Fear Trade

Fear Trade

by / July 16, 2012

Why Buying Fair Trade hurts the World’s Most poor

I’ll admit it. Every time I bought my Peoples Fair Trade Coffee, I felt pretty awesome. I would read the emotional anecdote about the farmer whom I was helping with my purchase and enjoy the warmth from the charity I had just committed. Fair trade (as opposed to everything else which is unfair) was the first born of the ethical consumer movement. You pay slightly more for your coffee and the farmers who grew it for you will be paid more in the process. Sounds lovely. It isn’t.

Remember how great you felt when you spent an extra two dollars on your pack of coffee in order to save the world and help the poor farmer. Turns out you were really just helping your cropped-jeans, plaid shirted, smiling barista. A study published in the Journal of Business Research found that only 2 per cent of the premium price is actually going back to the producers. Most goes to your seller who can hike up the price because it is ‘Fair Trade’. Fair Trade is a multinational built upon a lie. It misleads. It deceives. It targets your guilt and compassion and exploits it, no different than it does to its workers.

Fair trade goods hurt the poorest members of our global community. A paradox? Unfortunately not.

Mexico is the biggest producer of fair trade coffee in the world, dominating, with over a fifth of the market share. Mexico is not a poor country. They have issues, but their poverty is incomparable to countries such as Ethiopia that sell very little fair trade coffee. So we should realize first that the petty wage increases we are trying to make are going to a nice Mexican family who probably get to eat Old El Paso and not to your run of the mill World Vision Poster Child.

So who cares, you rightly ask, I am still helping someone. Whoever scolded someone for only helping a poor person? The problem is that your purchase of Fair Trade impacts on the many poorer non-fair trade coffee producers around the world.

Every time you buy your delicious Fair Trade Beans, you are obviously not buying non-fair trade. Fair Trade has a monopoly over the ethical consumer. That ‘oh-so-selfless’ shopper will only buy fair trade and thus no longer buys from the far poorer Ethiopian who does not work on a fair trade collective: because he works under worse conditions the ethical consumer considers the best response is to stop giving him money and trading with him. You are giving to those who already have a nicer job and cementing the despotic poverty of those who don’t. For when the non fair trade employer’s profits goes down, the buck stops with his workers.

Moreover, the producers of non-fair trade coffee, in order to compete with their more ethical cousins, have to keep their prices down, lower than the fair trade minimum price. Economist Tyler Cowen calls this ‘The Exploitation Sector’. The owner of the farm needs to keep his beans cheap. He does this by wreaking havoc on the fickle lives of his workers: fewer breaks, worse pay, more lay offs, longer hours, poorer hygiene. The Fair Trade competitor creates that oppressor.

If that doesn’t convince you, you should look at how a farmer gets a Fair Trade Stamp. Hint: it’s not just by paying its workers $20/hour. A Bitter Aftertaste, a revealing documentary on Fair Trade, exposed that the Fair Trade organization discourages the use of fertilisers on farms. Farmers are left to employ someone to do weeding. Yet they can’t be full time workers. That’s another rule. Coffee farms must be no more than 12 acres in size and only employ part time workers. Obviously the idea is to share the benefits of work, yet all it means is that no one working on these farms has any assurance of income: of ability to feed and nurture their loved ones. And to be honest, I have no idea why the farms are restricted in size. Maybe it is just because small farms look nicer.

The Fair Trade Stamp halts development. It takes 5 farmers in Brazil to do with Coffee what it takes 500 in Guatemala. Brazilian farmers have been allowed to use machines rather than people to do their backbreaking work. This agrarian inequality will not change when farmers on fair trade farms are discouraged from mechanization and fertilizer. Fair Trade have romanticized the life of a rural farmer in West Africa. They are either blind or deliberately misleading. They want people to keep individually removing weeds just as they did in the old days. That is not an acceptable life in any part of the world.

Oh and the coffee should be organic too: of course.

It isn’t that fair trade can only ever be a force for evil cloaked in good. If it changed many of its features and everyone went fair trade, it could well be an all right way to do your bit. But as it stands, you are better off just buying the cheaper unfair trade chocolate (which, let’s be honest, is more delicious anyway) and then giving your savings to charity. It may fit with your bourgeoise, environmentalist, holier than thou image, but next time you want a soy decaf mocha in your Keep Cup, do the right thing, don’t buy fair trade. ▲

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Comments (3)

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  1. Coffee kid says:

    Hi. I work for a Fairtrade coffee company and I think you need to do some more research before you have a rant. There are two different variations of Fairtrade: Fairtrade (one word) which is certified and regulated as we are, and Fair Trade (two words) which any one can basically label themselves without having any regulation at all. If you don’t believe this then go down to your local supermarket and I assure you there will be Fairtrade and Fair Trade coffee. We use just under a tonne of Ethiopian beans per month and no Mexican at all. Our Ethiopian coffee comes from the OCEFCU – check out their website http://www.oromiacoffeeunion.org/aboutUs.php – they have a Fairtrade certification. In early 2011 their GM Tadess Meskela was brought to Wellington by Fairtrade to talk about the situation in Ethiopia and the future of Fairtrade. He said it was a very difficult life being a coffee farmer, however with the help of Fairtrade, coffee farmers have enough income, resources and opportunities to allow their children a better future – they aspire to be more than a farmer and can actually achieve it. Fairtrade does not mean they will pay the farmers millions but their standard of living is improved. They have 185 facilities including roads, schools and clinics for the farmers. The OCEFCU puts around 70% of profits back into the farmers hands. Fairtrade may not believe in using pesticides and other chemicals but they are using science to increase crop yields and improving farming practices to achieve bigger pay days. If a machine is used to pick coffee cherries they will pick everything even the unripe and rotten, thus causing very low quality beans which don’t sell for as much. Also some pulping machines, if not maintained or serviced regularly, destroy more coffee than they produce, and cause farmers to have less to sell which will affect them more in the long run. I know people in the third world get a shit deal, and are often exploited but Fairtrade is doing more than you realise – they allow people like you and me to make small changes every day to improve the life of others. I don’t know many people who donate money to the Red Cross regularly, but I can name you 10 people who buy a Fairtrade coffee every morning.

  2. Barnaby Luff says:

    It was disappointing to read such an ill-informed attack on the Fairtrade system from Duncan McLachlan in Salient (16th July).

    Duncan claims that Fairtrade is misleading, deceiving and exploitative, but Fairtrade is all about tackling unfair exploitation through transparency and a fairer approach to trade. Fairtrade is an internationally recognised certification system deriving trust and credibility from robust annual audits of producer groups and traders. As a certification system Fairtrade has ISO 65 accreditation which ensures our audits and certifcations are conducted to the highest standards.

    Duncan’s article starts and ends by mentioning charity. Buying a Fairtrade product is not an act of charity. In buying Fairtrade you help to empower small-holder farmers in developing countries to trade their way out of poverty and build a more sustainable future for their families and generations to come.

    By seeking to address trade injustice Fairtrade does not provide hand-outs, Fairtrade enables small family run farms in remote areas in countries like Papua New Guinea to access global markets. It benefits whole communities through premiums that are invested by farmers to improve infrastructure, and education and healthcare facilities.

    A great example of this can be read in a blog from FLO-CERT auditor, Victor Tacuri Quispe about his experiences at a Fairtrade cooperative in Bolivia where he was impressed that children from non-Fairtrade farms can attend the school where improvements were funded by the Fairtrade Premium. He also described how the farmers were exploited by buyers before becoming Fairtrade Certified. Read the blog here http://www.flo-cert.net/flo-cert/299.html.

    If we do what Duncan suggests and just buy cheaper non-fair trade products and give to charity instead we just perpetuate traders sourcing at the lowest prices, which may not even cover the farmers’ cost of production. Nothing will change for farmers in the poorest countries accept that they become increasingly dependent on aid and charity from the rich.

    One of the unique aspects of Fairtrade is that farmers, as cooperative members are co-owners of the Fairtrade system. This means that they are involved in decision making from the setting of the international Fairtrade prices through to the local community development projects that their Fairtrade premiums are invested in. This is empowerment. Time and time again the farmers decide to invest in building classrooms and clinics, clean water supplies, training in sustainable farming techniques and projects to empower women.
    Duncan refers to a study published in the Journal of Business Research and suggests that most of the premium price paid by consumers in cafes “goes to the seller who can hike up the price because it is Fair Trade.” In most cases Fairtrade Certified coffee sold in cafes is competitively priced, in New Zealand’s largest cafe chain Wild Bean Cafe the price of a coffee is around $3.50 – $4.00. The Fairtrade price for coffee beans is set at a rate that covers farmers’ cost of sustainable production. When the market price falls farmers have this safety net – when the price is high they receive the higher market price.

    Duncan expresses concern that not enough is being done for poor Ethiopian coffee farmers, with more beans bought from Mexican farmers who are less poor instead. In New Zealand historically 3.5 times as many Fairtrade certified beans have been imported from Ethiopia than from Mexico. In 2010 Mexican beans represented approximately 10% of Fairtrade coffee sales in NZ. As the birthplace of coffee, Ethiopia is a popular source for global markets for high quality beans – and in the biggest coffee growing region, the Oromia Coffee Farmers Cooperative Union’s beans are organic, forest grown and bird friendly.

    The writer claims that “the Fair Trade organisation discourages the use of fertilisers on farms”. Fairtrade encourages environmentally sustainable production and organic fertilisers while prohibiting the use of the most toxic and harmful agri-chemicals. In places like PNG this more organic style approach to weed and pest control is the traditional way. As far as mechanisation is concerned this is not discouraged. Recently at the HOAC coffee cooperative in PNG mechanical coffee pulpers have been purchased with the Fairtrade Premium and will assist greatly in increasing efficiency.

    As a system with transparency and openness at its core, Fairtrade encourages people to ask questions about trade and where their money goes. We are always happy to provide information in order to reassure people that by choosing Fairtrade Certified coffee growers are truly getting a better deal .

    Barnaby Luff
    Operations Manager
    Fairtrade ANZ

  3. Maria says:

    I’m glad some professionals have replied to this article. A lot of it really irked me.
    Not only am I a fan of Fair Trade, but a second nerve was struck with the Mexico-Ethopia comments.
    Yes, Mexico isn’t a poor country but that doesn’t mean there aren’t poor farmers (there’s large economic inequality there) and there aren’t communities that benefit a lot from Fair Trade. That’s the whole point of Fair trade… more goes to the actual farmers and less to the middle men. Mexicans also don’t eat Old El Paso.. but maybe that was a joke?
    I would love further features on topics like this one, but to put it from such a bizarre angle wasn’t particularly educational as much as it was frustrating