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Fair trade: Fad, fraud or future
Brownfield
By Gary Truitt
When you see the phrase fair trade in the pages of Farm World, it usually refers to the trading policy of nations. It means: if country A buys products from country B, then country B should buy products from country A.

This is unless you are Japan or the EU; in which case, other nations can buy your products, but you can cook up a variety of flimsy excuses to keep their products out of your country.

The kind of free trade that is sweeping the nation today is something completely different. The main tenets of this kind of free trade involve producers receiving a fair price or a living wage. Proponents of this kind of trade say it is all about social justice and economic equality.

Fair trade is not a new concept but has become extremely popular in the past few years thanks to the efforts of Starbucks. They have made fair trade a major part of their marketing campaign; and other coffee roasters like Nestle, Kraft, Sara Lee and P&G have joined in.

Corporate America has learned that younger consumers have soft hearts, and fair trade has proven an effective way to sell products at higher prices. A recent study revealed that consumers will pay higher prices for products with labels indicating fair trade or other socially responsible attributes.

The fair trade fad started in the coffee shop but has quickly moved into other areas such as candy and clothing. Teens and young adults are the hottest market for fair trade products. “Eating morally” is a phrase often used by those who support the free trade movement.

“They feel like they are making a difference,” according to Michael Wood with a market research firm specializing in teens. But how much of a difference are they making?

In 2005, Starbucks purchased 11.5 million pounds of fair trade coffee. That sounds impressive until you learn that represents only 3.7 percent of all the coffee the company purchased. How much of the profits actually go back to the farmers? Critics say very little.

In order to put a fair trade label on your product, you must pay a license fee to one of several non-profit agencies. One of those agencies is Transfair USA who last year collected $1.89 million in license fees. Most of that money did not go back to farmers. Instead, Transfair spent $1.7 million on salaries, travel, conferences, and publications.

The New York Times reported a $3.49 fair trade chocolate bar sold at Target would return 3 cents to the cocoa farmers.

I am not opposed to the concept of fair trade; after all, farmers should always be paid a fair price both here and in developing nations. What bothers me is the reason fair trade has become so popular. Well-fed, pampered Americans feel that by paying higher prices for fair trade products they can help solve the world’s problems.

“It is a way we can be involved,” said one teen.

Involved? How is sitting is a coffee shop sipping a $4 cup of coffee involved?

There was a time that, when young people wanted to solve the problems of the world, they joined the Peace Corps or volunteered at a social service agency.

While fair trade will provide some help to farmers in developing nations, it will not solve the social and economic problems that made them poor to start with.

I also find it ironic that consumers, who complain when a gallon of milk costs $3, are willing to pay $10 for a pound of fair trade coffee. If American consumers really started letting their conscience dictate their food choices, our food industry, our society, and our world would be a much different place.

This farm news was published in the April 5, 2006 issue of Farm World.

4/5/2006