The charitable British purge their moral consciences by buying fair-trade coffee. They think they are doing their little bit to help the people working back-breaking fourteen-hour shifts in sun-scorched fields. But as they sip their socially-responsible espressos, how much of a difference does a fair-trade sticker really make?
Fair-trade coffee works by setting a minimum price to pay the producers, which is based on their costs. Fair-trade companies must pay the minimum price for coffee, unless the world market price is higher, in which case they must pay that. They are also required to put a premium on their coffee products, which goes towards social, environmental, or economic development projects.
However, this leaves some producers of good coffee unable to compete unless they are fair-trade, as demand is skewed towards that end of the market. This, it is said, undermines free-market trading.
If coffee crops aren’t providing enough yield, or are producing poor-quality coffee, then should we continue to flog a dead horse? It’s argued that fair-trade clamps some otherwise unsustainable producers to the coffee industry. Instead, investment in new industries is needed, to allow these people a chance for a fresh start and to enter markets with plenty of demand and growth potential.
Coffee Aroma in Lincoln’s city centre is an independent coffee shop which doesn’t buy fair-trade. Ben Drury, a barista at the shop, says fair-trade is a double-edged sword: “It can bring you trade and business because you’re a fair-trade registered company, so now the [hypothetical] fair-trade Colombian Farmers PLC are fair-trade they’ll get business, whereas a smaller farm which produces a tiny amount of coffee will not be able to get the same prices in their area [compared with others] because everyone else is fair-trade,” says Drury.
El Salvador coffee costs, on the world market, around a dollar a pound. Fair-trade prices are little more. Coffee Aroma pay £6.07 per pound for the same coffee.
“There’s a massive gap in paying for good quality produce than paying for a label. That label really doesn’t mean much. Most fair-trade coffee is awful quality and it doesn’t live up to standard. It isn’t treated well and it’s not handled correctly. It’s not even marketed very well. People just slap a fair-trade sticker on an espresso brand and think it’s fine and dandy,” Drury says.
The 2008 report “Unfair Trade” by the Adam Smith Institute, a right-leaning think-tank, found that four fifths of fair-trade goods end up in non-fair trade products, and just 10% of the premium price on fair-trade goods goes to the producers, as well as other findings.
The report concluded: “Fair-trade is not an answer to poverty. For those who promote it, fair-trade is not even necessarily intended to aid economic development. Instead, fair-trade operates to keep the poor in their place, sustaining uncompetitive farmers on their land and holding back the changes that could give their children a richer future by encouraging mechanization and diversification.” In response to the report, the Fairtrade Foundation “refutes the unsubstantiated claims that Fairtrade ‘does more harm than good’”.
“[The Adam Smith report] applies totally inflexible dogma and outdated information to criticise Fairtrade producers, without offering any constructive alternative for development other than ‘leave it to the market’.”
Stephen Leighton runs Has Bean Coffee Ltd and is Coffee Aroma’s roaster. He once used fair-trade coffee farmers, but made the decision in 2002 to stop buying from them. In an article on Has Bean’s website, he justified this move: “I’m not an evil capitalist that believes farmers should be suppressed so that coffee roasters can make all the money from coffee,” writes Leighton.
“The only way the speciality market can possibly grow and succeed is via sustainable methods, rewarding coffee farmers for the hard work they put in.”
He pours scorn on one major fair-trade organisation, who he believes waste money acting like a corporation. “Does the farmer need a full-page advertisement in The Sunday Times Magazine which, trust me, is very expensive. Does he need an army of administrative staff based in a swanky London office, or many other expensive cities around the world? Fairly traded produce has the ability to sell itself on its own merit and doesn’t need all these things,” he wrote.
Leighton also criticises the supermarkets who push guilt on the consumer despite their own unethical practices: “Calculating that, in general, and being generous, the fair-trade farmer gets 12p extra for a fair-trade pack of coffee, compared to a standard, commercial brand.
“However, the price on the pack in [one leading supermarket] is around 75p more than their own brand offerings, resulting in a small reward for the farmer from the supermarkets, but a large return for the supermarkets hitting the guilt strings of its customers.
“Consequently, it is the very people that drive prices down on many items, to a degree that makes it difficult to make a decent living, who are making the consumer feel guilty, whilst increasing their profit margins? This is a perverse situation to say the least.”
The Fairtrade Foundation did not respond to The Linc‘s request for comment.Tweet