Dateline: Courtyard Marriott Capitol Hill/NavyYard, DC
"Voting with your trolley", The Economist, December 9-15, 2006
For the last few years our church has been brewing Fair Trade coffee at our coffee time on Sunday mornings. We've done it because it was the "right" thing to do. It has always bothered me because it never made any sense, but it what liberals do--take action even if it doesn't make sense. The problem is people do not understand economics.
My concern has always been that "fair trade" artificially boosts the price of coffee and encourages people to grow coffee even though there is an overabundance. Of course, with the liberals paying better than a fair price for the coffee more people want to grow coffee which lowers the price even further.
Well, now I have others who agree. The December 9th - 15th 2006 issue of The Economist has an article outlining my objections exactly. They also confirmed a suspicion I've long had about the "fair trade" and that is that it is the retailers who are making a killing, not the growers. "Fair trade" coffee gives the farmer about a 5 cent per pound premium, according to The Economist.
Now I'm going to be generous. Let's say we use four pounds of coffee per week at church (I doubt we do because we always seem to run out). That means that each week we put an additional twenty cents in the wallet of the coffee farmer. Another way of looking at it is that we give Juan Valdez an extra $10.40 per year. I have no idea how much we are giving the retailer but I suspect if bought regular coffee ("unfair trade"??) and wrote a check to the coffee farmers for, say $30, we'd save a lot of money and the farmers would get a lot more money.
It seems like a better idea would be to give the money to the farmers and help them move into growing a different crop that they can sell and make a profit. Kind of makes me wonder why no one has thought of it before. Well lo and behold, someone has. The Economist Article mentions the Rainforest Alliance. They are not a trade association, they do not artificially inflate prices, they simply help farmers learn to grow other crops and provide them the credit they need to do so.
Some other myths shattered by this article:
1) Organic food is not better. Organic food requires more land which takes away the rain forest. Artificial fertilizer allows more food to be grown on less land. Example; cereal production tripled but the land required for that only increased 10%.
2) Buying local produce is not better for the economy. It consumes fewer resources to transport food in bulk to the supermarket where we all go that it does to have every soccer mom and her SUV drive to the market for some things and then drive to the farmers market. Add to that the fact that local farmer is not as efficient as the big farmers and you have a truly inefficient process.
This just goes to show you, everyone needs to take at least one economics class.
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