Does “Fair Trade” Help?
"Fair Trade" is a pretty trend idea in a lot of coffee shops and elsewhere, but does it actually help the poor? The case on its behalf is surprisingly weak.
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Actually, there is a study of Colorado State University about Poverty Alleviation and Fair Trade in Latin America (http://goo.gl/hMD7p) which concludes that certified producers have better access to credit and education and that their childen are more likely to visit schools compared to conventional producers. So at least some of the extra money seems to arrive at the producers. A differenciated view is needed to evaluate different fair trade companies and products. Your conclusion sounds like "dont buy fair trade products", but you could also argue that producers in Ethiopia are captured in their circle of poverty (low income, hard labour, minimal access to education) and it would be interesting to establish Fair Trade in Ethiopia as well to compare certified producers to conventional producers. Do you think Fair Trade in itself is a mistake and the maket itself has better means to improve the situation of small-scale agricutural prducers?
Reason magazine also has a nice online feature of how the actual organization works. At least partially it's a min set price and an extra layer of overhead. http://reason.com/archives/2006/03/01/absolution-in-your-cup
The MRU argument against Free Trade would equally apply to Child Labour Practices. It would imply that only the very poor resort to Child Labour. hence being only Non-Child Labour products is reducing the income of the very poor who must send their children to work and hence impacts negatively on the Children themselves. Hence MRU would suggest we should buy from countries that allow Child Labour Practices as they must really need our help.
Not entirely. But it's true that often without good education many poor families in poor countries have to resort to exactly that. If you remember the beginning of the industrial revolution in Europe, there was a similar effect which changed when people got more literate, richer and thus had time to protest. It shouldn't be surprising that most third world countries are forced through the same process.
This video is really quite misleading and misinformed about Fair Trade; in that it was specifically set up to increase the price paid for raw materials above the commodity prices and to remove market speculation effects from the workers in Coffee / Cocoa plantations. Given that the retail market for Coffee is also quite competitive, retailers generally do not charge more for fair trade coffee. So I expect that the extra money probably will actually go to the local coffee industries in a more efficent way than if I had donated to some Charity. Have you seen the statistics about the inefficencies of most charities? Often a large percentage of charity funding is spent on obtaining more funding rather than actually helping anyone.