Fair Trade: Rhetoric and Reality

The NYT Freakonomics blog notes that the Fair Trade movement does not exist independently of the laws of economics:

But the problem with Fair Trade coffee is that as the program scales up, the alternative market ethics it wants to sustain collapse. Inevitably, the Fair Trade market becomes subject to the same laws that drive the conventional commodities market. When the price of coffee drops, the appeal of Fair Trade’s price support lures growers into the cooperatives that sell coffee under the Fair Trade label. As poor growers rush into Fair Trade agreements, the supply of Fair Trade coffee rises. Protected by the price floor, the Fair Trade coffee remains inflated despite flagging demand. What Fair Trade importers thus end up doing with the excess Fair Trade coffee is dumping it—upwards of 75 percent of it!—on the conventional market.

This is a huge problem for Fair Trade. Essentially, to be successful, it must, as I have stated in the past, “argue for a complete standardization of its price-fixing methods.”

This gets at the paradox of religious support for Fair Trade. It makes those who argue so vociferously against “consumption” as an evil, something that feeds the Big Ag “devil” (to use the Freakonomics blog’s terminology), instead rather promote and endorse consumerism of another kind: Fair Trade consumerism.

That’s how you get to the point of mainline denominations pushing Fair Trade commodities (like coffee) in the church narthex and small groups, like moneychangers in the temple courtyard.

The Freakonomics post is lengthy and worthy of attention. But for a more comprehensive discussion of Fair Trade, be sure to check out the new monograph in the Studies in Christian Social Ethics and Economics series, Fair Trade? Its Prospects as a Poverty Solution.

In this book, Henderson State University economics professor Victor Claar examines the case of coffee in particular, and relates that in his

past place of worship, dedicated parishioners freely gave of their time and talents throughout the year to serve the retailing, advertising, and distribution efforts of Equal Exchange. Those parishioners who had taken on the ministry of fair trade coffee advertised frequently in the weekly bulletin and monthly newsletter—at no charge, of course. They also operated a coffee cart that was open for business between and after Sunday services, and they took great care to stock up on extra-special goodies in anticipation of gift-giving occasions such as Christmas and Valentine’s Day. They carefully maintained their inventory on hand, placing
orders with Equal Exchange when stocks were getting low. Of course, Equal Exchange was the only coffee served during coffee hour, where an Equal Exchange sign was prominently displayed to remind everyone that ours was a congregation that cared about the poor.

Claar concludes presciently: “In any other setting but a church, the message would be clear: If you enjoyed today’s free sample, be sure to pick some up on your way out to savor at home all week long.”

Order your copy of Fair Trade? Its Prospects as a Poverty Solution today.

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  • Joe DeVet

    Seems to me that the Fair Trade movement is one with other forms of a strange idea I’ve seen in US churchmen’s documents (though I don’t know if it ever has reached “official” documents such as encyclicals)–that is, that the family farm must be preserved.

    It’s this kind of thinking at the level of government which causes our milk to be x% (I’ve heard x equals anything from 20 to 50) more than a free market would price it. It’s this kind of thinking which helps sustain the ethanol-as-fuel boondoggle: we now “must” keep putting ethanol into gasoline even though we have discovered that it’s not a source of energy at all (taking as much energy to produce as it gives) and that it has wreaked (wrought) havoc on world prices for food. If we don’t keep mandating ethanol these days, so they say, many rural areas dependent on corn-for-ethanol will be in trouble. (To say nothing of the Iowa caucus losses for all candidates responsible for advocating freer markets and lower-cost food!)

    Higher milk prices, higher coffee prices, higher gasoline prices, higher world grain prices, higher taxes to subsidize the agri-boondoggles–all these represent inconveniences for us rich. (Yes, we’re called “middle class”, but in the whole world we are the rich.) But they positively harm the poor, and put their very lives at risk, within our borders as well as beyond them.

    In the same paragraph with the churchly mandate to “preserve the family farm”, we have the mandate for a “preferential option for the poor.” No wonder our Church’s social teachings appear at “pew level” to be muddled, self-contradictory, and irrelevant. Oh what a tangled web we weave, when church-economics we believe.

  • The ethanol boondoggle also represents a giant subsidy for agribusiness giant Archer Daniels Midland. Thus, it exacerbates the end of the family farm by strengthening the gargantuan at the expense of the small, rather than fighting it.

  • Thanks for the recommendation of “Fair Trade? Its Prospects as a Poverty Solution.” We here at Catholic Relief Services Fair Trade have just ordered a copy and will consider its views carefully. At this point, though, I’d like to share some perspectives from our 15 years of encouraging US Catholics to embrace Fair Trade as a way to live the values of their faith.

    CRS Fair Trade does not condemn the marketplace nor demonize it so much as endeavor to make sure that “the economy works for people, and not the other way around” to use a phrase from the US Catholic Conference of Bishops’ Pastoral Letter on economic justice. We believe that Catholic social teaching–particularly principles such as striving for the common good, honoring the dignity of work, and preferentially considering the poor when making decisions–is powerfully reflected in Fair Trade, as we and our partners try to practice it. The practice is not always perfect, to be sure, but the commitment to the transformational power of economic solidarity is the foundation of our work.

    While firmly rooted in the market system–promoting the exchange of goods to meet needs and wants–Fair Trade also offers principles for conducting commerce in ways that align with the Catholic faith. Pope Benedict recently noted in Caritas in Veritate that consumers can make daily economic decisions “with respect for moral principles without diminishing the intrinsic economic rationality of the act of purchasing…” (paragraph 66) By the way, I would commend this recent encyclical to Joe Devet not so much for its affirmation of family farms as its comprehensive consideration of the Gospel call for economic justice.

    I’d also invite everyone reading to join the Fair Trade movement at its “Futures” conference this September 10-12 in the Boston area. Hundreds of those committed to and sometimes skeptical of Fair Trade will share information and debate some of the themes suggested here. The website is: http://fairtradeconference.ning.com/ and deadline for registration is August 1.

    Thank you,