Fair Trade: a response to some of the evidence

Following this debate, Siel provided an article and 6 longer papers (one, two, three, four, five, six) that discuss fairtrade. She refused to answer the following questions:

1. Would you support efforts to make fairtrade part of the WTO, and Are you happy that the organisations that you’re supporting seem to be intending to do this?

2. Is there a difference between low coffee prices due to mechanisation (good, and necessary) versus through “exploitation” (bad, etc)

3. Will higher wages for fairtrade certified farmers lead to lower wages for non-certified farmers? (i.e are we turning a situation of equal shitness into one where some people are made better off, and others worse off?)

I have written a response to the articles, and since I intend to
publish it somewhere I won't be making it publicly available just yet.
However let me provide a few quotes that I think justify the above
questions:

Ideology should not be allowed to preclude some form of intervention, regulation, or change in market structure

The WTO Development Round in Cancun must be about policy interventions and regulations which put development goals first. Fairtrade shows that with the right rules in place, trade can both facilitate development and be commercially viable

An Oxfam report claims that:

“Coffee is unusual among global agricultual markets in being almost fully liberalised... The problem of the coffee market is actually that of the failure of liberalisation, not it’s insufficiency”

And yet on the following page we learn that “import tariffs of between 7.5 and 9.0 per cent are levied on coffee processed beyond the green-bean stage from certain non-ACP countries.”

And in another article:

“Agricultural protectionism of the US and the European Union further prohibits profitable diversification into other major food crops and distorts relative prices”

Also:

the capacity of Fair Trade organizations to provide price stabalization and price premia above market rates is limited so far, generating rents only for selected producers without significanlty boosting prices overall

The introduction of quality requirements [in Majomut] might only work as a barrier to entry of the Fair Trade market for new producers and deprives them of the opportunity to learn about these market niches and to make efforts towards entering them. This is likely to exclude particularly small and marginalized producers and is at odds with the values of the Fair Trade movement”

When assessing the Fair Trade claim to alleviate poverty and work with marginalized people we should not forget, however, that it helps those farmers that are already comparatively well off because of being organized in a relatively strong and efficient cooperative. On the contrary, the most marginalized farmers in very remote areas will not be able to benefit from these initiatives.
....
One cannot expect from Fair Trade as a market-based mechanism to help the poorest of these small-scale producers

Having read the reports, there's no point in me providing a more sophisticated argument because even the basic questions have yet to be answered. The above evidence shows that my original points were valid, and justified, and I expect Siel to stop deflecting the issue and give me - and those that read her blog - the courtesy of stating her position.

Let's be very clear - Siel is claiming that she is a consumer activist. If that is so, she should be against the efforts of the leaders of the fairtrade foundation to make it compulsory. In other words, she's either against one of the chief goals of the fairtrade project, or a liar.

So my position is as follows:

• be suspicious of fairtrade activists since some of them want it to be part of a voluntary market economy, and others want it to be a government imposed regulation. If in doubt, do the watermelon test
  
• fairtrade delivers benefits to some people - for sure - but harms others. Some farms are unable to join purely by geographic accident. The system benefits supermarkets and coffee shops far far more than it helps coffee farmers, and so if you want to support farmers it'd be more effective to buy regular coffee and donate the price premium of fairtrade coffee to a charity
• fairtrade isn't a sustainable solution, since the coffee market has (relatively) low barriers to entry. Consequently they can't become prosperous until many other sectors do. If you believe in "picking" an industry to support, it's a bad choice. Development requires broad policy changes, such as trade liberalisation, rather than propping up specific producers.
• Starbucks have done more to help coffee farmers than fairtraders - increasing demand is better than reducing supply.

Update: She's written a new post, referring to me, (without letting me know about it...)  

I wish I’d listened more in ECON 101. But it was at 9 am, I was invariably hung over, and the class was big enough that I could just fall asleep, head on desk, without notice.

Comments

[green LA girl]

Dude -- How does my newer post refer to you? I was referring to the emails I get in general with people who're either curious or wary of the fair trade argument. I get lots of emails from dissenters -- It's just that most of those tend to be more intelligent, well argued, and courteous, and we usually come to some sort of agreement or at least a courteous agreement to agree to disagree.

I put up the post quoting you -- not the recent one, the one written a while back -- because it portrayed some of the stuff that I wondered are even worth responding to. For ex, the "Hey, at least the sweatshop workers haven't starved to death yet. Why're they complaining," bit. And if I recall correctly, I identified you only by first name -- a v. common one -- and didn't link to this site. If you so chose, you could've remained anonymous. It was your choice to out yourself and go nutso.

And I responded to the questions you posed in the comments on my blog, despite the fact that -- at the time you posed the questions -- you hadn't read the articles that I'd carefully linked you to. This was in an effort, on my part, to be nice, if nothing else. And here you accuse me of refusing to answer? WTF?

Which all brings me back to what you keep trying to say about how yr attitude and personality admittedly sucks, but I should still engage you in argument anyway. That's bullshit. Serious economists, regardless of their stances, don't feel the need to resort to ultimatums and rantings. I can only conclude that you seek attention more than you seek discussion.

[AJE]

Siel - I honestly don't think that you've answered the questions, if you have then it shouldn't take you long to copy and paste.

Just compare the content of my post, and your comment. I am interested in discussion, and would prefer us to be talking about fairtrade, rather than which email was being quoted.