Fair Trade labeling can work on a small scale, as a niche market. On the other hand, Fair Trade labels are not the right way to change the situation for the great majority of poor farmers. This is shown in the report What Does Fair Trade Labeling Achieve? from AgriFood Economics Centre, Lund University and the Swedish University of Agricultural Sciences (SLU). Fair Trade labeling is based on farmers receiving a guaranteed minimum price for their production. The problem is that there are no resources to finance, on a large scale, a minimum price that is higher than the world market price – the number of poor farmers is simply too great in relation to the number of well-heeled consumers who can and want to pay more for the food proucts.There are 880 million poor farmers in the rural parts of developing countries, and 1.5 million of them are associated with Fair Trade. This means that this labeling has no chance of truly combating poverty and improving the living conditions of the great majority of farmers in developing countries.
Link