Farmers from the southern hemisphere benefit from the fair trade movement.
The fair trade movement is a response to the capitalist principles of free trade. The fair trade movement provides the disadvantaged producers with regulations that help them connect and conduct business with ethically-conscious consumers who agree to spend more on a product to alleviate the cost of production and let the producers make a bigger profit and pay higher wages. In spite of its obvious benefits, the fair trade movement can have some negative effects on both producers and the society itself.
Exclusivity
The fair trade movement has been criticized for being exclusionary from both the producers' and the consumers' perspective. Due to stringent compliance rules, many producers are unable to reach and maintain the standards, which puts them in a disadvantaged position in comparison with those that are able to comply. As a result, the producers are often divided into fair-trade ones and non-fair trade ones. Also, since the goods produced by fair-trade producers are priced higher that the non-free trade ones, not every customer is able to afford them.
Dependency on the Richer
Fair trade producers are largely dependent on richer consumers. The requirements of the fair trade production necessitates higher prices that are only affordable to the consumers who are able and willing to pay more for a given product. That is against the fairness premise of the free trade policy, as it does not reduce social inequality.
Cost
The compliance with the fair trade movement's standards and requirements is costly due to necessary additional labor costs, pest control problems and reduction in the size of land that can be used for fair trade farming. Many farmers complain that the requirements do not account for traditional methods of farming, which imposes additional costs on them. The increased costs often do not make up for the benefits of belonging to fair trade production community.
Demand
Critics of the fair trade movement believe that it stifles demand. By offering an ethically-produced product at higher price, fair trade producers put consumers in an uncomfortable situation in which they need to choose between a product that they enjoy and an ethically-produced but expensive product. This makes consumers self-conscious about the choices they make and may stifle their urge to make purchases.
