Is "Fairtrade" Coffee Fair?

Personal comment.

The brand:

Fairtrade coffee is a fantastic brand.

It has the feel of integrity, the smell of wholesomeness, and the taste of honesty!  A brand that sells a little over the going price in order to ensure the farmers who grew the product benefit. Altogether it seems like a delicious brew that is just what we require.  Indeed, it is so successful it has become the brand leader.  In 2006 in the UK, consumers bought almost 300 million pounds worth of it.  That increased the following year to nearly 500 millions.The brand has become so successful that the UK International Development Secretary here has promised Fairtrade 1.2 million pounds over the next two years so that it can increase its sales to a billion pounds by 2010 and two billions by 2012. The International Secretary says this is in ”recognition that Fairtrade is one important means of reducing global poverty”.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

Even the sugar giant Tate & Lyle likes Fairtrade. It plans to turn its entire operation over to Fairtrade sugar and forty percent of the cost will go to growers in Belize.

Does it do what it says?

Harriet Lamb, Fairtrade director, says that people buy their products “as a personal practical action to help tackle poverty in the developing world.” She goes on to say that “in doing so, they are already helping to give a better future to the seven million people, growers and their families who currently participate in the Fairtrade system”. But I am sceptical.  Fairtrade’s objectives of better product, decent working conditions, sustainable, fair terms, are all notions that need precise definitions if they to be tested. In <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Britain, we all know what product testing means.  Our independent Consumers Association rigorously tests various products, compares prices and gives clear results.

All we get from the Fairtrade company is unsubstantiated anecdotes of  success stories.  Surely, if it were truly a brand that does what it says, it would offer clear evidence that it is a company to be trusted as a way of reducing poverty.

Some local authorities support the brand by buying in bulk; Scotland even wants to make itself a Fairtrade country.  Yet neither asks any Trading Standards Units to first look at whether or not Fairtrade is making false claims.  Why not?

Simple solutions:

Perhaps customers like the idea that they need not bother to look very closely at the economics of trade when it is so complex.  Just leave it to these lovely people.  They are all of good provenance - Christians and Socialists who want to do good.  That has to be all right! Yet The Economist published a searing critique in December 2006, concluding that Fairtrade was anything but fair.  It was bad economics too.  It said the system encouraged over-production and left other farmers not in the Fairtrade network worse off.  Coffee prices are already problematic because of the protectionist tariffs and subsidies in European agriculture. These subsidies make it impossible for small farmers to grow and sell products suited to their climate. Vietnam moved into coffee in a big way a few years ago because it couldn't get into other markets. Also sugar beet grown in Europe is more expensive to produce than the equivalent sugar cane in West Africa.  Yet the sugar cane cannot find a market over here. Until we unravel these complex farm support systems to give everyone the chance to compete on ”a level playing field” we will never have fair or free trade.

Moral overtones:

The arguments get clouded by these somewhat vague notions of fairness.  Fairtrade seems to occupy the moral high ground.  So the arguments on both sides get covered in emotions. Also, I would be happier to give Fairtrade greater credit if it did not make the rules.  It says it wants farmers to have more control over their lives.  Yet it insists they should operate only in co-operatives.  Most of us would never want the stress of having to work in co-ops!  Surely its farmers should themselves decide what the rules are to be. That does not occur.

We know too that one of the reasons for developing countries getting poor prices is that they usually get squeezed out of the more profitable manufacturing side.  In fact, according to the recent report Unfair Trade (issued by the Adam Smith Institute (ASI) an outfit committed to free trade) this year, Fairtrade will only accredit farmers who are part of co-ops.  Farmers working for Café Britt in Costa Rica are self-employed small businesses who own their land.  Yet Fairtrade refuses certification even though Café Britt has increased its incomes by processing, roasting, packaging and branding locally.  Fairtrade coffee is roasted and packaged in the UK.  Need I say more?

The ASI Unfair Trade Report accuses Fairtrade of keeping farmers poor by denying them the use of improved technology in farming.  It also rightly points out that the poorest workers in farming are the landless labourers.  Yet nothing is in place to help them.

A cheap solution:

It also says that Fairtrade’s higher prices cover only a fraction (ten per cent according to the ASI) of many farmers’ output and that the wholesalers benefit more.  This was the gist of an argument used in a BBC programme it put out a year or so ago.  That was what first made me suspicious enough to think for myself!

The main reason I do not support Frairtrade is I don’t believe a penny or so above the ‘normal’ price really does anything to improve farmers’ livelihoods.  That is a prejudice of mine since I cannot prove it either way.  But Raj Patel’s book - Starved and Stuffed: Markets, Power…& the World Food System, points out that we customers and the farming suppliers are generally squeezed by the institutions that organize in the middle of the global food industry.  I believe him!

Competition matters:

Fairtrade seems to be against competition for farmers abroad, does nothing about farmers being excluded from our protected markets and insists these small farmers remain stuck without the potential to expand and grow.  Yet our farmers have expanded, grown and become more efficient in a competitive market.  Many too have left the industry.  This is a normal and healthy process given that manufacturing can offer greater long term growth than can agriculture.

Raj Patel says:  “Fairtrade gives to small farmers clinging on by their fingertips enough money for them to cling on a little bit longer”.

That is why I am so sceptical about this Fair Trade malarkey?

Please note:  The photo with a Hugger coffee cup is NOT by me but by Gingko7 at Flickr!