Question: Why criticize Fair Trade?

Steve Rogness & Amy Seeboth

We are glad to see that Jonathon Horne, in his letter entitled “Fair Trade Not the Solution,” highlighted the fact that the fair trade coffee movement is not an end-all solution to the impoverished condition of coffee farmers worldwide. Fair trade is but one of many tools that concerned and proactive individuals should be aware of when considering how to help these farmers. In Mr. Horne’s argument, however, both his characterization of the motives behind fair trade and his understanding of its economics are simplistic and misguided. To begin with, the fair trade movement is not an “anti-globalization,” “anti-capitalist” agenda from the “radical left.” Mr. Horne is throwing these terms around indiscriminately in order to make this debate one of ideology, not of facts. The very term “fair trade” shows support for trade and merely expresses concern that the conditions under which trade is currently conducted are inadequate.

More importantly, the economic ideas on which Mr. Horne bases his arguments are simply untrue. He begins his discussion of fair trade by comparing the system of fair trade certification to OPEC (Organization of Petroleum Exporting Countries), the middle-eastern oil cartel. This comparison is preposterous: fair trade coffee cooperatives do not exert any market power over the price of coffee (besides, our economies do not depend on coffee like they do on oil). Rather than exerting market power, they operate cooperatively within a system of nearly perfect competition, in other words, they operate within the capitalist market that Mr. Horne assumes we oppose. Within this competitive market, fair trade coffee has found its niche, and consumers show a desire to purchase it. Neither decisions facing producers nor consumers are being controlled, leaving purely competitive factors to drive the production and exchange of fair trade coffee.

How could this system possibly hurt “American corporations, workers and consumers?” The fact is that it does not. Some corporations, such as Starbucks, are finding it in their interest to offer fair trade coffee to the small but growing number of their customers who desire this product (still, sale of fair trade coffee at Starbucks are miniscule relative to conventional coffees). Other corporations do not have this incentive, and are offering the same prices as they always have. Therefore, no consumer is made worse off in this situation: coffee-buyers still face all of the same choices as they did before, with the additional option of supporting fair trade coffees.

To put the situation simply, here’s what we have: a new product is being offered and consumed. It is being marketed by companies and organizations across the world, including here at Lawrence. The only economic implication of this new product is a slightly better life for the people that we depend on to produce the coffee that we enjoy. The people who do not wish to produce, sell or purchase this coffee do not have to, and are not made worse off by its existence.

Mr. Horne is right about one thing: fair trade coffee will not by itself solve the problems of impoverished farmers worldwide. But not everyone will be privileged enough to move on to “more lucrative areas” than coffee production. As long as people drink coffee, people will produce it, and we must decide whether or not these producers will be paid a decent price for their product. While it must be incorporated into a long-term strategy to deal with the root causes of poverty, the fair trade system offers an immediate, economically efficient means for consumers in wealthy countries to choose products that will aid the plight of impoverished farmers.