Feeling Pretty Good About Your Choice to Purchase ‘Fair Trade’ Coffee? Don’t.

(July 6, 2011) As is so often the case, regulations engender unintended consequences, hypocrisies, and hurdles that more often than not end up harming the little guy. 

Don’t get me wrong – I enjoy a morning Starbucks trip as much as the next gal – but it would be a mistake to assume that, because I am buying certified organic, fair trade coffee, I’ve automatically made the more ethical choice in dishing out my dollars. Starbucks is merely picking up on the popular trend of selling some warm fuzzies along with their product, but be wary: as Lawrence Solomon for PERC explains, ‘fair trade’ coffee ain’t necessarily all that fair:

That fair-trade cup of coffee we savour may not only fail to ease the lot of poor farmers, it may actually help to impoverish them, according to a study out recently from Germany’s University of Hohenheim. The study, which followed hundreds of Nicaraguan coffee farmers over a decade, concluded that farmers producing for the fair-trade market “are more often found below the absolute poverty line than conventional producers.

“Over a period of 10 years, our analysis shows that organic and organic-fair trade farmers have become poorer relative to conventional producers.”…

The fair-trade business is filled with contradictions.

For starters, it discriminates against the very poorest of the world’s coffee farmers, most of whom are African, by requiring them to pay high certification fees. These fees — one of the factors that the German study cites as contributing to the farmers’ impoverishment — are especially perverse, given that the majority of Third World farmers are not only too poor to pay the certification fees, they’re also too poor to pay for the fertilizers and the pesticides that would disqualify coffee as certified organic. …

And in this well-intentioned price-fixing game, the fair-trade farmer is the pawn and the joke is on the customer.

Erika Johnsen, July 6, 2011 – Townhall

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1 Response to Feeling Pretty Good About Your Choice to Purchase ‘Fair Trade’ Coffee? Don’t.

  1. Michael says:

    For what it’s worth, the Hohenheim study doesn’t make any of the claims Soloman says it does.

    – It doesn’t say fair trade may have helped to impoverish farmers. In fact, the authors explicitly state their study can’t show causation

    – They also explicitly state that the differences in relative poverty between their conventional, organic, and organic-fairtrade (there was no “fair trade” group) were not statistically significant

    – It doesn’t mention certification fees once, no doubt because individual farmers don’t actually pay them. Their co-ops do, and they, along with all other costs, Fairtrade-related or otherwise, would factor into the price paid by the co-op to its member-farmers (this price was 11% higher for the fairtrade-organic group than conventional). Also, there’s a fund that covers up to 75% of these (Fairtrade) fees should a co-op have trouble paying them, and the current fee system has the unanimous support of producer representatives on the Fairtrade International Board of Directors….

    – It doesn’t mention Africa except for a brief mention of study of fruit and vegetable farmers in Kenya. The authors also say their study can’t be generalized outside of Northern Nicaragua. Worth noting is that, even by 2008, roughly 60% of all farmers and workers in the Fairtrade system were located in Africa.

    As a minor point, it didn’t follow farmers for over a decade either… all of the data was collected in 2007, plus a some interviews in 2008.

    Also, Soloman himself tries to promote his own coffee as Fair Trade, attempting to free ride off of the very system he decries here.

    Here’s a response to his entire piece:

    Here’s a link to the actual Hohenheim study, for anyone who cares to read it. It’s only nine pages long, and a wonder that Solomon couldn’t get one thing right about it….

    Here’s a link to an independent analysis of ten years worth of academic studies by the Natural Resources Institute, for anyone who actually wants a more reputable assessment of Fairtrade certification:

    Click to access 2_nri_full_literature_review_final_version.pdf

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