Fair Trade not the Solution


The indeed dire plight of Latin American coffee farmers has gotten a lot of attention lately. The activist elements on campus have effectively painted the picture of the poverty these people live with. On the surface, the Fair Trade movement seems like an effective means of dealing with this problem. Briefly, a Fair Trade certification means the coffee beans were purchased by an organization, similar to OPEC, that regulates the price that consumers pay and that producers get for the product. Presumably, the Fair Trade system will leave more money for the farmer because corporate middlemen would not be taking profits.
Although you’ll probably never hear it admitted by the anti-globalization elements on campus, the real problem is not the firms that transport the coffee. The problem lies in the market itself. In the 1990’s Brazil and Vietnam increased production and flooded the coffee market; Vietnam itself grabbed a 12 percent market share. This huge increase in supply necessarily forced a reduction in the price farmers were realizing for their crops.
Fair Trade fails to address this basal cause of the farmer’s poverty. Like any other cartel, Fair Trade will give the farmers an artificially high value for their product, inducing more production the market and deepening the glut that caused the problem in the first place. In addition, the cartel will force consumers, including the American poor, to pay more for their coffee. Given the radical left’s anti-capitalist agenda, it is not surprising that they have chosen a solution that not only hurts American corporations, workers and consumers, but ignores the situation’s basic cause.
Activists truly concerned with helping the less fortunate rather than hurting American business should buy whatever coffee they prefer. Although it may be more time consuming and perhaps less en vogue than buying a cup of Fair Trade, truly concerned activists should pressure their congressmen to help the Third World governments shift from commodities production, such as coffee, to more lucrative areas. And they should work to remove tariffs that punish production in Latin and South America.
If there is one thing the Fair Trade movement has accomplished on campus, it has separated the activist population into two groups: one, that enjoys pointing out problems and another that works for solutions.