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  • Halo of Fairtrade casts a shadow on poverty

    Halo of Fairtrade casts a shadow on poverty
    By Alex Singleton
    telegraph.co.uk

    "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, the policy director of the Adam Smith Institute.

    Despite huge pressures on the public purse, local councils are squandering large sums to become Fairtrade towns and cities, to hector people into buying only Fairtrade. Meanwhile, the Fairtrade Foundation has received £1.5 million from the Department for International Development. This week sees the start of Fairtrade Fortnight, when charities, politicians and teachers will promote the scheme as an undisputed good. With all this effort, what a pity Fairtrade does not work.

    Fairtrades supporters blame the plight of coffee farmers on world prices and ruthless multinationals. But supporters ignore the real causes of poverty among growers. Farmers I interviewed in Kenya told me that the problems they faced were caused by their own governments interference. They have to use milling companies granted regional monopolies, which fleece them. They want to boost productivity by using fertiliser but cannot afford the prices demanded by the fertiliser monopoly. Imported tools would transform their output but are subject to punitive tariffs.

    Brazil, conversely, pursued free-market reform and the farmers have mechanised. That 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 Britain, seems oblivious and admits it has no programmes to encourage the use of technology. Even worse, it is giving counterproductive advice to farmers, encouraging them to mix crops in the same field, thereby cutting productivity and making mechanisation more difficult.

    Despite Fairtrades moral halo, there are other, more ethical forms of coffee available. Most Fairtrade coffee is roasted and packaged in Europe, principally in Belgium and Germany. That is unnecessary and retards development. Farmers working for Costa Ricas Café Britt have climbed the economic ladder not just by growing beans but by doing the processing, roasting and packaging and branding themselves.

    But Café Britt is not welcome on the Fairtrade scheme. Most Café Britt farmers are self-employed small business people who own the land they farm. That is unacceptable to the ideologues at FLO International, Fairtrades international certifiers, who will accredit farmers only if they give up their small-business status and join together into a co-operative.

    There is evidence that Fairtrade is damaging quality, too. Its 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 beans in that market and then dump their poorer beans into the Fairtrade market, where they are guaranteed a good price. Thats worth considering next time you pop out for an espresso.

    http://www.telegraph.co.uk/earth/main.jhtml?view=DETAILS&grid=&xml=/earth/2008/02/24/scifair224.xml


  • #2
    Re: Halo of Fairtrade casts a shadow on poverty


    In all the pros / cons on Fairtrade I have read this was the first time that I had seen this paragraph...

    There is evidence that Fairtrade is damaging quality, too. Its 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 beans in that market and then dump their poorer beans into the Fairtrade market, where they are guaranteed a good price. Thats worth considering next time you pop out for an espresso.
    Interesting to say the least.

    Comment


    • #3
      Re: Halo of Fairtrade casts a shadow on poverty

      very interesting read.

      Comment


      • #4
        Re: Halo of Fairtrade casts a shadow on poverty

        A thought provoking article Andy.

        Like Communism, the concept of Fairtrade is, I believe, a good one.  Unfortunately, due to human greed, neither of these concepts seem to work when put into practice.

        Whilst Fairtrade aims at improving the lot of many underprivileged people who work in coffee production, it would seem to me that most of its funding is devoured by poor management, high administration costs and fruitless projects.  Fairtrade has become little more than another charity - one that often imposes unreasonable demands on the farmers and plantation workers who could do with some real support.   Fairtrade also seem reluctant to openly share their ledger.  At least the multinationals are held accountable by their shareholders.

        Fairtrade, "Guarantees a better deal for third world producers".  Id like to know how much of a better deal these producers have gained that wouldnt have happened without Fairtrades support.  Id then like to see some sort of comparison with the likes of Republica Coffee, who jumped on the Fairtrade wagon and bragged that they didnt have a roaster, but used marketing strategies to build a business that turned over more than a million dollars a year in very quick time.  I wonder if they ever considered direct profit sharing with their coffee producers?

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        • #5
          Re: Halo of Fairtrade casts a shadow on poverty

          Very interesting, indeed. Rather than ideology, well-intentioned or not, the best thing for specialty coffee producers is an alliance of communities and government with roasters and importers, with sustainable projects of education and qualification, best farming practice and a commitment to buy complete crops of quality coffee. In other words, an investment in the future of coffee producing communities that benefits farmers, local economies and green bean buyers alike. We are already willing to pay a lot more for our coffee, but I think we have a right to expect that a proportion of this will be re-invested in the communities that produce it. Then we all win. Maybe Fairtrade can have an impact on commodity coffee (but I doubt it), but it has limited benefit for specialty coffee, unfortunately.

          I would be interested to hear a contrary view, however.

          matt

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          • #6
            Re: Halo of Fairtrade casts a shadow on poverty

            Post removed, context has changed

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            • #7
              Re: Halo of Fairtrade casts a shadow on poverty

              Originally posted by benipk link=1204776460/15#25 date=1204778793
              <snip>As a roaster who uses FairTrade exclusively....
              Wow Ben,

              With the limited range of FT available, I would have thought that was like attempting to blend with one hand tied behind your back?  It must be challenging to run a regular blend and nigh on impossible to do an organic blend?  :-?

              With respect to FT, it seems that roasters using FT do so with integrity and pay dearly for the right to brand their product FT and display the logo.

              As for the rest of the chain, Ill be convinced when retailers, some of whom charge exhorbitant premiums on FT, as well as Oxfam, are prepared to come clean and show us (and the shoppers who naiively believe its an almost 100% donation to the growers AND their workers) where the money really goes...

              Chris

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              • #8
                Re: Halo of Fairtrade casts a shadow on poverty

                Post removed, context has changed

                Comment


                • #9
                  Re: Halo of Fairtrade casts a shadow on poverty

                  Maybe blending gives a more balanced flavour! Some roasters use 10% robusta in their Italian espresso blends, for that extra caffiene kick
                  Andy has won 3 awards at the golden bean last year and im positive they are all blends.
                  I think people should be open to trying any coffee they like

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                  • #10
                    Re: Halo of Fairtrade casts a shadow on poverty

                    All good and well...

                    I just wonder why there are so many secrets about how the money is used? Is it that they are using more than a reasonable share for purposes other than looking after growers?

                    Why also, does a FT grower get away with paying their workers the same or even less than other coffee workers? Do we really care or do we simply want to appear like we do?

                    Why do we hear stories of plantations selling their lower standard for FT and keeping the good stuff for the open market? There are many other tales as well....

                    For me personally, there is way too much use of smoke and mirrors. Good coffee doesnt HAVE to be FT and growers who produce the best stuff can achieve great prices without more greedy fingers in the pie. COE and RFA are just a couple of examples, and often waaaay superior IMHO.

                    Ben, this is not to say that youre not doing a great job. You clearly are and deserve the awards. Id just like to see Joe Average supplied with all the information to allow for an informed decision.

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                    • #11
                      Re: Halo of Fairtrade casts a shadow on poverty

                      The information is available, but perhaps you should be talking directly to the Fairtrade organisation? Oxfam and Fairtrade are not the same entity, although Oxfam have helped out a great deal with marketing etc.

                      http://www.fta.org.au/

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                      • #12
                        Re: Halo of Fairtrade casts a shadow on poverty

                        Dont appear to be any figures on the fta website Ben.

                        Can see that supporting "developing country disadvantaged producers" ranks 3rd out of the 4 priorities the fta has - behind promoting the concept and promoting activities in AU and NZ.

                        To me, that just translates to ads and junkets.

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                        • #13
                          Re: Halo of Fairtrade casts a shadow on poverty

                          Someone from FT posted here a while back.
                          So we have spoken directly to them Ben and the cynicism is still here.

                          Comment


                          • #14
                            Re: Halo of Fairtrade casts a shadow on poverty

                            Had a look myself but cant see any figures.
                            I just hope Fair Trade doesnt promise a certain price for the beans and cant deliver when there is a glut as this happened here in OZ with grape growers and a large winery.

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                            • #15
                              Re: Halo of Fairtrade casts a shadow on poverty

                              Firstly CSrs...  
                              Removing the content of your posts in the middle of a thread is pretty bad form.  If you post claims, generate a debate and remove your claims then the whole thread becomes hard to read.
                              Try to avoid it please.

                              [hr]

                              Now...

                              Inaccuracy is the exact reason I’m replying to some of the claims in the removed post, when you have an emotional discussion like this there are many false truths and inaccuracies. Ill quote the text, not the author.

                              The increase in the global cost of coffee will not start disadvantaging FairTrade farmers, because theyre already getting higher (2-3 times) more per kilo for their coffee than other farmers
                              That is the first inaccuracy.
                              "2-3 times" is total hogwash.  Statements like that are generally  propagated by people trying to oversell the benefits and I suspect you are a victim of that.  

                              For the moment, lets forget about the licensing, certification and label costs that you as a roaster/retailer have to pay as they dont go to the farmer.

                              There are 3 Fairtrade price components for farmers.

                              1. Minimum price per pound in US cents.
                              Washed Arabica 121
                              Unwashed Arabica 115
                              Washed Robusta 105
                              Unwashed Robusta 101
                              2. Price Premium per pound in US cents - 10
                              3. Organic Premium per pound in US cents - 20

                              The current ICE price for coffee is 162 so the minimums dont come into play.  At todays price the fairtrade cooperative (not farmer) will get 172 and 192 for organic.

                              On the face of it, that looks pretty fair until you dig a little deeper.  

                              The small farmer is not allowed to trade with Fairtrade unless he is part of a cooperative so the small property holder with a crop of trees that can provde for his family cannot apply for Fairtrade certification.  He needs to join a co-op and play by the co-op rules,   which is hardly a free market place.

                              The co-op fees are something like 250 euro for initial application plus 2000 euro for inspections of a 50 worker farm.  If they also process coffee and have 50 workers in the processing plant then they require additional inspection days at a similar price circa 2000 euro.  Organic certification requires far more inspections and testing which is why the 0.20 premium is given to help cover the additional costs incured by the farmer.  

                              and this does not include the 2% premium we pay back to the cooperatives.
                              I think you will find that the 2% that you pay goes to the FLO for the right to use the labels, as far as I know NONE of that goes back to the co-ops and is instead used for marketing and administration costs.

                              As the price of coffee increases, the Fairtrade "minimum" is revised, and if the average coffee prices rise above that of FairTrade, FairTrade prices will increase to match
                              True.  The gotcha is that being a big fat worldwide company it takes about 6 months for prices to adjust.  They have just made a price change but it wont take effect till June this year and even then buyers that had contracts written last year for delivery of coffee post June 2008 will still get it at the old price.

                              and the premium we pay to the cooperatives will start to decrease to reflect that.  
                              Eh?  I dont think so.

                              Lets be very clear, FairTrade is not a method of price fixing to disadvantage the farmers, its a *minimum price fix* to create a floor below which the price cannot fall. There is nothing stopping a high quality FairTrade coffee from commanding a high price, like any specialty bean. The system simply exists to prevent prices falling below a sustainable level.
                              Nice paragraph.  Factual without false quoted figures.  That is exactly the reason they set Fairtrade minimum prices.

                              As a roaster who uses FairTrade exclusively, the rising market prices are a good thing. We do not enjoy such large profit margins as most other companies and will actually become more competitive as prices increase, as we will not have to increase our own retail prices like other companies until the world coffee prices approach that of the FairTrade minimums.  
                              Ummm... I think you are off way track here.

                              World coffee prices are already 30% above the Fairtrade minimum.

                              Will become more competitive?  Unless you have a contract with your broker for a fixed price I expect you will  get a shock on your next bean order.  Most Australian brokers prices moved up 8% this month following the international indexes, that includes Fairtrade beans.


                              (continued next post... too long)

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