Fair Trade sounds good
What the hell is it?
David Cavett-Goodwin
Fair trade is a global movement that attempts to mitigate the exploitation involved in global political economic relations, partly by baiting corporate actors into the arena of “ethical production.” It’s all about social justice. Then, chalk it up to Western corporations such as Starbucks, or other big names, like Nestle, Kraft, Sarah Lee or P&G, to take advantage of it.
The main principles of fair trade are: producers receive a fair price and a living wage, forced labour and exploitative child labour is prohibited, and buyers and producers trade under direct long-term relationships, in which producers receive access to financial and technical assistance.
Fair trade is about creating relationships that are more socially equitable and ethical between coffee producers, for instance, and the large corporations that purchase their products — not an unreasonable request.
Fair trade is by no means just limited to coffee. It exists for all types of agricultural goods (bananas and other fruits) as well as cultural goods (handmade crafts and art). It is no surprise that consumers of fair trade products are typically ethically benign and socially conscious people. Statistically speaking, a large proportion of those who have supported fair trade are teachers, health professionals and social workers. Fair trade also resonates with some high school and university students for its social justice aspirations.
Despite all of the publicity on a socially aware campus such as the U of M, most students still have no clue what fair trade entails. In 2005, Starbucks exceeded their goal of 10 million pounds of fair trade certified coffee, purchasing 11.5 million pounds — impressive until you read the fine print.
This accounts for only 3.7 per cent of Starbucks’ total coffee purchases. This year Starbucks plans on purchasing 12 million pounds of fair trade certified coffee — an improvement, but not by much, and certainly not the kind of improvement that coffee farmers need to see in order to live.
The company’s commitment to fair trade ensures that producers receive $1.26 per pound of fair trade certified coffee, which amounts to a living wage. If farmers — mostly in Latin America, in Starbucks’ case — didn’t receive this fair trade price, they would have to sell their coffee on the world market at the New York Exchange price, which was 97.39 cents per pound in February. Market prices have fluctuated wildly for coffee, particularly in the past 20 years. Coffee prices have dropped as low as 50 cents a pound, forcing many coffee producers into further poverty.
Another common problem is that the average consumer, or student, doesn’t recognize the difference between fair trade coffee, shade-grown coffee, CAFÉ practices (to improve quality), etc. These are different labels put out by coffee companies in their attempt to copy the new buzzword of business: corporate social responsibility. The list goes on, and most corporations will not go out of their way to tell you the difference.
This poses serious problems, specifically for the fair trade movement. Starbucks and the four major coffee roasting companies (Nestle, Kraft, Sara Lee, P&G) have flooded the market with ethical brands/labels. As they are proliferated, these labels become confusing for the average consumer. Thus, they feel that if they buy organically-grown coffee, “well, then it all must go to the same place.” It doesn’t.
So, with such noble intentions to make the world a better place, why does fair trade coffee account for less than 1 per cent of the global coffee market? Multiple explanations have been put forth, and corporate response to the movement has been lukewarm at best. Not surprisingly, Starbucks is at the front of this corporate social responsibility wave, while the world’s largest roasters have been slow to respond and, in some cases, even hostile to the movement’s demands.
One campaign attempts to discredit the fair trade movement using conventional economic theory, arguing that raised coffee prices will increase costs for the company as well as the consumer, thus driving down profits. The major four companies would argue that the root cause of coffee growers’ poverty is the simple oversupply of coffee in the world market. Therefore, if oversupply is the problem, fair trade is doing a great disservice to coffee producers by attempting to maintain a minimum price.
While corporations are attempting to discredit the fair trade movement on economic grounds, they are trying to portray themselves as socially caring, ethically responsible citizens. The very least that consumers can do at home is recognize this ambiguity, while still supporting fair trade’s goals and aspirations in the hope of creating a more socially fair world. Creating more public awareness on the topic would generate enough widespread support to actually encourage modifications in the way these companies behave, and make change for the better.
David Cavett-Goodwin is a fourth-year global political economy student.
