How “Fair” is Fair Trade?
March 24, 2009
hmuller370
Despite the benefits that Fair Trade gives to producers around the world, there are several arguments against Fair Trade.
To begin, the article “Fair trade is unfair” argues that “a very small number of farmers are getting a subsidised fixed price for their produce under Fairtrade franchises, and that this is at the expense of most other farmers in their regions, who are actually worse off as a result” and “the Fairtrade operation helps keep poor countries and undeveloped economies exactly that — poor and undeveloped.” The article’s solution for the development of these countries out of poverty is through free trade and not through Fairtrade. Although this article brings up some good points, Fair Trade was not made to be the answer to poverty in underdeveloped countries or to all the problems in world trade; it was created to prompt companies, individuals, and everyone ”to do something to make the world fairer,” a quote from the Executive Director of the Fairtrade Foundation. It may be true that the prices for products from Fair Trade farmers might negatively impact other farmers in the same region, but those other farmers have the option to be Fair Trade certified themselves or to find a different occupation, perhaps a more ”modern economic activity”(proposed by the article) that they can benefit from.
Another problem with Fair Trade posed in our own Daily Evergreen in the article “Fair Trade Isn’t Fair for All along Production Line” deals with the fact that distributors are required to pay a 10 cent premium on the Fair Trade price. The article claims that “higher prices attract farmers to stay in an unsustainable system.” Therefore, if coffee is unsustainable at the current price, the producers will be unable to sell all of their products because at higher prices, the demand for the Fair Trade coffee is lower. However, I do not completely agree with the article because the purpose of Fair Trade is so that individual consumers can contribute to the fair prices received by the producers for their goods. Even though the Fair Trade prices are 10+ cents higher than others, in my opinion, the conscious consumer will buy the more expensive product in support of small-time producers receiving a fair price.
There is also a claim in “Fair Trade Isn’t Fair for All along Production Line” that the middlemen are still a problem in Fair Trade, even though the Fair Trade Organization works to eliminate the middlemen as much as possible. It is understandable that some middlemen are still present as it is impossible for the small-time producer to practice vertical integration (as the writer of the article proposes) and own the whole trade route and not have portions of his profit taken along the way. It would be very inefficient for one man to produce and transport goods from one country to the next, therefore the Fair Trade Organization steps in and does their part instead to reduce the amount of hands the goods are passed through, increasing the return of profit to the producer.
Another article, “Fair-trade coffee: not worth a hill of beans”, argues that Fair Trade ignores the laws of supply and demand. For example, although there are a multitude of coffee producers, higher prices paid to fair traders “send a signal to people in developing countries to join an already overcrowded field. “ Because they all flock to a single cash crop, it is thought to be keeping people in these countries from pursuing other lucrative jobs that would contribute to diversity and growth of the countries and to not being dependent on that single cash crop. I think that this problem could be solved by an outside source helping to implement and encourage a new or pre-existing line of work that would benefit the country, perhaps the above-mentioned “modern economic activity.” Also, since the number of Fair Trade Certified products are increasing, people of the developing countries could try to find other Fair Trade products to produce.
This article brings up again that the demand for a crop such as coffee would go down with the increase in price of Fair Trade coffee. However, I have worked around coffee for years and I know that most customers will pay whatever price they have to to get their daily fix of coffee. In general, I noticed the same thing when the gas prices increased. People still have to drive to work, so they are going to pay the outrageous prices for gas. Similarly, the addictive quality of caffeine in coffee will keep consumers coming back, which is also similar to the skyrocketed price of cigarettes with addictive nicotine that their consumers will continue paying for. Once again, I would hope that the coffee consumers would happily pay a slightly higher price to increase fair wages for the coffee producers.
I hope to have addressed some of the major points of conflict with Fair Trade, and perhaps if my defense of Fair Trade has not been convincing, there are other good points and bad points made about Fair Trade to be found in the article “Points of view: How fair is Fairtrade?” This article has a variety of quotes by people directly involved with Fair Trade and they give their insights on some of the problems and benefits of Fair Trade. Overall, I believe Fair Trade to be a good effort by the organization towards it’s purpose of uniting companies and consumers to support fair prices for farmers/producers, even though it may still need to work out a few kinks. Once again, it was not designed to solve all of the problems of world trade, but I would like to think that Fair Trade is helping in the ways that it can.
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