http://www.theinterface.org.uk/?q=node/110http://blogs.telegraph.co.uk/alex_singleton/blog/2008/02/23/the_poverty_of_fairtrade_coffeeread this:
Fairtrade purports to work within the market economy but its rise has been largely based on marketing subsidies and public-sector procurement," says Tom Clougherty, policy director of the Adam Smith Institute. Despite huge pressures on the public purse, local councils are squandering large sums becoming Fairtrade towns and cities, distributing posters and leaflets to nanny people into only buying Fairtrade. Meanwhile, the Fairtrade Foundation has received over £1.5m from the Department for International Development. It wants more. In December, reminiscent of 1970s-style industrial policy, it called for £50m of development aid to be spent as "strategic investment" on Fairtrade.
Fairtrade coffee is not actually the most ethical form available
Monday sees the start of Fairtrade Fortnight, the time each year when we are hectored into paying more for a cup of coffee. Charities, politicians and primary school teachers will deliver the scheme as an undisputed good. With all this effort, it is a pity Fairtrade does not work.
Fairtrade's supporters blame the plight of coffee farmers on world prices and ruthless multinational companies. But supporters ignore the real causes of poverty among growers. Farmers I interviewed in Kenya told me that the problems they face are not caused by global influences but their own government's interference. They are forced to use milling companies granted regional monopolies, who fleece them. They want to boost productivity by using fertiliser, but they cannot afford the inflated prices demanded by the government fertiliser monopoly. Imported tools and machinery would transform their output but are subject to punitive tariffs. Police roadblocks slow their goods and involve money exchanging hands.
Brazil, conversely, pursued free-market reforms and the farmers have mechanised. This has enabled five people and a machine to enjoy the same output as 500 unaided farmers. Yet the Fairtrade Foundation, the lobby group behind the scheme in the UK, seems oblivious to this and admits it has no programmes to encourage the use of technology. Even worse, it is giving counterproductive advice to farmers, encouraging them mix different crops in the same field, thereby cutting productivity and making future mechanisation more difficult.
Despite Fairtrade's moral halo, there are other, more ethical forms of coffee available. Most Fairtrade coffee on sale in UK supermarkets and on the high street is roasted and packaged in Europe, principally in Belgium and Germany. This is unnecessary and retards development. Farmers working for Costa Rica's Café Britt have been climbing the economic ladder by not just growing beans but by also doing all of the processing, roasting and packaging and branding themselves. Shipping unroasted green beans to Europe causes them to deteriorate, so not only is Café Britt doing far more to promote economic development than Fairtrade rivals, it is also creating better tasting coffee.
But Café Britt is not welcome on the Fairtrade scheme. Most of Café Britt's farmers are self-employed small businesspeople who own the land they farm. This is wholly unacceptable to the rigid ideologues at FLO International, Fairtrade's international certifiers, who will only accredit the farmers if they give up their small business status and join together into a co-operative. "It's like outlawing private enterprise," says Dan Cox, former head of the Speciality Coffee Association of America. Many African farmers, organised along tribal lines, are similarly excluded from the scheme. Other producers complain that accreditation is needlessly bureaucratic and costs five times as much as organic certifications.
Café Britt accuses the Fairtrade scheme of failing to understand the cultural realities in countries like Costa Rica where many farmers simply do not want to become part of co-operatives. Unlike campaigners' romantic vision of developing country co-ops, the overwhelming evidence is that they are breeding grounds for corruption and abuse of workers. Co-operative leaders, who routinely get re-elected in fiddled votes, rake money from ordinary farmers, keeping them in the dark about their output's true worth.
While true that certification requires an annual inspection (for a fee) these can range from simple visits to requests for paperwork by post. The scheme does not verify wages paid to labourers. Those co-operatives who run free elections are little better, with leaders often unwilling to make tough but necessary choices for fear of losing popularity with their voters. Moreover, an independent investigation into Peruvian Fartraide farms found breaches of Fairtrade rules, with many workers being paid less that that country's minimum wage and non-certified coffee being passed off as Fairtrade.
Meanwhile, Fairtrade has the effect of encouraging relatively affluent, but not very efficient, producers to stay in the market. Being more affluent, they find it easier to jump the bureaucratic hurdles the scheme imposes. Accordingly, Mexico is the largest single Fairtrade coffee producer, despite the country having free access to US markets and enjoying average wages eighteen times those of its coffee rival Ethiopia, which loses out as a result.
Unfortunately, the juggernaut of Fairtrade marketing has been extremely damaging by crowding out other ethical approaches. While Café Britt's products are sold globally, its products have found competing in the UK very difficult. Its UK distributor, 100% Arabica, was recently forced out of business. Good African Coffee, a non-Fairtrade Ugandan firm that packages and brands its coffee in Uganda, has done better but has still only gained a very small part Britain's ethical coffee market.
While high-street chains like Starbucks and Caffe Nero have encouraged consumers to favour higher-quality, speciality coffee, there is growing evidence that Fairtrade is damaging quality, too. Fairtrade farmers typically sell in both Fairtrade and open markets. Because the price in the open market is solely determined by quality, they sell their better quality beans in that market, and then dump their poorer beans into the Fairtrade market, where they are guaranteed a good price regardless. Moreover, because co-operatives mix every farmer's beans together, farmers who improve quality receive the same payment as those who do not, which discourages improvements. That's worth considering next time you pop out for a double espresso.
