹⁴ The role of the historian is therefore to go beyond the ambiguities of ‘official’ history; but too many academic accounts of Fair Trade have accepted this ‘founding myth’ uncritically.

Some accounts have credited Leslie Kirkley, the then Director of Oxfam, as personally delivering this first suitcase of pincushions and embroidered boxes.¹⁵ However, in reality the story is probably more complex.¹⁶ Following the communist revolution in China, an influx of Chinese refugees to Hong Kong meant that the population of the city had expanded from 1.6 million in 1941 to 3 million in 1960.¹⁷ With many refugees homeless and living in miserable conditions, the Lutheran World Federation Department of World Services established centres to provide food, clothing and vocational training.¹⁸ When the German-born, director of the Federation’s relief work in Hong Kong, Pastor Ludwig Stumpf was invited by Oxfam to speak at the World Refugee Year Conference in 1959, he brought with him a suitcase of pincushions and boxes made by the Chinese refugees.¹⁹ Initially, Oxfam staff showed little interest in these handcrafts. But conference delegate Elizabeth Wilson, one of the founders of Huddersfield Famine Relief Committee, was more enthusiastic.²⁰ She took these items to sell in the north of England and thereafter successfully imported further handcrafts from Pastor Stumpf. It was a further year or two before Oxfam also began importing from Pastor Stumpf. Lynn Ten Kate, a Gifts organiser and later Executive Secretary at Oxfam, was keen to expand the programme and persuaded Jimmy Betts, Oxfam’s first Field Director, to bring back handcrafts including: beads, bowls and ornaments from producers in Southern Africa.²¹

While it is true that the 1950s and 1960s witnessed the formation of new trading ventures run by major charities such as Oxfam, this historical perspective only offers a limited insight into the business philosophy, practices and impact of these trading operations. A starting point for a reassessment of Oxfam’s trading activities is an understanding that buying from producers in the ‘Third World’ does not, in itself, represent an alternative model of trade. And the fact that Oxfam, a charity, owned the trading company is not synonymous with Fair Trade. A more detailed and nuanced assessment is required. For Oxfam, the justification for operating an importing company throughout the 1960s seemed to be a straightforward case of responding to the desperate need for employment that existed throughout the developing world. A campaign leaflet stated that: ‘One in every three people in need of work in the so-called developing countries of Africa, Asia and Latin-America is unable to get a regular job.’²² These sentiments were consistent with the first UN Development Decade’s focus on ‘trade not aid’. But this uncritical stance regarding the mutual benefits of trade with developing countries was not that different to those arguments used by multinational corporations (MNCs) to justify their presence in oppressive regimes including South Africa.²³ A closer evaluation of the terms of trade operated by Oxfam Activities and HbS during the 1960s, reveals a commercial outlook not entirely compatible with modern definitions of Fair Trade.²⁴

Oxfam Activities: Christmas cards and corporation tax

A government review of charity tax exemptions included in the Finance Act of 1965 ruled that charities would be liable for income tax on trading activities, unless they set up subsidiary trading companies which would then covenant to pay profits back to the charity. Oxfam was one of the few charities that had acted relatively swiftly in forming a new trading company. The Guardian reported, in November 1966, that most of the 150 charities selling Christmas cards had not yet set up trading companies and would therefore be liable for 40% corporation tax on their net profits.²⁵ The timing of the formation of Oxfam Activities, in 1964, actually had more to do with the pressure from the Charity Commission and the Inland Revenue, than efforts to pioneer ‘trade not aid’. Many charities resented the pressure to form trading companies. Some charity organisers were concerned that: ‘Once trading companies are organised … charities may be tempted to expand trading beyond the traditional Christmas card.’²⁶ Oxfam did indeed extend its trading activities beyond Christmas cards and its expanding retail programme represented only one sector of its commercial portfolio. Throughout the 1960s and 1970s Oxfam Activities was responsible for the growth of a number of new ventures that aligned commercial consumer services and charitable fundraising for Oxfam.²⁷

Helping by Selling (HbS) was set up in 1967 to coordinate Oxfam’s relatively ad hoc international trading arrangements and was soon able to capitalise on Oxfam’s growing high street presence. Peter Burnell, in his survey of development charities in Britain noted that: ‘The Oxfam shops, which sell Third World handcrafts as well as donated goods, are crucial. Not only do they help shape the general public’s perception of the charity, but they also consistently generate around 30 per cent of its income.’²⁸ Oxfam’s growing network of shops, from only 4 in 1962 to 136 by 1967, were a significant factor in driving Oxfam’s early international trading programme and not only in commercial terms. Maggie Black, in writing Oxfam’s official history argued that, ‘in opting for shops as the fundraising way forward, Oxfam subconsciously made a choice about what kind of organisation it would be in terms of character of its support and broad public perception of its activities’.²⁹ This assessment, often overlooked in academic literature, offers an insight into both the internal challenges faced by Oxfam in balancing trading and fundraising, and the wider public challenge of engaging consumers and charity supporters.

The import programme run by HbS focused mainly on handcrafts that utilized low-level technology and could provide employment for large numbers of people. HbS favoured what it described as ‘appropriate “labour-intensive” rather than “capital intensive” industries’.³⁰ This practical response fitted with the hands-on nature of Oxfam’s charter, ‘When there is so much we can do now we don’t intend sitting around talking about it.’³¹ But beyond the immediate benefits of providing employment, there was only limited consideration of the wider impacts of the business. Issues of working conditions, pay, community involvement and the environment were not directly addressed and therefore effectively remained ‘externalities’.The idea that the 1960s was a time when, ‘Northern ATOs did not seek to make a profit that would accrue to private pockets, but instead sought to cover operating costs and direct all remaining profits into the hands of Southern producer groups’, underestimates the difficulty in making this vision a reality and conflicts with contemporary accounts that describe the challenges faced by ATOs such as Oxfam.³² In 1970 Guy Stringer, the newly appointed Commercial Director, noted his concern that ‘it is necessary to persuade our organisers and supporters to be less worried about the profit from this operation and to see it much more clearly as a form of aid’.³³

By the late 1960s HbS was established as a commercially successful venture and by the mid-1970s had also become an important source of income for Oxfam – representing 47% of Oxfam Trading’s total sales and returning profits of £90,000 on sales of £343,564 in 1974.³⁴ But this level of profitability also strengthened calls from some staff that Oxfam should consider a systematic review of the trading principles and practices of HbS. Although it had set out to assist producers in the ‘Third World’ by developing trade partnerships, there were few guidelines as to how this could be achieved. What was required was a clear framework that would allow Oxfam to assess its own performance and provide greater transparency for supporters and shopper...

Table of contents

• Cover
• Title
• Copyright
• Contents
• Acknowledgements
• List of Abbreviations
• Introduction: A New International ‘Moral Economy’?
• 1 Oxfam ‘Helping by Selling’: Charity, Trade and Advocacy
• 2 Christian Ethics and Economics: Voluntary Organisations and Alternative Trade
• 3 The Co-operative Difference: Co-operation among Co-operatives?
• 4 International Trade Unionism: Labour Solidarity?
• 5 Ethical Consumerism: ‘Shopping for a Better World’
• Conclusion: A New Direction for Consumer Politics
• Appendix
• Notes
• Bibliography
• Index