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Fair Trade bad for free trade

Published: November 18, 2005
Section: Opinions


Fair Trade coffee is bad for free trade. Fair Trade is several things, first of which is an attempt by outside groups to place a price floor on coffee. Price floors keep more farmers in the business of coffee, on the hope that they will sell to a Fair Trade importer, perhaps impoverishing them more from staying in the coffee business when they should not. But what happens is that too much coffee bean is made with this attempted price floor, and big corporations win more by cheapened non-Fair Trade certified coffee.

The price floor is even ridiculous considering Fair Trade attempts to give low interest loans to farmers, further reducing their costs of production. Its preferential treatment designed to gain loyalty of farmers to Fair Trade. They will help you produce cheaper and sell higher.

Fair Trade attempts to bundle this price floor and loans with workers rights initiatives. Workers rights are very important, but the world is already mobilized against unfair labor practices. Large employers already pay strict attention to labor rights for fear of being exposed, which is driven as much by profit as anything.
This dichotomy of purpose is confusing the public of what Fair Trade actually is. It actually gives incentives for producers to cheat the market. Not only are you buying a coffee bean with Fair Trade coffee, youre buying bureaucracy and transferring money to coffee producers-whether large or small you can never tell. Are these farmers now living better? Marginally. Can you tell if the right farmers competing for the Fair Trade title actually got it? Not everyone who needs a better price and better worker rights gets it, and this comes at a greater cost to the economy. Not even Starbucks, beloved Starbucks does Fair Trade coffee because it, along with the Economics department, realizes the premium paid for the coffee and lack of return in the form of guaranteed better coffee producing villagers.