Bitter truth about Fair Trade versus free trade

Fair Trade is everywhere. All the big brands have bought into it and in some supermarkets certain products can only be purchased in their Fair Trade incarnation.

We coffee-lovers get to enjoy our daily fix and, by paying more than for a standard brew, a premium is apparently paid to a poor producer in the developing world. In addition, we get to feel a tad virtuous and maybe even a little smug. It is surely, in simple terms, a “good thing”. However, take a peek behind the rhetoric and look at the actual outcomes, and the picture is not quite so clear.

The first thing to be tackled is the premium. That extra 40p you pay for the Fair Trade version of your skinny decaf cap? Fair Trade promoters, outside of wholly inadequate case studies, have never demonstrated how much of the additional price reaches producers, and even analysts sympathetic to the movement suggest that only 25 per cent will make its way through.

Read the rest of the article on the Yorkshire Post website.


Further reading:

Fair Trade Without the Froth by Sushil Mohan

1 thought on “Bitter truth about Fair Trade versus free trade”

  1. Posted 11/11/2010 at 12:02 | Permalink

    Nick is quite right. As Sushil Mohan’s new Hobart Paper ‘Fair Trade without the Froth’ explains in a very balanced way.

    I’m not quite sure why purchasers of Fair Trade coffee (for example) should feel smug, any more than people who drink orange juice rather than alcohol, or those who pride themselves in having an ‘ethical’ investment portfolio. They are simply giving effect to their subjective preferences.

    My own modest portfolio contains some shares in tobacco companies and in arms manufacturers as well as BP. Actually the investment I feel most dubious about is my holding of gilt-edged securities (British government stock). Am I encouraging reckless government borrowing?

Comments are closed.