How fair is fair trade exactly?

People are becoming more aware of what it means to be a “conscious consumer,” which entails buying products that are made by firms that pay fair wages, provide safe working conditions, follow environmental regulations, and have standard working hours for their employees. This also includes organizations that intend to raise people above the poverty line and living conditions of people in the developing world. One of these organizations, the Fair Trade Labeling Organization, and the American affiliate (Fair Trade USA), are well-known among many people. Loras College is a Fair Trade campus, which means serving coffee made from fair trade certified coffee beans as opposed to non-fair trade certified beans. One may think that since one of the Loras dispositions is to be “ethical decision makers,” it is very logical to support an organization with ethical intentions such as fair trade. However, as this may crush the perception and “moral pride” of consuming fair trade products, fair trade is really not what it is perceived to be. In fact, instead of helping the masses of people and farming communities who live in poverty around the world, it has hurt them above anything else

Fair trade works by providing a price floor (almost $2.00/lb) for growers in case the market price falls below that price. This is in order to maintain an above poverty-level lifestyle. Farmers are intended to receive a $0.20 premium from each pound sold, which is sent back for investment in the local community. However, first fair trade cooperatives receive $1.40 from each pound sold. In order to become “Fair Trade Certified,” a farmer must pay for the certification, join a cooperative, agree to pesticide and fertilizer standards, and pay fair wages to their laborers.

The problems start by agreeing to become “Fair Trade Certified.” The amount of money that growers have to pay to attain the certificate is equal to, or in some situations greater than, the benefits of becoming certified. This ultimately ends in economic loss, or zero-sum gain for participating growers. Another drawback of fair trade is that it hurts the quality of coffee beans in the market. The price floor allows growers to sell bad beans at a price higher than what they should sell for according to the market price.

The amount of low-quality beans in the fair trade market has been a significant factor in limiting that particular market, which ultimately limits the revenue that can be brought in by the actual growers. These growers would be better off selling low-quality beans beneath the price floor but to a larger market. In addition to paying for the certification, growers must also pay for the pesticides and fertilizers that are stipulated by the fair trade agreement. This leads already impoverished farmers to fall further into poverty and debt, which is not outweighed by the revenue they bring in from fair trade.

Another drawback is that fair trade does not target the poorest of the poor; the only people who receive actual benefits are the slightly-to-moderately poor. The vast majority of poor do not receive any economic or educational benefits for themselves or families. This stems from that for each cup of fair trade coffee, only a third of a cent will be received by the growers. The money that is received by fair trade cooperatives is often used to pay salaries and build new office space instead of being invested into the impoverished communities. Building better infrastructure and schools for education is the solution to fixing the root problem of poverty, not fair trade.

So why are we a fair trade campus? Is it misguided consumerism? Or a need to feel self-righteous in the belief that continued consumption of fair trade products is a noble undertaking?  It is clearly not as ethical as we perceive it to be. In fact, it is more hurtful than helpful to the growers who participate in it.

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