Unfair Trade: Is Fair Trade Scalable?
Posted in: Opinion
Thanks for the very interesting posts on fair trade Clay (and hello from a first time poster, brilliant site).Hope you dont mind if I make a few comments (although I am far from an expert and very happy to be found completely wrong! (my intention is to learn)). Agreed, some flaws with fair trade (ft) concept:1) as you say in another post ft provides a fairer deal for producers in some countries than those in others (given differences in $ purchasing power across different countries);2) as Matt says it fails to incentivise farmers to improve quality (unlike say direct trade concepts) why put in more effort to raise the bar re planting more flavour-some but more labour intensive bean, or say spend more time and effort fermenting if you know you will get the same price as your more laid back neighbor who will just take the easy options? ;3) the farmer could actually be worse off : if every farmers goal is to sell fair trade cacao then wont this cause oversupply given the finite (albeit growing) fair-trade market? So those beans that s-he cant sell fair-trade (if s-he does not belong to a co-operative) will have to be sold on the open market at rock bottom prices given the glut.4) as you have pointed out before, the minimum cacao price contract seems, currently, a pretty rubbish deal after the spoils have been divied up. The ft floor price ($1750 per tonne isnt it? ie $1600 plus $150 premium) has been irrelevant for the last four or five years with open market cacao prices being above the floor (dont know why the floor hasnt been adjusted upwards to take into account of inflation). So the ft advantage for the farmers now (and for the foreseeable future in my opinion as I cant see cacao going down below $1600) comes from the $150 premium which as you point out is currently only about 5% above market. And if prices rise the premium will be even less in % terms. Obviously, when prices were at the $1000 level in the early 90s then farmers were getting a much better deal (when the ft price-premium was 75% above the open market).All this said, I think the fair-trade foundation has done really important work to inform western consumers about the plight of developing world farmers, their miserable wages, living standards, environmental standards etc AND to empower them to demand changes-improvements using their wallet. It is also keeping big business accountable to some extent on wages, the environment etc given the ft certification many consumers now expect from big business.But, I agree ft is mostly for the big boys. Its not really helping the small scale farmer (who as you say find certification costs prohibitively expensive) reach international consumers. Nor is it really helping the ethical chocolate maker or craft producer who pays way above the minimum fair-trade price because they think it is the right thing to do in the circumstances, since their ft logo, if they go for it, will lump them in with all the "no more than $150 premium" corporate buyers. One size cant fit all.As you say Clay no point criticising a system without a better alternative to propose so really interested in your new site, will check it out. PS I came across The Fair Tracing Project a while ago whilst browsing (and no, I have no connection with them!) and I thought there were some great ideas in there. No doubt you have come across it already.Sorry for rambling (especially on a first post)..and sincerely hope I have not offended anyone!Dom