Debunking “Fair Trade” Coffee

In the current issue of The Warrior, an article that the “social justice” crowd here on campus should read.

And take to heart.

But they won’t.

Charles Rickert deconstructs the notion of “Fair Trade Coffee.” After outlining international market forces that forced down the price of coffee, he says:

Enter Fair Trade coffee, the quixotic certification effort with a heart of gold. TransFair USA, the only Fair Trade coffee certifier in the United States, promises farming cooperatives (organized farmer groups, almost like a union) a magnified price of $1.26 per pound of coffee beans ($1.41 per pound if grown organic). The advantage of this price to cooperatives is undeniable. All the proceeds are given to the cooperative and each member receives one vote to decide how the money shall be distributed. Although individual farmers are not guaranteed a definite portion of the revenue, the results of Fair Trade selling are community development, higher standards of labor and lower environmental impact.

To become a certified fair trade coffee grower, farmers must first collectively pay the Fair Trade Labeling Organization (FLO) between $2,000 and $4,000, followed by annual recertification fees. According to TransFair USA’s Web site, these costs can be a “barrier to entry into the Fair Trade system” for small cooperatives but can be partially lowered through grant donations.

While cost is a temporary barrier to Fair Trade, failure to join a farming cooperative is a permanent barrier. The FLO will not certify standalone farms, even if they are family-owned. On the other hand, if your cooperative operates on a tribal basis, like in Africa, you are also excluded from Fair Trade. Only democratic cooperatives can apply.

It looks like we have a large dose of imperialism here.

Self-righteous coffee drinkers in the U.S. are, in effect, dictating to coffee growers in the Third World how coffee production must be organized. No standalone farms. No farms run on a tribal basis. You have to form the kind of cooperative that makes left-leaning Americans tingle with pleasure.

Further discouraging a farmer’s individual initiative is the practice of mixing the coffee beans of one farmer with those of the other members of the cooperative. If Farmer X implements quality improvements to his growing technique, the benefits are muted because his output is combined with that of his peers. Beyond that, it does not matter if a Fair Trade farmer’s coffee is eventually sold by retailers for $10, $15 or $20 per pound, the farmer’s cooperative can and will only receive $1.26 per pound. (Remember, Fair Trade coffee does not put additional money into the pockets of individual farmers, but only into the cooperative and never more than the minimum floor price).

Another criticism of Fair Trade coffee in America is that the social movement has sold out. TransFair USA spent over $1.2 million on marketing and product education in 2004, according to their Form 990. Much of this money was spent promoting themselves to multinational corporations and attempting to convince consumers that it is impossible to be socially conscious without being “Fair Trade.”

Of course, to imply that any product without a “Fair Trade” label must be exploitive is dishonest. In fact, because Fair Trade prices subsidize inefficient suppliers (keeping them in the market), this only prolongs the suffering of farmers who do not qualify for Fair Trade’s rule.

So what about the people who are keen on Fair Trade Coffee?

They tend to oppose policies like CAFTA (the Central American Free Trade Agreement) which would have huge benefits for poor people in Latin America because it’s pro-market and pro-capitalist.

They favor political figures like Hugo Chavez (whose anti-market policies will have the predictable effect of hurting economic development and therefore the poor) because he’s anti-American and anti-capitalist.

The self-satisfied Yuppies (and Marquette future Yuppies) who pride themselves on drinking only Fair Trade coffee are neither intellectually nor morally serious people.