A report by the Adam Smith Institute (ASI) claims that fair trade is one big marketing scam that benefits only a few farmers who are offered higher prices for products. Though fair trade among British shoppers is on the rise, the ASI report titlted Unfair Trade claims many Mexican farmers reap the benefits of fair trade though Mexico is considered a relatively developed country. Few farmers in developing countries such as Ethiopia are helped by fair trade practices. The report also says the about 80 per cent of produce sold by certified farmers ends up in non-fair trade goods and the producer only receives about 10 per cent of the premium paid by consumers.

The ASI's policy director, Tom Clougherty, said: "At best, fair trade is a marketing device that does the poor little good. At worst, it may inadvertently be harming some of the planet's most vulnerable people. "If we really want to aid international development, we should instead work to abolish barriers to trade in the rich world, and help the developing world to the same. Free trade is the most effective poverty reduction strategy the world has ever seen."

Harriet Lamb, director of the the Fairtrade Foundation is fighting back, saying that fair trade practices are effective and will continue to grow and benefit more farmers as it progresses.

"Fair trade is already making a big difference to the lives of more than seven million people in the developing world, but there are millions more we'd like to reach. 2007 was a phenomenal year of growth for fair trade bananas, for example, with one in every five bananas bought from supermarkets now Fairtrade certified. On the other hand, this means four in five bananas still aren't fair trade, and we're determined to change those odds."

» Guardian