Fair Trade for Coffee May Be Good, But…

Michael Giberson

Fair trade for coffee is good, but many readily available alternatives may be better. “Better” as in, better for the producer and better for consumers. I was browsing the website of a local specialty coffee roaster, and noticed the “Ethics” labels on the products: “Premium price” and “Farm Gate”, but not “Fair Trade.” Curious, I thought.

Looking around the website, the “About” page had a clue:

There were some things we were certain about.  … The coffee had to be ethically sourced.  Fair Trade isn’t always so fair, and we strive to make sure that the farmers who grew our coffee were paid at least, but usually more, than the Fair Trade minimums.

The roaster’s blog revealed more: “News: Fairtrade is accused of doing less for coffee farmers than Starbucks.”

The post links to a Gaurdian (U.K) news story discussing a report by the London-based Institute of Economics Affairs. The key problems identified, highlighted in the roaster’s blog post, are: high overhead keeps some of the poorest coffee farmers from Fair Trade certification; Fair Trade is not about quality of products, just price and production conditions; Fair Trade certification works with organizations, like co-ops, but not individual farmers, and Fair Trade premiums paid to the organization may not reach farmers. The IEA report offers more details.

IEA is a free-market leaning think tank, and Fair Trade proponents frequently frame their efforts as morally superior to ordinary market outcomes. One might expect IEA to slam Fair Trade rhetoric. A Financial Times columnist finds that the report “is more nuanced than that.”

[Author Sushil Mohan] accepts that a Fairtrade buyer is, like any other consumer, simply making a choice. “Fairtrade rests as much on market forces as conventional trading does,” he writes. “Fairtrade works not because it subsidises goods no one wants, but because some free market consumers are willing to support it.”

Yet overall, Mohan concludes, Fair Trade seems to be more about catering to the attitudes of western consumers than about improving the lives of coffee producers. Perhaps it yields some good for some producers, but the benefits are surely tiny in comparison to the good that good ol’ free trade is doing for coffee producers. Given that reality, the report suggests there is no reason for school systems or others to succumb to Fair Trade lobbying.

Earlier fair trade coffee commentary at Knowledge Problem:

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