Challenges Ahead for Fair Trade Amidst Growing Demand

The fair trade sector in Germany has witnessed significant growth, achieving record sales figures. However, as the demand for ethically sourced products rises, it faces increasing political resistance. According to recent reports, the total revenue from fair trade products in Germany has surged to approximately 2.6 billion euros, representing an 11 percent increase from the previous year.

Despite this growth, the profits from agricultural products are not reaching the producers, particularly farmers in developing nations. An estimated 80 percent of the revenue from a chocolate bar is retained by industrial manufacturers and retail giants in the Global North, leaving little for cocoa farmers in South America and West Africa. This disparity has long been criticized by organizations such as the Forum Fair Trade.

Andrea Fütterer, the chairperson of the Forum Fair Trade, highlighted that fair trade represents reliability during crises and promotes social and environmental responsibility throughout global supply chains. The demand for fair trade products, particularly those bearing the 'Fairtrade' label, accounts for 83 percent of the total sales in this sector, with coffee and chocolate being the top sellers.

However, specialty shops known as World Shops, which have historically been at the forefront of fair trade, are struggling. Once referred to as 'Third World Shops', these stores have seen stagnating sales, with figures reaching only 79 million euros in 2024, a decrease when adjusted for inflation. Matthias Fiedler, managing director of the Forum Fair Trade, attributes this decline to the concentration of power among a few major grocery chains.

The grocery market in Germany is dominated by just four large retailers, which poses challenges for fair trade enterprises. Fiedler is advocating for intervention from the Federal Cartel Office, especially following a reform in competition law that allows for sector-wide investigations to promote fair competition. This reform aims to address systemic issues within the market that disadvantage fair trade producers.

Fiedler emphasized that fair trade is not solely focused on increasing sales; it also seeks to improve political conditions that hinder fair competition. He has noted a trend of growing disconnection within society, which is impacting support for initiatives such as the German Supply Chain Act and corresponding EU directives.

Unfair competition remains a pressing issue for local fair trade producers, particularly in the food sector where they often rely on a limited number of conventional buyers. These producers frequently face exploitative trading practices, particularly in the coffee sector. While some farmers and cooperatives currently benefit from high global coffee prices, their position within traditional supply chains has not substantially improved.

When comparing Germany's spending on fair trade to other European nations, there is considerable room for growth. On average, a German consumer spends about 31 euros annually on fair trade products, while consumers in Switzerland spend significantly more--approximately 120 euros. This disparity is attributed to the stronger emphasis on fair products by major Swiss retailers.