Fairtrade v Free Trade
But you knew this already...
Fairtrade is a nice idea, and it is great that so many consumers want to help the poor in the developing world. But it is important that we ask whether Fairtrade really helps. After all, 'Fairtrade' does not mean anyone who gives better terms to third-world farmers. It is a particular brand, which competes with other ethical schemes and charities for people's money.
There are a number of inconvenient truths about Fairtrade. Indeed, on closer inspection it may not be that fair at all. It only offers a very small number of farmers a higher fixed price for their goods. Given the way markets work, these higher prices come at the expense of many other farmers, who – unable to qualify for Fairtrade certification – are left even worse off.
More importantly, the Fairtrade scheme does not aid economic development. It sustains uncompetitive farmers on their land, holding back diversification, mechanization and moves up the value chain. In doing so it denies future generations the chance of a better life.
The fact that will surprise consumers most, however, is that only 10 percent of the premium they pay for their Fairtrade products actually gets to the producer. The rest goes to people further along the retail chain.
Comments
Yeah, but aren't the cute farmers worth saving? I imagine the world without third world aborignals grubbing in the dirt for our pleasure.
Posted by: Tomare Utsu Zo | February 25, 2008 12:34 PM
Save Juan Valdez's leetle farm up in da mountains, so he can buy a big house on Rodeo Drive.
Posted by: DirtCrashr | February 25, 2008 6:25 PM
Damn fine blog... I commented on this one on my blog this morning.
What I can't stand about Fairtrade is pasty-faced celebrities like Coldplay's Chris Martin getting into it and moralising to the rest of us about what brand of coffee we should buy... etc, etc.
And the fact is Fairtrade doesn't taste good; it leaves a sour taste in your mouth - literally, and that's forgetting about the Adam Smith report...
In my opinion, the selling point of Fairtrade is penance. It's a way to appease you guilt, like the monks of old used to put dried peas in their shoes to make walking hellishly painful.
But now the truth is out... Fairtrade is a big blag...
Posted by: Jimmy Lee Shreeve | February 25, 2008 10:17 PM
Are you good gentlemen able to obtain 'Dilmah' tea in Blighty?
It's direct from the growers in Ceylon, is fair trade because of that, without the label or associated baggage, and is actually damned fine tea.
Posted by: rpg | February 26, 2008 8:53 AM