The iniquity of Fairtrade

Crap weather in a beautiful place has meant that I have caught up on some of my blog reading.

I was intrigued by an article in The Australian about a couple of academics taking issue with Oxfam's Fairtrade programme. Their argument is simply that Fairtrade is unsustainable and ultimately does not help the coffee growers. They have largely based their arguments on an article in The Cato Journal - the house magazine of the Cato Institute, a Washington based, pro-free market, anti-regulation think tank. Given the politics of the journal, it is safe to assume they were never going to support Fairtrade subsidies.

Whatever the politics, the fundamental point is still a strong one. As with all forms of subsidy, Fairtrade creates a false market and raises income expectations to unreasonable levels. The current system also prioritises supply over demand, there is no incentive to keeping supply down, rather the more there is, the more producers know they can sell. Clearly nature puts a limit on supply, but nonetheless the subsidy creates an unreal market. When you consider further the failures in policing the Fairtrade label as demonstrated by The Financial Times, it raises the questions whether Fairtrade is really little more than a way for latte lovers to assuage their guilt, or is it another way for anti-corporate groups to kick up more of a stink, or does it actually help the producers?

The main issue I have with Fairtrade is that there seems to be no programme to transition the growers from subsidy to free market, with the inevitability that it continues ad infinitum. If producers and their farmhands were earning living wages then maybe you could argue it has its benefits, but as the FT article demonstrates, that is not the case and anyway what is a living wage? As the Cato Journal article notes, Fairtrade makes no stipulation about what the coffee farmers should earn individually and often what they earn is paltry, as this post on the New Scientist blog demonstrates.

It would seem therefore that Fairtrade isn't helping those it is meant to. It is fair to assume that those buying believe they are doing good, but haven't done much investigation into how quantifiable that good is. It is also safe to assume that those promoting Fairtrade feel good about themselves. If they are a big corporate they must be making a profit, or hoping to, if they are an anti-globalisation organisation they are no doubt feeling self-righteous. Where does that leave the little guy?

Hat-tip: Coffee Ratings

Comments

[Doug]

Well said. Its quite a difficult situation we've gotten ourselves into. The problems likely started when we destroyed any concept of local agriculture and started operating on a global basis.

Farmers have historically been poor - the notion of endless subsidies keeping them afloat is surely not a solution. In all likelihood, neither is single crop farming.

[johanna]

i have a similar issue with food miles - another buzzword of the decade. the issue being that while you might affect the environment by having food shipped from, say, NZ, their farming is in many instances way more energy-efficient than home-grown crops, off-setting the energy wasted in shipping.
And if we all started buying truly local, going to pick our own veggies at a farm in surrey, and buying our eggs from the chicken lady in chiswick, etc, we will harm the environment even more than just doing one trip to the market or even having it delivered to our doorstep in a low-emission van.
it's doing my head in, really.

[Silverbrow]

I agree with both of you. Food miles particularly get my goat. With the exception of some, it is amusing how many UK chefs keep relatively quiet about it. Afterall, for the top end ones, they largely rely on food being shipped in from all over the world.

Food miles is another way for us to feel less guilty.

Don't get me started on organic produce either, just a way for the Soil Association to fleece gullible consumers out of hard earned cash.

[johanna]

good point, actually. organic farming uses 3 times more land than more extensive ways of farming... so healthy or not, it'll only ever be available for the few who can afford to buy it. if everybody wanted to go organic, we'd have outgrown our planet already as not enough arable land is available...

[Trig]

I can't agree with you on this. Certainly there are issues around fairtrade and organic food and no shortage of people willing to exploit a good idea for their own benefit. And you are right when you say that fairtrade is not a long-term sustainable economy. But it has already lifted thousands of families out of poverty brought about by countries like ours controlling their markets in the same way we used to control their lands.

Eventually fairtrade farmers will have to compete effectively or we will go back to the kind of economy that failed with the collapse of communism, but you can't compete in an unfair market. I need to be convinced that there's not enough ground for organic farming - after all over 3/4 of all the food currently produced by intensive means is thrown away.

I do agree with you on food miles. I've been guilt myself of being smug at my adventurous choice of ingredients without thinking about the cost of transporting them across the globe to my house. But don't you think it might be better to make such arguments when you are back home, rather than having flown half-way across the planet on holiday?

Just jealous, really.

[Silverbrow]

Trig, unfortunately what you say doesn't stand up to evidence. Everything I have read and heard about Fairtrade, does not suggest that thousands of families have been lifted out of poverty. At best, it seems to help some families out. But even these limited successes are in peril as the big multi-nationals like Nestle muscle in, the smaller growers have even fewer chances for improving their situation. I'd be interested to see any independent evidence you have on its successes.

As for food miles, what I choose to do with my time is my money and you seem to have missed the point. I was criticisng as was Johanna I believe, those who witter on incessantly about the good they are doing by buying food from the allotment down the road. As you should well know, in the top restaurants that simply doesn't wash. You get the best ingredients you can, however you can.

[Stempel]

Anthony, first it's great to see you and the 'Browess are having a great time in South America. Keep up the reports - Pee and I are exceptionally jealous!

Second, I am 100% with you on Fairtrade. It makes no economic sense. It is unsustainable. Yes, it has lifted some families a little way out of poverty, but by and large those are the families that could make the transition to other crops or other forms of income without the help of subsidies. It's noticeable that most Fairtrade coffees come from (relatively affluent) Latin and Central America rather than (devastatingly poor) Ethiopia, which is where most of the cheap Robusta coffee is grown (so I understand).

I have a lot of time for the Rainforest Alliance, who I think give sensible business advice and loans to farmers but don't subsidize their inefficiencies. That's the correct way to get them into a more profitable crop, not artificially increasing the demand cost.

Anyway, enough already. Enjoy your travels.

[Silverbrow]

Cheers for the good wishes, we're having a great time. Maybe you, P & Y will have to take 5 wks off as well.

Anyway, I agree with everything you say, as ever.