Fair Trade in the coffee market

Sat, 24/03/2007 - 09:09 -- James Oakley

I’ve been meaning to post a link to this for a while. Steve Leighton has written an article on how the Fair Trade movement impacts coffee growers. It’s insightful, because he has a lot of inside knowledge when it comes to the coffee industry.

Read his article – it’s not that long, and says it better than I could. In essence, my perception is that the FT system offers the growers a certain price (slight premium) for what they will grow before they even plant. This leaves no incentive to do anything other than maximise yield. Such a system is very unlikely to produce a high quality product, and is more likely to produce a low quality product. There is an economic reason why much of the coffee sold as “FT” tastes bad.

But the end result for the farmer is that they are still not able to produce anything someone wants to buy. They remain stuck in the poverty trap. We only buy their coffee because we pity them. I have no problem with charitable handouts – at times they are the compassionate response, but the public’s perception of FT is not that of a charitable handout system.

Many of us want ways to encourage farmers in the developing world out of the poverty trap. It’s frustrating that FT isn’t it. I know enough about the coffee industry to know how to choose what I buy so as to help. But bananas – not a clue. Sugar – no idea.

I think it’s a combination of:

1. Support organisations like TEAR Fund who aim to invest in long-term development. If all the extra money people spent by buying FT goods were instead given to such aid agencies a lot could be done.
2. Where we know enough to buy in such a way as to help directly, do so.
3. Pray. Spread the gospel of Jesus Christ. The spread of the reign of King Jesus [in effect, not in fact] is what will ultimately bring justice, prosperity, peace and harmony to this broken world.

All in all, a little frustrating that FT has become so chic in Christian circles.

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Reiss's picture
Submitted by Reiss on

At Londinium Espresso we would endorse Steve's article on Fairtrade. In particular we salute his courage to speak out on a 'movement' that has gained so much inertia in recent years that any who dare to question Fairtrade are branded as 'uncaring'/'filthy capitalists'/'perhaps, but do you have a better suggestion'.

In our view if you are selling a commodity product, you are by definition a price taker. It is only when the farmer is able to bring a product to market that has some unique characteristics that you can hope for a situation where demand might exceed supply at the prevailing commodity price, that the price for the 'unique' goods can be expected to rise.

Accordingly, as Steve rightly points out, programs like the Cup of Excellence are instrumental in encouraging farmers to develop high quality, differentiated crops that the gourmet/speciality market will pay a premium for.

Consumers might also like to consider why the milk in their latte/cappuccino actually costs more than the coffee.

At Londinium Espresso we think additives to coffee merely serve as a mask for low grade coffee. In addition additives make a significant contribution to obesity, which is now a major issue in much of the developed world. For example, a large Frappuccino with all the trimmings contains in excess of 500 calories, with some people consuming two of these in a day.

If the same amount per cup was spent on quality coffee the beverage would be calorie free & it would massively enlarge the demand for speciality coffee, which would result in much higher prices for these coffees being paid to the farmer.

I think the other major barrier to farmers obtaining fairer prices for their product is 'access to market'. Nationalised buying groups and the like have produced over 100 years of misery, war, poverty, and misappropriation of wealth. In our view the internet offers real hope to growers that they might be able to sell their coffees directly to speciality roasters, thus eliminating the 'middle men'. There is already some evidence of this happening for some of the better funded & better organised plantations.


Stephen Leighton's picture

Hi James

Thank you, your too kind.


Neil Robbie's picture
Submitted by Neil Robbie on

Hi James

I had just read "do or die chocolate" on Peter Ould's blog http://www.peter-ould.net/ when I clicked on yours.

The issue either way seems to me to be the need for benevolance in captialism.

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