Comments (22)

• Jim Morse

• I sent the following e-mail to transfair@transfairusa.org back in December, 2002. The good folks at Transfair USA never replied.

  Dear Sir or Madam,

  I'm trying to decide whether or not fair-trade coffee is the right way to go for me.

  As I understand it, under fair trade, the farmer gets $1.26/pound, which often is much higher than the free-market price. By doing so, is the fair-trade movement doing nothing more than encouraging marginal coffee farmers to continue producing coffee, thereby reducing the free-market price even further, in a never-ending spiral? Sure, the farmers getting the fair-trade price might do OK, but what about the rest (most?) of the farmers, who would be getting the artificially reduced, market price?

  If the companies that are now involved in the fair-trade movement really want to "do well by doing good," would it not make more sense for them to use some of their profits to set up non-coffee-growing businesses in coffee-growing countries--to provide alternative employment opportunities to the marginal coffee farmers that are thrown out of work by low coffee prices--instead of paying these marginal producers a price that is above the free-market price, which can only lead to increased supply and an even lower market price?

  Thanks,

  Jim Morse

• Published: June 25, 2004 8:14 AM

• Bert Ickler

• I was in total agreement until the "bitter end". The point is that there is no coercion (at least to the consumer) in this transaction. If consumers are being mislead then more publicity is in order but that should be sufficient.

  But my point (and I have one) is that I buy one particular flavor of this coffee - Mind, Body and Soul - because I like the flavor and am willing to pay the extra for it! I tolerate the nonsensical name and the charitable weirdness simply because I like the coffee.

• Published: June 25, 2004 10:14 AM

• Brad Dexter

• The danger I find is, while peoples' consumption is completely voluntary, it is the use to which they put their intellect. There is always subjective components to consumption, but I would much rather the decision be based on shadings of taste related directly to the product consumed versus some unconnected set of values. But then again, quite a bit of consumption that is not steaped in 'fair-trade' cloaking also relies on irrational emotions that have nothing to do with the intrinsic nature of what is being consumed (premiums are charged simply due to the label that is attached). At the end of the day, fair trade labeling is the same thing as sewing a designer patch on a pair of jeans and charging $50 more. One has to support freedom of choice and not coercion, but one still reserves the right to shake one's head at the choices people make. Lastly, I do notice a habit of making constructs which eminate in the culture, and are voluntary, but which are popular, become anointed as a Must via the State. In this case, fair trade could become such a mainstay in the mass consciousness that Public Policy may soon follow.

• Published: June 25, 2004 10:43 AM

• Jim Morse

• (1) While it's true that there is no government coercion involved, I do wonder whether the net effect of the Fair Trade movement is a plus or not, once "what is NOT seen" as well as "what is seen" has been taken into account, as I suggested in my previous post.

  (2) If the consumer chooses to buy "Fair Trade" coffee because the retailer has led him/her to believe that much if not most of the higher price is going to the needy farmer, when in fact it is going to the retailer, is that not fraud of a sort and, thus a type of coercion?

• Published: June 25, 2004 10:43 AM

• Francisco Torres

• My question is: If this coffee was brought to the US under a "fair trade" scheme, does that mean that the other coffee brands somehow bring the products by means of UNfair trade?

  I don't have much problem with whatever gimmick a company chooses to use to dupe the customers, since it is my responsability as a consumer to know better. The problem I see is the obvious innuendo implied here. It seems now that getting the best price possible for something is not good purchasing sense anymore, it is being unfair.

• Published: June 25, 2004 11:49 AM

• Ken Weaver

• I loved this "Fairness with Your Coffee" article. I disagree with Mr. Potts in every regard. I contract with growers for popcorn. They raise it and I process it. Increased competition for the grower's land creates better opportunity for the growers. The grower must discern the risk/reward balance when considering which processor for which to raise his/her crop. Ceteris paribus it does not matter to the grower where the retail sale price lands. In the end the gimic benefits the coffee grower. I see nothing unfair about this situation.

• Published: June 25, 2004 12:58 PM

• Jim Morse

• In the end the gimic benefits the coffee grower. I see nothing unfair about this situation.

  It benefits only those coffee growers who are able to join the Fair Trade program. All other growers will face an even lower price for their non-FT coffee. (If not for the FT program, some marginal growers would stop growing coffee, which would lead to a drop in supply and an increase or stabilization in price. However, because of the FT program, these marginal growers will continue growing coffee, leading to a supply that is higher than it otherwise would have been and a decrease in price for non-FT coffee.)

• Published: June 25, 2004 2:14 PM

• Harry Valentine

• Lets see the politicians impose fair trade on the world's oldest profession, in the red light districts, where providers of services and their customers (SINNERS) have haggled and negotiated for centuries until a price is agreed upon. In Britain's over-regulated economy, some members of parliament have been known to familiarize themselves with the fundamentals of free market economics, by haggling and negotiating with call-girls until a price was agreed upon (then the British tabloids caught them with their pants down!!!). HOW DARE THESE KEYNESIANS PRACTICE FREE MARKET ECONOMICS!!!

  Harry Valentine

• Published: June 25, 2004 2:45 PM

• Question

• Good piece, though I wonder - did Mr. Potts actually find the coffee bitter, as he said at the end? Or was it just a clumsy metaphor? A zinger's not a zinger if the intent's unclear. (It would be more interesting if, as a consumer, he gave his actual opinion of the coffee itself - actual criticism of it would spread to the Fair Trade idea naturally. "No ideas but in things," ect.)

• Published: June 25, 2004 3:32 PM

• Andrew McManama-Smith

• This is a great piece about market manipulation.
  Truth in labeling isn't important to some people, they just want to feel good.
  But if everything is "fair" trade it's just like subsidies to lazy farmers!

• Published: June 25, 2004 4:38 PM

• Lawrence

• Let's have a good laugh about "Fair Trade" products while we still can, because soon enough, a wise politician will come along and use this popular concept as a pretext for more regulations, more taxation and more bureaucracy, applying tobacco-like taxes to products without the "Fair Trade Label" or outlawing them altogether (unless they decide to go for "high fat/high cholesterol" food first).

  Indeed, let's enjoy being able to buy "regular" coffee at a reasonable price - this will soon just be a memory.

• Published: June 25, 2004 4:44 PM

• Jonathan Dingel

• Did anyone take a look at the CSM article and try to do some math?

  Let X be the numbers of dollars per pound that coffee growers need to earn in order to cover their initial certification fee of $2,431. The CSM article says that the supply of fair trade coffee comes from 670,000 smallholder family farmers. Thus, 50 million * X = $2,431 * 670,000. X = $1,628,770,000 / 50 million. X = $32.58. I hope that I did that math wrong. There is no way that fair trade farmers are making thirty-two dollars per pound. Can you spot my error?

  I wrote about it at http://www.exploittheworker.com/exploit/archives/000025.html

• Published: June 25, 2004 9:36 PM

• JF McEnany

• Potts misses the point of Fair Trade and if here weren't so self-satisfied over saving a buck here ands there, it might be more apparent to him. Cotton was artificially cheap too, 150 years ago, because like coffee, its producers used slave labor to pick and process it. So, was slavery a positive market force, one that should be encouraged and maintained? Not on my side of the Mason-Dixon line.

  If consumers are willing to spend a premium for coffee not picked by wage-slaves, or for diamonds not mined by literal slaves, or for a pair of pants not sewn by an eight year old in a sweat shop, then the difference certainly carries a value. And it's up to me and the market to decide how much.

  Too often Libertarians are concerned only with their own rights and bottom line, and no one else's. It's short-sighted and unstable. My brand of freedom recognizes that if we ask the poorest of the poor to subsidize our morning constitution, our gasoline, and our fashion sense, then it will all eventually cost us something in the way of illegal immigration and terrorism.

• Published: June 26, 2004 11:31 AM

• Kate Foreman

• While Mr. Potts has many valid points, I'd like to remind folks that there are TRUE fair trade options. Any business that wants to sport the TransFair label, which is the most common one, has to pay a fee and follow TransFair rules. There are many smaller companies which promote fair trade products by dealing directly with the source. These companies usually offer the best prices for goods such as coffee beans, and they support the farms that TransFair overlooks. One example is a small group of roasters called Coffee Cooperative. One member, Bongo Java, sells 100% fair trade coffee, but you won't find TransFair label anywhere on the package. If you really want to be a true Fair Trade consumer, it's possible...you just have to know where to look.

  Check out www.bongojava.com for starters.

• Published: June 26, 2004 2:41 PM

• Kate Foreman

• While Mr. Potts has many valid points, I'd like to remind folks that there are TRUE fair trade options. Any business that wants to sport the TransFair label, which is the most common one, has to pay a fee and follow TransFair rules. There are many smaller companies which promote fair trade products by dealing directly with the source. These companies usually offer the best prices for goods such as coffee beans, and they support the farms that TransFair overlooks. One example is a small group of roasters called Coffee Cooperative. One member, Bongo Java, sells 100% fair trade coffee, but you won't find TransFair label anywhere on the package. If you really want to be a true Fair Trade consumer, it's possible...you just have to know where to look.

  Check out www.bongojava.com for starters.

• Published: June 26, 2004 2:42 PM

• Jim Morse

• Cotton was artificially cheap too, 150 years ago, because like coffee, its producers used slave labor to pick and process it.

  An interesting observation, especially given that cotton is artificially cheap today, too. The U. S. government provides financial support to U. S. cotton farmers. This financial support attracts more Americans into cotton farming than otherwise would be attracted. The supply of cotton is artificially increased, which lowers the price. The lower price doesn't hurt American cotton farmers because they're getting financial help from Uncle Sam. Instead, it's the poor cotton farmers in, e.g., Africa who are hurt.

  The parallels between cotton and coffee are striking. The Fair Trade price attracts more farmers into growing coffee than otherwise would be attracted. The supply of coffee is artificially increased, which lowers the price of non-FT coffee. The lower price of non-FT coffee doesn't hurt the FT farmers because they're getting a higher price from the FT folks. Instead, it's the poor, non-FT coffee growers who are hurt. The higher price paid to the FT growers is what is "seen" by consumers of FT coffee. The lower price paid to the non-FT growers is "unseen" by these consumers. (See http://www.econlib.org/library/Bastiat/BasEss1.html .)

  Coercion, of course, is wrong. If some coffee growers are being forced to work for compensation that is less than that which they would freely accept, that is clearly wrong and clearly anti-libertarian.
  

• Published: June 26, 2004 3:14 PM

• Francisco Torres

• "The U. S. government provides financial support to U. S. cotton farmers. This financial support attracts more Americans into cotton farming than otherwise would be attracted. The supply of cotton is artificially increased, which lowers the price. The lower price doesn't hurt American cotton farmers because they're getting financial help from Uncle Sam."

  Like Fréderic Bastiat said several times, it is the unseen consecuences one should look for. If UNCLE SAM is giving financial aid to cotton farmers, it may make the price of the cotton seem cheaper compared to cotton grown without such aid, but the aid comes from the pockets of taxpayers, making the ACTUAL net cost of such cotton HIGHER to the consumer/taxpayer than cotton grown without taxpayers' money.

  The fair trade scheme may be beneficial for some of the coffee growers (if they can pay for the subscription), but it is the final consumer who ends up paying more. If the consumer feels this is a fine deal, so be it; in the end, competition and lower prices for the same product will snatch the clients away from such gimmicky novelties, once those customers part with the "feel good" mentality and start purchasing for the best deal, which for me, is being fair.

• Published: June 29, 2004 4:02 PM

• Jim Morse

• If UNCLE SAM is giving financial aid to cotton farmers, it may make the price of the cotton seem cheaper compared to cotton grown without such aid, but the aid comes from the pockets of taxpayers, making the ACTUAL net cost of such cotton HIGHER to the consumer/taxpayer than cotton grown without taxpayers' money.

  Good point. The bottom line is that U. S. cotton farmers benefit from the support of the U. S. government, while the much-less-well-off African cotton farmers suffer. "Your tax dollars at work."

  If people want to buy Fair Trade coffee, they are of course free to do so. But in making the decision whether to buy FT coffee, they ought to consider not just the immediate impact on the coffee growers who are in the FT system: they ought to consider the long-term impact on all coffee growers. On balance, does the FT system do more harm than good?

• Published: June 30, 2004 7:20 AM

• Mark Stevens

• The concerns voiced by Mr. Potts and subsequent commentators are fairly common to those becoming familiar with Fair Trade certification, and its unfortunate that he did not look much longer for answers before posting. Perhaps I can address a couple concerns here. I invite any and all further inquiries at the below address.

  To briefly answer what might be the most common concern, the retail price of Fair Trade coffee is not inflated. Rather, because of the high quality standards (more on that in a minute), it is priced high in general comparison to other specialty coffee. As for claims that stores and companies are skimming profits, I would appreciate numbers or instances where this is true. If anything, Fair Trade goods, in their early stage, are costly to add to a product line and have been adopted in deference to surging consumer demand and often outright pressure.

  Nor is the floor price of $1.26 "charity." Rather, this figure is a venerated formulation of the actual price necessary to live off of producing coffee. Furthermore, so long as the absence of "coercion" is involved, this is anything but charity, it is supply and demand at it's utmost, unless it is theft, but I protest, no customer has been "duped" at all.

  With regard to another large concern, it is relatively true that Fair Trade certification does nothing for other farmers and that programs should be implemented both to encourage other responsible sourcing relationships as well as to discourage new growers from flocking to coffee growth when it is unwise. FT is a solution for those who can make it work while these solutions come to those who cannot, and by no means is it detrimental; due to its structure, including its quality standards, the idea that FT would bring more producers into production is implausible. So when Mr. Potts asks "how does [a FT buyer] choose which grower deserves our largesse?" I was surprised that his visit to TransFair's site lent an unsatisfactory answer.

  If you've read this far, perhaps you'll write. pertinentquestions@planet-save.com.

• Published: July 7, 2004 5:42 PM

• Toni Heinonen

• "Rather, this figure is a venerated formulation of the actual price necessary to live off of producing coffee."

  To each according to their need, eh?

• Published: July 14, 2004 3:17 PM

• Rune Aldstedt

• Fair Coffee is a very frustrating consept, and it will not make the world a better place in any way.

  For me as a professional barista it is very frustrating to see people buy "cheap" coffee at a high price, "to save the world".
  If people focused more on quality and not just price, then the coffee-growers could focus more on growing better coffee to get better prices. We see this alredy with the Cup Of Exellence:

  www.cupofexellence.org

  And it's working, this is a win-win situation.
  This is the kind of fair-trade Coffee-growers really need, this way they could acomplish something by themselves and be proud of it. All they need is a fair chance, not our supermarket fair-trade pennies.

• Published: July 27, 2004 2:03 PM

• Lamar Cole

• There is a middle ground called fairness that people can find in most situations if they look hard enough.

• Published: June 21, 2007 5:36 AM