Fair Trade Coffee?
On election day, voters in Berkeley defeated a measure that would have made it a crime punishable by up to 6 months in jail to sell coffee that was not labeled as Fair Trade. Fair Trade Coffee is offered by activists as a way to help out third world farmers and save the environment, but it likely has the opposite effect.
The main problem with coffee is that there’s simply too much of it. World coffee markets are currently glutted with product, and as such farmers receive only about U.S. 24 cents per pound. That is the lowest price for coffee in a century according to an Oxfam report.
Fair Trade Coffee, on the other hand, guarantees farmers at small cooperatives $1.25 per pound for coffee beans.
Talk about perverse incentives. Farmers should be looking at the low price of coffee, conclude that there is a glut, and move on to other crops. But if Fair Trade Coffee were to take off, it would send a price signal to farmers to grow even more coffee, further glutting the world market.
And they call that fair?
Source:
Global issues flow into America’s coffee. Kim Bendheim, The New York Times, November 3, 2002.
The Fair Trade Coffee? by Brian Carnell, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 License.
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