I’m wondering if ‘fair Trade’ is mostly feel-good advertising. supposedly, it works like this: A US importer will only buy a product (like coffee beans0 which have been produced by some grower who pays a “fair wage” to his farmhands-this si supposed to mean that the people doing the hard work get paid a living wage. Quite aprt from the socialist-silliness of the idea, how is STARBUCKS able to know just what comnstitutes a “fair wage’-and given that it knows this, how does it KNOW that the workers are being paid this amount?
Suppose I were to say-gee, sugra cane harvesters are exploited/underpaid; let’s pay $25.00/lb for sugar, this will provide the workers a “fair” wage. Or take the US senate-they just raised the minimum wage-net result-reenagers are losing fast-food jobs.
I wonder how people are better off earning NOTHING, if employers cannot pay a :fair” wage.
Commodity prices fluctuate
- realistically they don’t, but ultimate sellers and ultimate buyers don’t know that.
Fair Trade might be Ok, I don’t like their levy and auxilliary costs.
Vertical integration makes a lot more sense in the long run.
There are all kinds of arguments about how this is an attempt to force the market, but… I dunno; all sorts of things attempt to force the market; that’s what the market is about.
What’s wrong with saying that the fair trade movement is just a bunch of consumers being specific about the product they want, how they want it produced, and the price they’re prepared to pay for it? That’s market capitalism, isn’t it?
Nothing socialist about it, IMO. It’s a good capitalist scheme, fulfilling the purchasing desires of consumers.
All it’s doing is eliminating the middlemen and agents who make a whacking great markup. The farms would still exist without it; it’s just that the farmers who fulfil the Fair Trade criteria get what their product is worth on the world market, not what the middlemen are prepared to pay (who would normally be the ones that get paid what the product is worth on the world market). With the extra money they can afford better sanitation, healthcare and education for their communities.
“Fairtrade” is actually a brand in the UK, and their products cost scarcely more than the regular stuff. Not only that, but the Fairtrade Foundation that licenses each product is a registered charity “established in 1992 by CAFOD, Christian Aid, New Consumer, Oxfam, Traidcraft and the World Development Movement. These founding organisations were later joined by Britain’s largest women’s organisation, the Women’s Institute.”
Its books are therefore of public record, and it is subject to scrutiny by the UK. In return the farms it assists are scrutinized by the organisation to attempt to eliminate corruption.
Can’t answer for Starbuck’s, but I’d imagine they’d outsource the quality assurance and seal of approval to an organisation like Faritrade. Indeed, according to the Fairtrade product list, at least one brand of Starbucks beans has received their seal of approval.
So, not a scam.
You mean scam as in “The label says one thing but the product is another”, or scam like Communism?
Well if “fairtrade” is like a “Farmer’s market” (i.e. a market where the farmer sells direct to the consumer), I see nothing wrong with it. I’d just be pissed if i paid a premium price for something, only to find it was produced by farm hands making $0.02/hour. Of course, the “middlemen” are there for a reason-they make a market, and provide payment to the seller right away. Are we proposing to end all middlemen from transactions? how is that supposed to work?
I don’t think anyone is proposing to abolish anything; it’s just a different model of trading where part of the customer’s requirement is the assurance that the grassroots producer is being fairly compensated. Nobody is forced to participate in the scheme.
I would say only in cases where the middlemen are distorting the market downwards, to the detriment of people’s health and futures.
I was slightly wrong, actually - Fairtrade says “By requiring companies to pay above market prices, Fairtrade addresses the injustices of conventional trade, which traditionally discriminates against the poorest, weakest producers.” So it does, to an extent, distort the market upwards.
Which may, of course appear to be “socialism” to some - but it pales into comparison with anti-free-market “socialistic” state-subsdised agriculture, practiced by the US and EU, Australia, and no doubt lots of other places.
Really? Could you provide some evidence for this?
And i don’t mean “I met a guy whose teenaged son lost his job at McDonald’s.”
I mean some sort of quanititative study that shows a decline in teenage employment in the fast-food industry as a result of changing minimum-wage policies.
I’m not saying you’re wrong; i’d just like to see where you got your figures from.
The Economist came out with a pretty scathing report on Fairtrade, organic farming and locally produced practices. They are not as beneficial as they are made out to be.
Go look for the article if you want more then my faulty memory…actually, just do that. I can only remember a vague sense of going against Adam Smith, ala “They try to manipulate free-trade and it doesn’t always work out the way they intended.”
I think one argument was that if you guarantee above-market prices in one product, then ALL of the farmers try to produce that product, causing over-supply, but the price is now fixed, so instead of the price dropping, it remains level, and you have too much of it, and so people then go and try to sell it on a non-fairtrade market, but since there is too much, they get even a worse price than before. And then there is the year-to-year argument…prices fluctuate with supply, so one year a fairtrade price will be set, but the next year is when the problems show up…and that fairtrade price lowers…and lowers again the next year…and so on because production is too high based on faulty information of market price for a product. So while fairtrade might work for the lucky few, it causes hardships on those not in on the game from the beginning, and then it hurts those very people in the end because they have gotten into a game they can never win.
Again, that might be my faulty memory, so look it up. But my idea on fair trade foods changed because of it…I’d much rather see farmers equipped with simple mobile phone technology (and yes, sub-sahara farmers are using mobile phones) that give up-to-date market information so they can make better choices in the products they grow. Screwing with the invisible hand is rarely (ever?) a good thing.
-Tcat
i’ve been waiting years to say this: what does this have to do with the price of tea in China?
I always just figured it was a clever feel-good marketing thing. Who actually determines what “fair trade” is? I actually thought it would ultimately be a bad thing for producers to enter into. By agreeing to the “Fair Trade” scheme they are still producing their product, though now have no means for upward mobility. They are stuck growing their coffee beans for a set value year upon year. They cannot ever get more money than their product may be worth. The bean is worth the same value in a good growing season as it is in a poor. It is just another means of keeping third world peoples in their lowly station.
The more important matter is, why would anybody (any large organization) actually participate in this program unless there is profit to be made? Obviously, the profit comes from somewhere? Apparently, this profit comes from cutting out the middle-man. If by cutting out the middle-man, “Fair Trade” saves (for example) 25%. Of that 25%, how much goes to the actual producer? Fair trade indeed.
Fairtrade is not such an unusual concept
In the early 1980s my father was going around giving rather revolutionary speeches to companies on purchaser-supplier relationships, with particular emphasis on buying expensive capital equipment.
The jist was that if a buyer screws a supplier on price then :-
a) the supplier will try to make it up if anything goes wrong
b) when the buyer goes back for more
. 1) the supplier will hike the price or
. 2) the supplier will tell them to sod off or
. 3) the supplier will have gone bust
Basically he was saying that it makes sense to keep an eye on your suppliers margins, and make sure that they are not too low.
Nowadays the concept of non-predatory purchasing is fairly old hat.
The big problem with commodities is that they are commodities, so to some extent it does not matter where you buy them. Also at any point in time, the supply is fixed. This can lead to tremendous price fluctuations and the ‘market’ becoming the ‘end’ rather than the ‘means’. The fluctuations benefit neither the supplier or the purchaser - both really want a stable price and quantity so that they can plan.
In an ideal world a seller would sell forward his crop before planting, and a buyer would buy forward at least a growing seasons supply. In effect Fairtrade is doing just that.
Perhaps for the same reasons some consumers are prepared to pay a premium for items produced with (what they believe to be) a greater emphasis on social ethics, environmental responsibility, etc - profit isn’t the only thing that motivates human activity.
These are questions…
…this appears to be a dismissal based on answers to those questions (answers that you presumably find unsatisfactory), but where are the actual answers?
I second the recommendation to go and read the Economist article on the topic.
I recall reading about a study (sorry no cite was in the newspaper a while back) that looked at how much of the higher price of fair trade coffee ended up in the hands of the 3rd world farmer. The farmers cut was maybe 5-10 percent and the rest ended up in the pockets of the middlemen and the shops.
Basically it was a way to target consumers who have a high willingness to pay.
I can’t quite put my finger on it, but it seems like a lot of the criticism takes the form of:
-FairTrade doesn’t work; an open market can do it better for everyone
-FairTrade is potentially damaging to the market at large
Which seems to boil down to the market can do anything, except cope with the presence of FairTrade, which would be interesting.
There is, as far as I’m aware, no special treatment or status afforded by governments to FairTrade - it exists within the market - if it’s really a bad thing, and if market forces can fix bad things, then there is no problem, is there?
Of course Fair Trade is about profit. It would be a pretty poor scheme if it wasn’t. The idea, though, is that we, the rich western consumers, can afford to pay a few more pennies for our coffee and thus bask in a warm socially-responsible glow. The retailer, meanwhile, pays more for the product, but recoups this by charging the customer more, and additionally gains ethical kudos for stocking Fair Trade products. And therefore the supplier, and ultimately the grower, get more money than they would otherwise get if everyone still had the “bulk buy, drive the cost down whatever it takes” mentality.
If that’s “socialist silliness” then let’s have more of it.
And also the middleman is NPOs that will put any profit into more schools, hospitals, college fellowships… I wouldn’t buy their chocolate if I didn’t like it, but since I do, what’s not to like?
You people really have no clue the difference a few pennies makes to an African farmer, do you? Hell, 5c/day extra can be the difference between schooling your kid this year or not.
Or (say) earning an extra $20 in a growing season may enable a poor Niger farmer to afford a foot-operated water pump, locally produced and suited to the local conditions, that enable him to farm even better next season. Plus the pumpmaker now has money too, or the brickmaker who builds a school for the farmer’s co-op, or the guy who augers toilets, and so it trickles down.
So you may scoff at them seeing only 10% of that Fair Trade premium, Coil, but believe me, the farmers don’t.
I’m most familiar with Fair Trade coffee farmers in the Dominican Republic and Haiti - the process cuts out the intermediaries and organises the farmers (small-holders) into cooperatives or associations that process and sell the coffee directly to the exporters. The premiums they receive as an organisation go on coffee-producing and community infrastructure, training, crop diversification initiatives, and payouts to the members. On a personal level, the farmers talk about the stability it has given them, the ability to educate their children, and the reduced incentive to migrate to the cities.
Although FT is undeniably a Good Thing, it isn’t immune to abuse. I’d love to get an investigative journalist to look into a rumour I heard about certain banana plantation owners who manipulate the Fair Trade assessors by giving them the illusion that their crop is produced by small-holders, instead of the feudal set-up that is actually in operation. These are just allegations, mind you, and I’m not clear how they supposedly pull this off, but it’s worth checking out in order to identify weak links in the verification process.