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Great ‘Cheapest Way to Go Fairtrade’ Hunt
Comments
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No one is arguing that Fairtrade growers don't get a 'fair' price for their coffee. The issue is whether giving them a 'fair' price distorts the market, resulting in over-supply and putting their competitors out of business.
One of the fairtrade claims is that by introducing buyers who are willing to pay good prices to an area, the average price goes up. More buyers and higher prices will not reduce the average price, that just doesn't make sense.
However, the claim that it might lead to increasing coffee plantations which would lower the price is harder to be so clear about. In 2001, when fairtrade held a very small market share, the market price was at a 30 year low. However, regardless if you connect the two peices of data directly, both the average coffee price and the fairtrade market share have grown significantly since then. The suggestion fairtrade is indirectly damaging the prices does not seem apparent yet, if at all.
Even if there is some truth in the claim, I'm not sure I agree with the sentiment anyway. Very low prices is not an ideal way to control the world production of coffee. The suggestion that the free market will come fix the problem seems rather contradictory on this point, because they're openly admitting that every time the price goes up so will supply and that will drive it back down again. Why is this alleged flaw in the plan only going to affect fairtrade prices? And most importantly, how will free trade avoid it happening?0 -
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