Trade policy | Fair trade faces political headwinds

It's not the producers of agricultural products who make the big money. This applies to many German farmers as well as to farmers in the Global South. Nevertheless, many everyday goods that consumers buy are expensive, and not just perceived. According to calculations by the television network ZDF, food prices in Germany have risen by around 40 percent over the past five years.

The actors in the supply chains, however, – between farmers and local buyers – are the ones who generate the most revenue. The German Federal Ministry for Economic Cooperation and Development estimates that around 80 percent of the revenue from the sale of a bar of chocolate goes to industrial manufacturers and trading corporations in the northern hemisphere. This is bad news for cocoa producers in South America and West Africa. The Fair Trade Forum (FFH) has long been a critic of this development. At the same time, this global imbalance continues to motivate the umbrella organization of world shops, fair trade companies, and fair product labels.

The industry looks back on a very successful year. With an increase of eleven percent, total sales of fair trade products in Germany reached a new record high of approximately €2.6 billion. Sales have more than doubled over the past decade. "Fair trade stands for reliability in times of crisis and for social and ecological responsibility along global supply chains," said CEO Andrea Fütterer during the FFH's annual press conference this Thursday in Berlin.

In light of the climate crisis, growing inequality, and social division, reliability is more important than ever, especially for farmers. Best-sellers are Fairtrade-certified products, which can be found in almost every supermarket. They account for 83 percent of total sales. The highest sales are generated by coffee and chocolate.

World shops and world groups are struggling. These specialty stores—formerly known as "Third World Shops"—are considered the nucleus of fair trade. The first stores opened in the early 1970s. At that time, young people in particular protested in several countries against the growing injustice in global trade. A new political movement had emerged. Today, there are 900 world shops in Germany, and thousands upon thousands of people volunteer their time there. In 2024, sales reached €79 million. But they have been stagnating for years and, adjusted for inflation, have even declined.

FFH Managing Director Matthias Fiedler blames the concentration of power in the brick-and-mortar food retail sector, saying it is controlled by four corporations. Fiedler is now counting on a response from the Federal Cartel Office. Since a reform of competition law in 2023, the authority has been able to gain a precise picture of entire economic sectors through a so-called sector inquiry. Until then, it was primarily possible to conduct individual case investigations. Following a sector inquiry, targeted measures are possible to ensure fair competition.

"The idea that humanity benefits from deregulation is unfortunately experiencing an economic revival."

Matthias Fiedler Fair Trade Forum

Fair trade is not just about increased sales, but also about the political framework, Fiedler emphasized. He observes a "disintegration of solidarity" in society. The German Supply Chain Act, as well as the corresponding EU directive , are under pressure. "The idea that humanity benefits from deregulation is unfortunately experiencing an economic revival." For many companies, this creates a competitive disadvantage. They try to comply with human rights and environmental standards of their own accord, while companies that don't care about standards incur lower costs.

Unfair competition is a problem for many local Fair Trade producers in the food sector, including in Europe. They are often dependent on a few conventional buyers and are exposed to unfair trading practices and price gouging. This is the case, for example, in the coffee sector. While farmers and cooperatives currently benefit from high world market prices for coffee, their precarious position in the conventional supply chain has not changed, criticizes the Fair Trade Forum. "Our trading partners therefore primarily want more stability and larger sales through Fair Trade in the future."

A look at neighboring European countries such as Switzerland, Austria, and France shows that there is still plenty of room for improvement in sales in Germany. The average German consumer spends €31 per year on fair trade products. The wealthier Swiss, on the other hand, spend 112 francs, or around €120, on the same amount. The Swiss market is dominated by just two major players. However, the cooperatively organized Migros and COOP traditionally place greater emphasis on high-quality, fair trade products than German providers.