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October 02, 2007

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aaron schiff

Tim Harford is also sceptical of fair trade coffee: http://www.timharford.com/favourites/gofigure.htm

Asif Dowla

Even when the vendor charge higher price for fair trade coffee, it is used as a means of identifying consumers who are willing to pay higher price or what the economists call third-degree price discrimination. In his book, Undercover Economist, Tim Harford shows that the farmers get a few pennies extra for producing fair trade coffee and the rest is pocketed by the retailer. Are few extra pennies worth the conditionalities imposed? Don't the activist complain about conditionalities by the big bad IMF and the World Bank?

Asif Dowla

Even when the vendor charge higher price for fair trade coffee, it is used as a means of identifying consumers who are willing to pay higher price or what the economists call third-degree price discrimination. In his book, Undercover Economist, Tim Harford shows that the farmers get a few pennies extra for producing fair trade coffee and the rest is pocketed by the retailer. Are few extra pennies worth the conditionalities imposed? Don't the activist complain about conditionalities by the big bad IMF and the World Bank?

Peter

“Has my economics training corrupted my mind so much that I cannot leave good things alone?”

Yes and no. On the yes side, there is already a high degree of standardization in fair trade, with an international association that sets common criteria. Conditionality is based on a level of input from developing country producers that far exceeds the zero-to-meager democratic content of IFI conditionality. Criticism should be directed at free-lancers, who make up their own definition of “fair trade” and use the label misleadingly.

As for the stipulation that children of coffee growers be in school, this is a reasonable protective measure. It reflects the interest of children in an education that prepares them for the world they are destined to be part of, and it also preempts the possibility that children’s labor may be exploited. That is, children are often paid less than adults per unit output, which cannot be healthy for adult labor markets.

On the no side, there are limits to fair trade that are crucial to bear in mind. Requiring the children of coffee growers to attend school, for instance, says nothing about whether the schools are worth attending, which many are not. Fair trade as a social and economic movement is not in a position to cope with the many dimensions of the poverty/child labor/schooling nexus. Access to schools, proper training for teachers, adequate facilities and materials, affordability for parents: these things are beyond the reach of the best-intentioned consumer movement, and yet it makes little sense to stipulate school attendance without them.

The main point, however, is that fair trade is simply too limited a response. It is a means for influencing global development through trade, but only a minority of traded goods markets are subject to fair trade, and most goods and services produced in developing countries are not traded internationally. It is, as you say, too external a model, too far away, in geography and often culture, from the world it wants to transform.

If concerned consumers in the wealthy countries see fair trade as one of many useful ways to combat global poverty, then fine. The problem is that such people often have an unrealistic expectation of what they can achieve by consuming more conscientiously, the product of a demobilized political culture in which consumerism has replaced collective action.

Francesco

I do understand.

First. Goods with a fair trade label are more expensive (5-10% more). Indeed just Starbucks can pretend to sell its "fair coffee" at the same price of the "unfair one". But we don't have to pretend Starbucks to be fair for this.

Second. The "long list of rules" is not too long. Generally, ten.
This set of rules is subscribed by most of the fair trade organizations in the world, and do not say how parents should grow up their children.

To buy is just like to vote. So a better understanding about where our money goes is desirable.
Information about the actual chain of production is what we do not get from a big corporation (like Starbucks I would say), just because information is not free. Fair trade organizations make us pay for this information. And apparently somebody is happy to pay. This makes sense from an ethical and economical point of view. With more information markets work better.

Per Kurowski

Fair prices!

And while waiting in the line I see a “Fair Trade Certified” coffee that on its label promises that its purchase will improve the lives of coffee farmers by insuring they receive a guaranteed “fair price for their harvest”. I could not resist such an enticement and I bought a cup of it. It was great, and like any truly good coffee it made my mind wander. What does a fair price mean?

That the coffee grower can afford to send his kids to school, afford good decent healthcare, and buy a car? Or that his kids will not go to bed starving. I hope he gets at least the last. Or does fair in this context mean that he is getting prices that are fairly similar to those quoted for coffee on the commodities exchanges without risking being taken to the cleaners by some savvy distributors? Who knows?

I finish up my coffee with a lingering suspicion that perhaps a fair price might still not be enough. Would it not be better to certify “unfair prices” or, in perhaps more marketing digestible terms “fair price plus 100%”? Whatever, at the end of the day, if I were a farmer, I know that I would much rather get European farm prices than fair prices.

An extract from my Voice and Noise

mk

A few things:

1) The price of fair trade may sometimes be the same because the added cost is incredibly low. The Starbucks spokesman probably gave some BS answer because customers don't want to hear "you're mostly paying for things that aren't the coffee anyway."

2) I'd like to see a retailer allied with a charity, such that you can buy a bag of coffee beans coupled with a donation to some charity that helps those farmers. In this way more of your money goes to the farmers, not to middleman profits.

I'm slightly surprised not to be seeing a movement toward this equilibrium. Obviously it is not as directly profitable, but it should attract some customers, and it should make fair trade look like a comparatively bad deal.

Justin Rietz

Corporations engaging in "fair trade" do a disservice to developing economies. In many cases, "fair trade" purchases are made from coops of farmers, thereby excluding farmers who are not part of the coop (can't afford the fees, etc.). Second, it is inflationary, and therefore hurts those who do not participate in a fair trade industry.

As far as IMF/World Bank vs. multinational corporations, there are several differences. First, the IMF and World Bank carry much more international weight and can make or break a country's credit rating. Second, these organizations are funded by governments, i.e. taxes, meaning that people who disagree with their policies don't have an option to "shop somewhere else." Third, the IMF and World Bank have no profit motive, and therefore are more apt to be aloof of local conditions and distort markets, whereas corporations are more likely to be active at a local level and maintain some sort of competitive market (with all of its fair trade flaws) as they still need to protect their bottom line.

notsneaky

I'm also skeptical of the whole "fair trade" thing. It's always seemed like mostly a marketing campaign intended to make rich country coffee consumers feel good about themselves. Middlemen are usually middlemen because they play a useful role in in the production/delivery process. Specialization and all that.

Tim Worstall

I've seen that some of the conditions for fair trade can be: being in a cooperative: not mechanising.

That last sounds like an appalling condition: at the benefit of a slightly higher income now the farmer is committed to always being a peasant farmer.

corvad

Tim worstall: the farmer was always pretty much committed to being a peasant farmer -- Mexican farmers have been fighting for this since NAFTA, for example. Being a peasant farmer might be, in that farmer's pov, a better alternative to living in a megaslum/migrating seasonally/splitting up the family by going to the States in search of dignified poverty. Aristide's lofty goal for Haitians: dignified poverty. Because under the current neoliberal system even that is not possible.

Fair Trade is about incremental change, bypassing IFIs. It's NGO-driven, even consumer driven, so it's not "outside" or an alternative to capitalism, it's an attempt to make lives marginally better now, and to establish a more democratic form of trade (albeit certainly problematic, as posters have noted), by allowing elite consumers with disposable income to prefer ethical consumption.

you know, from the easy dismissal of Naomi Klein I feel obliged to point out that Klein, and the peasant farmer, (and the ethical consumer), are both highly skeptical of government top-down change, preferring grassroots-led change, even if that means a more cooperative form of capitalism -- you should see her documentary "The Take", about worker expropriation of factories in Argentina after its collapse in 2001. "Que vayan todos" -- not just the IMF, WB, and elites, but also the political parties on the "left", peronist and otherwise. It's about survival and stability first, upward mobility second.

robertdfeinman

Notice that for a minuscule change in it's purchasing patterns Sam's Club (that is Walmart) gets a featured article in the NY Times aimed at improving its tattered image.

The same is true of Starbucks which comes in for a lot of criticism. So, from their point of view the slightly smaller markup (if any) on the item is compensated for by the improved PR they get.

If you want to see how things are done when the company is really interested in obtaining a new product, look into the way Walmart set up a salmon farming industry in Chile. Salmon isn't even a native species. Walmart sets the price it will pay, the conditions under which the fish are grown and other factors. The pollution and the depletion of native fish used to feed the salmon are not their concern.

Does Walmart's PR department put out a press release about that? Of course not. Why did the NY Times rise to the bait?

The greenwashing industry is getting better at propagandizing. They have progressed far beyond "Beyond Petroleum" (BP).

corvad

Per Kurowski: indeed! but those farmers will never get European (or American) farm prices, not unless (a) the IFIs were somehow made more democratic and (b) the IFIs could actually make the US and Europe stop subsidizing. They can't, and won't.

Mr. Todd

whatever gains 'fair trade' can do for poor farmers' incomes, aren't they just a drop in the bucket compared to what reforming state marketing boards in developing countries could do? Why not tackle that instead of the fighting over a few percentage point premiums for coffee?

Mr. Todd

This also reminds me of something Paul Collier wrote in his recent book. Paying farmers a small premium for 'fair trade' goods only encourages them to keep grinding away in the industries that help keep them in poverty in the first place.

Search the Web on Snap.com

Translated from an article I published in El Universal, Caracas, Venezuela, July 2003, while I was an Executive Director at the World Bank

Place us next to something profitable …

I recently visited a country here in the Americas where I flew over a valley that appeared very fertile—a vast, thick green carpet beautifully woven by plantations of African palm trees. I was enthusiastic, thinking that at last I had discovered development in action—that is, until I landed.

The contrast between the wonderful view from above and the misery below screamed out that the African palm, far from being a motor of development, could be the mother of all poverty traps. By contrast, take, for example, a coffee bean. It may be worth very little in the field, but at least it lets us dream of the chance of capturing a bit more of the value suggested by the fact that some people pay four dollars or more for a cup of it at Starbucks. But in the case of the African palm, no dreams seem possible. Just for a starter, its saturated fats are considered undesirable.

In this sense, the difficult cultivation of the African palm would seem to be doomed to mark the borderline of lowest overall marginal cost, that is, where the least is paid to farmers for their labor. Palm farming now has such a small margin of profit that it does not even cover the costs of registering a union, and so, Mr. Planner, just in case, don’t place us next to the palms, please place us next to something profitable.

When analyzing agricultural margins of profit, we must not forget that in most cases in which farmers’ margins allow them to maintain a decent standard of living, this is due to some kind of subsidy, protection, or market interference. So, of course, if we’re offered the chance to grow African palms in France, we might just consider it.

It is one thing to be a marginal agricultural producer and it is another very different thing to be an agricultural margin capturer. In a supermarket in the United States I came across 11 kinds of eggs, ranging in price from 95 cents a dozen for caged, industrial production to $3.99 a dozen for eggs certified as coming from organically-fed free-range hens.

For countries whose hopes focus on Cancun and on agricultural opening, I hope that the above leads them to stop, think, and realize that opening in itself does not work miracles if farmers do not also receive other kinds of aid, such as those offered in many developed countries.

max havelaurabar

I'm amazed at the degree of ignorance displayed in the main blog post and in all the comments. People who don't understand a system or even basic market economics shouldn't write about it. If all you're basing your opinions on are the NYTimes article, other people's blogs, and rumor, then you're doing nothing other than displaying your own intellectual laziness.

Why not actually go to the site of FLO or FLO-Cert and read the standards for Fair Trade Certification for small farmer organizations? Why not search and find criticisms of Tim Harford's woefully uninformed book? Really people, had the Neo-Con agenda really altered the zeitgeist so greatly that ignorance and spurious statements pass for commentary and journalism on all sides of the political fence?

It's appalling really. From the comments about fair trade forcing farmers not to mechanize to someone talking about the inequalities between the prices European & American farmers get vs. those in developing countries. Well, anyone with a brain knows that sustainable quality coffee production means cover crops & shade, hand harvesting, composting, limited pesticide use, etc. and guess what kind of beans command higher prices? Not the mechanized ones. Also, coffee is not grown in any significant capacity in developed countries, mostly because it's impossible (one exception being Hawaii)

So, really, read up people. Learn something before you go off making idiotic posts.

Then again, this is the internet...

Andrzej

Bravo Max Havelaurabar!!!

greykangaroo

well that's interesting max haveabrain, accusing Rodrik of not understanding "even basic market economics".

Hmmm, as someone who does work to promote free trade in Asia I dont think your post amounts to anything much but abuse. My impression of 'fair' trade proponents that I meet is that they cannot define it economically and they believe it is somehow the opposite to free trade.

Furthermore, they have difficulty defining 'free trade' and why they resist, they generally resort to abuse and slogans. I think you fair traders act and speak with good intentions by and large but do not really understand what free trade is and where its pitfalls really lie, thus your arguments against it remain weak.

Said Salih KAYMAKCI

Black Gold, Wake up and Smell the coffee.
http://www.blackgoldmovie.com/

A grim portrayal of the coffe industry and i think the reason why do we need fair trade even with its inadequacies.

pat toche

I don't understand "fair trade" either, I have always had the impression it was just bonkers.

Meghan Sweet

"Isn't the farmer himself a better judge of how his extra income should be spent?"

Fair trade offers a non-market-fluctuating base price for the product plus a social premium. This premium can be spent however the farmer (or usually cooperative of farmers) decides. I spend two weeks in Nicaragua this summer visiting Fair Trade cooperatives, and they spent it on all sorts of things, whatever was needed in the community. A lot of the money goes into scholarships for students, which often require a number of volunteer hours on the cooperative in return. Other projects we saw included paving roads, women's reproductive rights work, potable water projects, and a recycled paper project.

The reason I love fair trade so much is because it works in solidarity with cooperatives. It empowers people to organize themselves. In comparison, while in Nicaragua, I visited a large, more traditional coffee plantation. The setting was a large house for the plantation owner and then poor conditions and poor pay for the workers. For example, the 500 seasonal harvest workers all slept in one giant room/building with no windows on wood planks. We found out at the end of the tour that this plantation sells all its coffee to Starbucks.

Compare this to fair trade cooperatives where people have family homes, work in conjunction and have real power over their organization.

Dani

Here is the turist version of fair trade, http://www.responsibletravel.com/

hari

Dani-

This is AGAIN like the blind following the (wicked) blind!

Max Havelaurabur is known here for FAIR TRADE!

You guys think the authour is "right" in his analysis - which is of course false! He doesn't know the (economic) difference between "free trade" and "fair trade".

May be you shld try to do a fair seminar on the subject in one of your classes.

ivan janssens

The fact that major companies like Starbucks are involved now, does not make "fair trade" in any way market-based. It only means that it gets more businessfriendly and that some companies see some opportunities here. But everyody should know that pro-business it not the same as pro-market.

Fair trade looks instead to be an authoritarian and anti-liberal solution. I mean we have governments taxing some portion of your income to provide social services like education or to build infrastructure or just to waste it (most of the time). Some libertarians would contend this amounts to coercion. Well, fair trade goes yet one step further. Here we have companies or non-governmental organisations, sometimes backed by governments, who will decide what income you will get in the first place. No children rolled into education? Do you use pesticides? The wrong farming techniques? Sorry, no fair wages for you! (Whatever that may be.)

The second major problem with fair trade is that it is hindering real development. If some occupation does not provide enough income you should get the hell out. Development means providing opportunities to find occupations who do pay. Thus, the creation of jobs in sectors with higher productivity like manufacturing. Yes, fair trade gives those who obey some serious conditions a little more income. But that is not development.

seth

If I have the definition correct, the traditional use of the term fair trade means that traded goods are traded without major price distortions- subsidies, tariffs etc. That, of course, is not how the current market functions.

Would it be correct to say then, that in the current system where U.S. and EU farmers are receiving large subsidies and benefits, that fair trade certification is acting as a subsidy for farmers in the developing world? Does this just muddy an already opaque marketplace- introducing subsidies to counter subsidies? Would it be a better focus of time and energy for fair trade certification proponents to target the removal or at least reduction of the subsidies of the developed countries or has the Doha Round dragged on too long leaving dispirited activists to find another outlet for social change?

(I apologize for any misuse of economic terms.)

seth

If I have the definition correct, the traditional use of the term fair trade means that traded goods are traded without major price distortions- subsidies, tariffs etc. That, of course, is not how the current market functions.

Would it be correct to say then, that in the current system where U.S. and EU farmers are receiving large subsidies and benefits, that fair trade certification is acting as a subsidy for farmers in the developing world? Does this just muddy an already opaque marketplace- introducing subsidies to counter subsidies? Would it be a better focus of time and energy for fair trade certification proponents to target the removal or at least reduction of the subsidies of the developed countries or has the Doha Round dragged on too long leaving dispirited activists to find another outlet for social change?

(I apologize for any misuse of economic terms.)

John Barrdear

In looking at your first question, I wonder if it could be explained if we simply happened to be observing a coincidence in timing between a consumer push for "fair trade" (i.e. non-market-determined) prices and a change in administrative/logistic costs that make it more attractive to the big retailers to increase their vertical integration (i.e. capture more of the value chain or cut out the middleman).

greykangaroo

For interest i noticed this article in The Times - "Free Trade is Fair"

http://www.timesonline.co.uk/tol/comment/letters/article2563004.ece

Decorum

Actually, the Fair Trade people do argue that a premium to the "ethical consumer"(!) is not an essential part of their programs at all. They argue that FT firms act to counter monoposony power so the premium paid to farmers comes out of a monopsony rent otherwise captured by MNC middlemen (hence they also argue that there is no need to pay farmers above their marginal product either.)

Of course, just where this supposed market power comes from in the specialty coffee market is not clear - there's free entry at the roasting level and at the farmer level so it must be in the middlemen, *if anywhere*. (In the soluble coffee market it's a bit more obvious: as Sutton notes in his Sunk Costs and Market Structure book, there are very large fixed costs associated with processing in that market segment and the number of producers is correspondingly small.)

For an analysis of Fair Trade *given* monoposony power for wholesalers see http://www.ecocomm.anu.edu.au/research/papers/pdf/wp481.pdf.

The question of the conditionality of support in Dani's original post is a bit of a red herring, I think. Yes, the farmer would be better off having the premium to spend as he wishes, but he's still better off having the premium with conditionality clauses than not getting it at all (or else he wouldn't sign up in the first place.) Put simply, Fair Trade can still be a Good Thing even if it's not the Best Thing. (And I'm not saying here that it *is* a good thing!)

Tom A

One of the problems with this post and the comments on it is that almost everyone here is talking about Fairtrade in a very abstract, theoretical way. And a lot of people here are working with the level of knowledge that you would expect an average member of the public to have from reading Fairtrade product packaging.

As Dani says there can be “an opaqueness in what the [Fairtrade] transaction is really about”, but only if you’re trying to figure it out from the packaging on products or from advertising in the public domain. Fairtrade is quite a complex system, and certification organisations and companies have mostly chosen in their public communications to focus on the higher price generally paid to farmers and workers for Fairtrade products, this being easy for the average consumer to understand. In fact, it’s not strictly a “higher” price but an agreed minimum price, and then there’s other important aspects, the social premium, advance payments, long-term contracts and producer/worker and trader standards.

For example, what attracts farmers to join Kuapa Kokoo, a cocoa cooperative of 45,000 farmers in Ghana, is not always the guaranteed fair price, but the fact that the organisation has a reputation for using accurate weighing scales that can be understood by illiterate farmers and weighers are elected by each village society and are thus accountable to them.

In no way is Fairtrade, as some people have suggested here, an authoritarian system in which companies and NGOs decide what income farmers/workers will receive. First off, it’s a voluntary system: producer organisations can withdraw at any time if they feel it’s not working for them.

Producers get paid the world commodity price, but they get a guarantee that it will not drop below a certain threshold. Furthermore, producers decide how the social premium is spent – that’s the whole point of it. Part of the Fairtrade system is the requirement that an organisational structure is set up that allows producers to actually bring a product to the market and gives all of them access to democratic control over the organisation and over how the social premium is spent.

You could argue that the social premium should just be incorporated into the price paid to individual producers and they can then organise themselves to deliver collective goods, but it makes a lot more sense to build this resource pooling into the system from the outset, given that small scale farmers and plantation workers are generally the most marginalised members of developing country societies.

Noah E


Of Prof. Rodrik's two concerns, I think the second one is fairly easily answered. The rules of the Fair Trade product certification system for coffee and other agricultural commodities are set by FLO, the Fairtrade Labelling Organization International. You may visit FLO's website at http://www.fairtrade.net.

FLO is an international trade association with a board of directors that comprises representatives from producers, traders, and retailers. It creates the standards for certified Fair Trade that the traders and producer organizations must follow. These standards are enforced by an independent certification body called FLO-CERT. FLO-CERT was spun off from FLO in order to comply with ISO standards and thus increase the legitimacy of the Fair Trade certification system.

Two things are worth noting here. First, FLO is not the only ethical or solidarity trading system out there. There are others, such as IFAT, an international trade association which certifies whole firms as "Fair Trade Organizations." These businesses mostly deal in handicrafts, but food products as well. The U.S. has another organization similar to IFAT, called the Fair Trade Federation. All of these organizations can be researched on the Web, and while none of their models are perfect in an abstract sense, they all provide valid alternatives.

FLO's strength - and its key limitation - is that it certifies transactions, not companies. Thus Starbucks can buy 2% of its coffee under Fair Trade (FLO) terms and leave the other 98% of its business as it is. This is a strength because it allows a greater volume of product to be moved through the system, by getting the MNCs into the game, who would never enter the market if they had to ensure that 100% of their product met the FLO standards. Incidentally, it also places the onus on the consumers to demand Fair Trade products, such that it will be in the MNCs' interests to buy them.

However, the transaction-certification model also has a key weakness: it allows the other 98% or 99% of the MNC's business to go on as usual. In the case of many MNCs, such as Nestle, this business may involve highly inhumane or unsustainable practices. But FLO simply has nothing to say, and no enforcement capacity, about the barest minimum ethical standard of some of its clients' core business. This casts doubt on the system's power to be a genuine moral authority in international trade. Instead, it becomes more of a tool for ensuring a well-defined set of benefits are distributed to a group of marginalized people. This is a great thing in and of itself, but a drop in the bucket when it comes to systemic change.

Recently, producers have complained that the FLO standards are too stringent, and require a level of transparency of their organizations that far exceeds that which the rich-country traders must exhibit to be part of teh system. In other words, the co-ops that make up the system have to submit to rigorous inspections, open their account books, demonstrate absolute compliance to an increasingly stringent set of standards. By contrast, all the rich-country traders have to do is show they paid a higher price - oftentimes, the long-term contracts, pre-financing requirements, and other principles of the system fall by the wayside. This reality reflects the power imbalance in the FLO system.

In responses, producers within the FLO system are now setting up their own advocacy networks, such as CLAC (Latin American Fair Trade Producers Network) and AFN (African Fair Trade Network). You can search these organizations on the web, too. They have interesting things to say.

Someone brought up a good point about the cultural divide between the people who run FLO and the producers. This is a key point and vitally important to the future of Fair Trade.

Now to respond to Rodrik's first point. That's a really good question! It reminds me of the joke about an economist and his son walking down the street. (Let me preface this by revealing that I am a graduate student in economics.) The son sees a twenty-dollar bill on the ground and says, "Dad, look! There's twenty dollars on the ground!" The economist says to his son, "No, son. If there were really twenty dollars sitting there, someone would have picked it up." They kept walking.

My hypothesis is that there is a path dependency that makes cutting out the middleman costly even if it brings higher long-run profits. So there needs to be an incentive - in this case, in the form of a whole subset of products that advertises itself as cutting out the middleman - in order to make these changes profitable in the short run. I could be underestimating MNCs - people in my walk of life tend to think of these firms as being terminally short-sighted.

Also, conditions may have changed on the ground such that cutting out middlemen is now more profitable than it was, but MNCs haven't had - until now - reliable enough information to act accordingly. For instance, coffee producers are now more organized than before, thanks in part to the efforts of the Fair Trade system. So now they can export as a group (or co-op), rather than individually selling to the local private exporter. However, MNCs do not have much contact with these co-ops because, historically, they have dealt with the middlemen. They know the middlemen and do not know the co-ops. Therefore, their information about the co-ops is likely to be biased by their relationships with the middlemen. They may be hearing things like, "Oh, the co-ops have really bad coffee," or "The co-ops never deliver on time."

With FLO, you have a third-party organization that has vetted the co-ops, made sure they're well-run, even groomed them somewhat to do international business. You may also have the approval of various international aid agencies that support and advise the co-ops. And you have a growing consumer demand for products specifically originating from these co-ops. What have you got to lose? If you're an MNC, all you need to figure out is if the benefits of switching from your _worst_ private middleman to the co-op exceed the costs of making the transition.

Which brings up a side effect: sufficient growth in the Fair Trade market is capable of weeding the most inefficient middlemen out of the non-Fair Trade market.

Responding to another poster about the "unfairness" of Fair Trade at the producer level: co-op membership, at least in Peru where I have done my fieldwork, is free and voluntary by the Law of Cooperatives. Anyone who wishes to join the co-op, and can meet the requirements, the co-op by law must accept.

Second, the charge that the FLO system, by itself, does not respond adequately to oversupply in the coffee market, is true. There is still oversupply in the market, keeping prices down, and since the breakdown of the ICO, coffee-producing countries have been unable to coordinate sufficiently to withhold production to keep prices up. However, many co-ops have begun using increased revenue from Fair Trade to promote the cultivation of alternative crops, such as cacao and organic cane sugar in Peru. Thus, the system's increased incentives for producers to expand their coffee may be at least partially offset by their organizations' awareness that coffee production cannot expand indefinitely. However, I do believe that alternatives to coffee production for export in the tropics must be more heavily promoted, not just by their co-ops, but by local and international development agencies working in tandem with business and government. (The specifics need to be worked out case by case.)

Well, I'm glad to see a lively discussion on this topic. As you can probably tell by now, Fair Trade is near and dear to my heart. I think it'd be hard to find an international movement out there that's brought so many direct benefits to so many people in such a short time. But I also think there are big questions the movement must ask if it wants to grow and stay true to its ideals.

Noah E


Just a PS about my last comment regarding the promotion of alternative crops. My experience in Peru has shown me that co-ops can in fact be key actors in this process, and I would even place them above business, government, and the agencies in their capacity to do this job effectively. The other three parties need to play supportive roles to the primary actors: well-informed, well-organized small farmers.

David

According to some economists, fair trade is an organized social movement and market based approach that empowers developing nation producers and promoting sustainability. This movement usually advocates the payment of a fair price as well as social and environmental standards in areas related to the production of a wide variety of goods. In other words it helps the developing countries to developed more by means of exports of products. Most of the products that they export come from farmer’s yield like crafts, vegetables and fruits.
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KCl is used in medicine, scientific applications, food processing and in judicial execution through lethal injection. It occurs naturally as the mineral sylvite and in combination with sodium chloride as sylvinite.

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Actually, the Fair Trade people do argue that a premium to the "ethical consumer"(!) is not an essential part of their programs at all. They argue that FT firms act to counter monoposony power so the premium paid to farmers comes out of a monopsony rent otherwise captured by MNC middlemen (hence they also argue that there is no need to pay farmers above their marginal product either.)
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The foods you eat bring pleasure to your palate and provide your body with powerful healing substances. Most people probably never consider that their morning grapefruit protects their blood vessels or that eating a handful of raw almonds daily can protect them from cancer. Certain heart-healthy foods.


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