Fair trade?

posted 03 February 2004

(from the blitz list, #1 of many)

Timothy asked:

Can someone explain why everyone is jumping up and down about wanting this fair trade stuff?

You always read articles talking about how coffee market prices are so low that all these farmers end up selling the coffee for less than it costs to grow it. They imply that somehow this state of affairs is the fault of the developed consumer countries and that we should feel guilty about this and buy the more expensive "fair trade cofee".

But presumably this means that some coffee growers can afford to sell at this market price - or else the price would never get this low - and the others should quit making coffee and go do something else? Or is there actually some way that the evil starbucks & co manage to force all the growers to sell for below their cost price?

The students of edinburgh university recently voted by a very high margin to make edinburgh the UK's first fair trade university that will only sell fair trade drinks and food in its outlets wherever possible. Is this a steep thing to have done or is it dread?

To which I responded, and was subsequently backed up by Ed and Raymond:

The idea behind fair trade coffee is this: because competition in the coffee-growing world is fierce, coffee growing companies (who are Big Corporations™ and therefore automatically evil in the eyes of the people who tend to like Fair Trade stuff) sell coffee very cheaply. In order to still make a profit, therefore, they pay their employees very low wages (often remaining below the poverty line), or if they buy their coffee from independent farmers, they tend to pay them very low rates for the coffee (less than it costs them to grow).

So far, all of this is just market forces at work. If coffee is too cheap, you're right, the farmers should stop growing it or grow it more efficiently (perhaps by becoming part of a larger plantation, but good luck getting a good price selling your farm to them...). Where the problem arises is that for a lot of these people, options for other means of income are few or non-existent: the coffee industry tends to dominate the area as the only employer, and there is generally no labour shortage so unionising for better wages is also ineffective.

So the situation ends up as: rich white people cruise into Starbucks and pay a price for a single cup of coffee that's equivalent to a month's earnings for the really poor brown person who grew it. Despite this being market forces at work, it's kinda hard not to feel guilty about that as you sip your moccha latte. Fair trade tries to solve this problem by guaranteeing that these workers are paid a living wage (however low that might be) which assuages our middle-class guilt, while at the same time it means coffee growing corporations get to sell coffee at a higher margin than usual, so the coffee companies also skim a little extra money off the top (which is why they agree to Fair Trade in the first place).

The reason this is probably dumb is because all it does is perpetuate the coffee-growers' hold on life for these people. It doesn't solve the basic economic problem that there are too many people and not enough jobs. If we really wanted to help these people, the extra money we pay for Fair Trade would go into investing in the area and creating new industries to make use of the labour surplus. But -- surprise! -- coffee growers aren't too interested in schemes like that.

But in the end we're not interested in solving problems. We just want to pay 10p extra for our coffee-sans-guilt.

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