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May 8, 2017

How fair is fair trade?

Today’s college students were raised in an era of simple solutions for complex problems. Our generation crams thousands of songs into credit-card-sized MP3 players, stuffs happiness into easy-to-swallow pills and compresses deep thoughts into 140 tweetable-characters.

But can we put social justice into a cup of coffee? Well, on university campuses across the country, students are certainly trying. Frequent the campus center at any given college and you’re likely to find a trendy new establishment known as a “fair trade” coffee shop – in contrast, presumably, to those greedy “unfair trade” coffee shops of our parents’ generation.

The premise of these new cafés is simple enough. For a slightly steeper price, the shops purchase their coffee beans solely from producers in undeveloped countries that are certified fair trade growers. In order to become certified, producers must commit to certain guidelines, such as promising to pay their coffee pickers a minimum wage salary. Then college students, in their tireless and good-hearted quest for global equality, gladly pick up the tab by paying 75 cents more for their organic double mocha espresso.

It appears to be a win-win situation for all parties, but is it? Evidence is mounting that the people who lose the most from the fair trade craze are the same ones who it was originally designed to help – the poorest of the poor in undeveloped countries.

“[F]air trade is not a panacea, and it does not bring the majority of participants out of poverty,” wrote Michigan State University sociology Professor Daniel Jaffee – who spent four years studying the impact of fair trade in Mexico – in his book “Brewing Justice: Fair Trade Coffee, Sustainability and Survival.”

 

Fair trade sets a minimum price floor that importers are required to pay certified coffee producers and tacks on an additional premium of 10 cents to each pound of coffee. With this extra money, coffee growers are expected to provide their laborers with a living salary and safe working conditions. Unfortunately, this isn’t always the case. In a Sept. 9, 2006 article, the Financial Times reported that the majority of certified farmers visited by the newspaper were paying workers less than their country’s minimum wage. “No one in the industry is paying minimum wage,” Eduardo Montauban, head of the Peruvian Coffee Chamber, told the paper. “It’s simply not feasible for producers.”

 

Moreover, the certification process often leaves the most impoverished coffee growers out in the cold. “Fair trade [certifiers] must pick among farmers on the basis of whether they are able to bring a buyer to the table and whether they meet fair-trade standards, not on the basis of need,” wrote Marc Sidwell in a 2008 study by the Adam Smith Institute (ASI). Unable to qualify, many farmers in undeveloped countries struggle to compete against the financially-backed fair trade-certified growers.

 

Even if these problems could be resolved, the fundamental theory of the fair trade coffee campaign stands on shaky economic ground. The movement began in the early 1990s to counter plunging coffee prices caused by a surplus in the market. However, the minimum price floors created by fair trade organizations have caused the coffee growing industry to become even more saturated with farmers eager to capitalize on the artificially high prices.

 

“We’re hurting because of overproduction,” Edmundo Roman, a Nicaraguan coffee farmer, told Claudia Adrien of Florida Fly-Ins in 2004. “The bottom line is that coffee is everywhere.”

 

Even worse, the fair trade movement props up unsustainable farming communities instead of helping them develop more marketable industries. “[In] the time it takes 500 people in Guatemala to fill a large container with coffee, the same amount of coffee can be picked in Brazil by five people and a mechanical harvester. Fair trade supports inefficient, labour-intensive cooperatives in a battle they can never win, trapping them in their poverty,” noted Sidwell.

 

But campus coffee shops still continue to peddle fair trade coffee to students, despite evidence that it actually causes more harm than good. And students keep drinking it up.

 

The fact is we’re not going to finagle a path to global equality by overcharging for cups of coffee. But by implementing the tried-and-true principles of free trade, we can begin to create opportunity for the world’s poor. This means the opportunity for coffee growers to compete on an open market free of restrictive tariffs, the opportunity for farmers to replace the stagnation of unsustainable industries with the growth of new enterprise and the opportunity for them to strive for something more out of life than a minimum wage salary.

 

And unlike fair trade, which benefits only a few of the world’s poor at the expense of others, free trade can improve the lives of everyone. That’s real fairness.

 

Alana Goodman is a Collegian columnist.  She can be reached at agoodma@student.umass.edu.

Comments
3 Responses to “How fair is fair trade?”
  1. Ed says:

    “Our generation crams thousands of songs into credit-card-sized MP3 players, stuffs happiness into easy-to-swallow pills and compresses deep thoughts into 140 tweetable-characters.”

    Best definition of Gen-Y yet….

  2. Matt Robare, Collegian Columnist says:

    Um. Fair trade is free trade. Unfree trade implies government barriers. Fair Trade is completely outside the government. Furthermore, the entire purpose of Fair Trade is to build up capital in their cooperatives so they can invest in labor-saving devices. In case you haven’t noticed, the poor need to save and invest in capital goods. The aim, if you read the Fair Trade website, isn’t competition with big producers owning huge coffee plantations, it’s to cut out the expensive middlemen between the small, independent producers and their markets.

  3. Ed Cutting, Maine Lobsterman says:

    Matt, I have seen the exact sort of thing of which Alana writes occur in the lobster industry. My family isn’t able to afford to have someone full time out selling our catch. Likewise we don’t ourselves have enough of a catch to make it worthwhile for someone (like Big Y) to have us as their vendor – I actually once spoke with their buyer about this.

    So what happens is that the BIG outfits gets the exclusive deal, thus the support market for the smaller outfits gets forced out and that is why the boat price right now $3.25/lb.

    What I think you will find is that the Free Trade folk are purchasing beans (at a lower price) from those who otherwise would have sold them on the regular market.

    And one other thing — the price differential seems to be greater than the actual difference in the price of the beans. Who actually makes the most, the farmers or the rich white folks who manage the program???

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