Fair Trade Is Not

I understand fair trade’s appeal.  It’s like buying popcorn from cub scouts, you pay a bit more for something than you would otherwise and you support a good cause at the same time.

But in reality fair trade is even worse than the “buying-stuff-as-a-donation” model.  At least in cub scout circumstance, the messages are clear: Industrious kids working to impress you into pitching in for their cause (and you get a snack with your warm fuzzies).  With fair trade, the message is entirely different: “Because normal market mechanisms have failed, buy this product to preserve justice.” It’s not just a donation, it’s a righteous act.

And that’s what bothers me about fair trade. It is the self-righteousness that the fair trade marketers are appealing to in their customers.  Certainly not all fair trade coffee drinkers are self-righteous.  My hope is–and I’d give even odds–that most think of it more like cub scouts popcorn.  However, the question of justice in determining wages isn’t one as simple as buying more expensive coffee.

Before continuing, let me note as others have said on this topic before me, “We need to be vigilant against exploitative labor practices and slave labor, and for this the Fair Trade movement should be commended.”

However, the fair trade promise is a false hope.  Here is a laundry list of reasons:

1) Fair trade pits the poor against the poor. As the Acton Institute’s Michael Miller explains, “[O]nly certain ‘Fair Trade Certified’ farmers receive higher prices for their beans. This means that other farmers in the area find it harder to compete.”

2) Fair trade encourages the poor to stay in an unproductive market. Economist Paul Collier argues that fair trade effectively ensures that people “get charity as long as they stay producing the crops that have locked them into poverty.”

3) Fair trade doesn’t deal with the real source of low wages. Exploitative labor practices may have a real negative impact on wages, but they aren’t responsible for the lion’s share of wage levels in the coffee industry.  It is simple supply and demand.  As the success of chains like Starbucks created a new demand for premium coffee, suppliers responded by producing more coffee.  Acton’s Jordan Ballor reports, “From 1995 to 2002, according to CoffeeResearch.org and the International Coffee Organization, Brazil increased coffee exports by more than 200 percent.”

These arguments have been rehashed many times before by authors far more expert than myself, but for some reason the realities of fair trade never stick to it.  Fair trade continues to be successful. Andrew Chambers at The Guardian reported on December 12th that Nestle was adding a fair trade logo to its Kit Kat bars in the UK.

Madness.

It is funny that the use of fair trade by major corporations might eventually cause activists to sour on it.  My guess is that few fair trade champions know that Starbucks is the world’s largest buyer of fair trade coffee.

Perhaps I will buy fair trade coffee when I can get it at Wal-Mart (Fun side project: Go search Walmart.com for “fair trade”).  That’ll be a sure sign that this false hope for change will have run its course.

4 Comments

  • Avatar
    December 22, 2009

    Nathan

    Your dismissal of Fair Trade Coffee left a bitter aftertaste in my mouth.

  • Adam D'Luzansky
    December 22, 2009

    Adam D'Luzansky

    Glad to hear it! A strong flavor is a sign of a good brew. It also means that it wasn’t watered down with any pansy sweeteners.

  • Avatar
    May 22, 2010

    justinvlg

    It seems to me that you have skewed view on Fair Trade, and its objectives, altogether.
    Fair Trade is not discouraging “normal market mechanisms” from playing their part. Quite to the contrary, normal market mechanisms have encouraged suppliers to drive down costs; look for cheaper alternative, take advantage of lower wages in economies and countries of lower economic development, exploited people with no choice about their jobs and encouraged sweatshops and child labour.
    It is these normal market mechanisms that have allowed third world producers to be exploited in the past. This is no longer acceptable, the increased availability of information to the public through the internet, has made the public aware of the inhumane treatment, and working and living standards of these producers. The public is now aware of these poor business practices. It is for this reason that Fair Trade is beginning to grow, the public is taking a stand against cost driven products that take advantage of those people who have no choice. The public is growing rapidly aware, and making a statement. Fair Trade is here to stay, and prosper, so you should take your views and reconsider your opinions. The world is changing and you need to understand this.
    Some points you made are, perhaps, a little biased:
    • Fair Trade pits the poor against the poor
    o While this is true to some extent; fair trade producers are given a better wage for their efforts, and so those producers not under the “fair trade” distribution channel lose out. Well, they may lose out, and choose to close down. But this is exactly what we are looking at encouraging, we want producers to receive a decent wage for their days work, and those not under fair trade are not receiving that.
    o Also note that by giving these producers a higher income; they have more to spend in their community. They can afford to buy food, clothing, health care and education. They have more income with which to invest in better technology or a larger workforce; encouraging the industry to develop and grow. For those with even the simplest understanding of economics, understand that there is a trickle-down effect of this increased income, as initial increase in earnings gets passed onto one member in the community and then another and so on. So there is a multiplied effect of that fair price, lifting more than just a producer’s welfare but a community’s.
    • Fair Trade encourages unproductive practices by producers to take advantage of their charity.
    o I can assure you that every extra cent received by a producer and the workers will be put to good use. The consumer behaviour in such poor regions is significantly different to those we have grown up with. We have always had prosperity relative to these regions. We fulfil our needs consistently, and more often than not we fulfil our wants as well. Money is so rare in these regions, that behaviour is different. People are thrifty and stretch their income to the fullest extent. Many will merely satisfy their needs, with no excess going towards wants. Their motivations lie strongly with improving the way they live, and they often are motivated solely with the goal of sending their children to school.
    o Fair Trade provides communities with money to improve the way they live, their motivation, their productive capacity and the well-being of their children. People aspire to do better, and with that in mind will try everything to better their situation putting money to good use; investing in their communities or their businesses. These people do not perceive their earnings as charity from the world, merely as a lifeline. They are not of the mind-set that they will lose out if they do better. They want to do better and earn their living.
    • Fair Trade does not deal with the real source of low wages
    o As a matter of fact, that is exactly what it does. It ensures fair wages are given. As mentioned before, low wages were the result of a cost driven market, and corporations seeking to maximise profit. Supply is determined by costs, any person with the most basic understanding of business or economics knows this. Thus, if the only option for corporations is to pay a higher cost, they will either reduce supply or pass on the additional costs to consumers. This is the reason why many Fair Trade products are slightly more costly, so that the consumer is given the choice to support ethical business practices in play.
    o Regardless of whether supply is increased, the producer is getting a fair wage, and increased earnings. He is not being exploited. He can sustainably support himself and his community.
    I would also like to mention that Fair Trade products encapsulate a whole lot more than coffee, chocolate, and tea. A lot of unique craft products are produced every day, as well as clothing, jewellery and stationery. Many of these products have been severely marginalised in the past, and fair trade is fixing this problem. The public is becoming increasingly aware of the value of these products as unique, meaningful gifts.
    A final question I wish to pose to you, Adam. If we give the opportunity to these third world countries to develop and grow, they will expand their industries and gain earnings that could give them substantial buying power on world markets. Note that, currently, one third of the world population accounts for 3.2% of the world consumption (The State of Consumption Today, Worldwide Institute, 2008). If that one third of the world were to grow sustainably and gain purchasing power, this would facilitate a huge growth in the world economy (albeit, this may pose some serious problems). Also, these markets can develop enough to realise their real competitive advantage and gain in independence enough to warrant the removal of the label and ideology of “Fair Trade”. This is the end goal of Fair Trade, a world which acts ethically and purchases with consideration for their producers. Fair Trade won’t be here forever, it won’t be needed for ever. But, it is needed now, so it is here for now.

  • […] Ignorance is not Bliss! Filed under: Vital Gifts by Justin Scott — Leave a comment May 22, 2010 I was doing some reading last night and I came across a blog about someone’s view on Fair Trade: http://humanepursuits.com/2009/12/18/fair-trade-is-not/. […]