I don't know how many people read the Economist piece, but its main (only?) criticism of Fairtrade was that it prevents market signals from getting through to producers, stimulating them to switch to other crops. Cheers, Economist. The whole point of Fairtrade is that it is a corrective to practices by large multinational produce buyers that are, in effect, monopolistic. Nescafe switches off market signal transmission by standing like a Himalayan range between me, the individual consumer on this side, and the individual producer on the other. (Don't know anything about Nescafe's buying practices, so I apologise if that's a poorly aimed example.)
Fairtrade activates the signal again by showing that we are happy to pay more, indicating to producers that they *can* raise their prices, whatever the man from Del Monte says.
If I may add my two penn'orth. Basically, if the market was doing a good job and not allowing effectively monopolistic practices to prevail against the economically weak, we would not need fair trade. Criticise it when the world trade system works properly and doesn't privilege the already-haves by turning the have nots into little more than slave labour held in place by their lack of options and a system that keeps them that way.
Please excuse me reproducing the language of one of the other respondants but it makes the point well:
come on, fuck economic theory, market signals etc. It should not be possible to buy coffee, rice, sugar, whatever, at a price which does not provide a living wage to its producers. To do so is simply immoral.
Quite so, and as I point out elsewhere, we have legislation to try to prevent that happening in the UK and the USA, as well as preventing child-labour, slavery and to make sure children are educated -all of which needed doing because they seem good and right and somehow the market worked against them happening ... markets only work within proper constraints. In fact they need non market mechanisms to get them to work at all: weights and measures legislation, fair descriptions, legal redress for mis-selling etc etc, so let's not get precious at trying to extend the benefits we enjoy to those less economically enfranchised.
And I'd like to add the words of one of the last respondants speaking as a 'fair trade' economist, I suppose, reminding us of what the situation is that fairtrade is seeking to redress.
... The alternative is to become landless labourers, migrating to the slums of big cities or (in the case of countries like Mexico) trying to get work in the USA – illegally if necessary. Faced with a choice between hardship and destitution, coffee farmers actually make a rational economic decision to take the lesser of two evils and hang on in production as best they can. This actually encourages further over-production as farmers try to offset low prices by increasing volume, often at the expense of quality.
This is why coffee prices slumped to such a low level for so long, before a slight rally in the last year or so. This had nothing to do with Fairtrade – it accounts for less than 1% of global production whereas the excess of supply over demand was more like 10% annually.
So, there’s the analysis. But wouldn’t it be more interesting to think about what we can do to help? Everyone agrees that artificial subsidies aren’t a long-term sustainable solution – which is why we don’t do them. Instead we work with farmers who are potentially viable but need help to improve their position. The minimum price ensures that they can maintain a decent living, while encouraging them to work through co-operatives means that they take greater ownership of their product and retain more of the export price. It also means they engage more directly with markets and gain the knowledge to trade more effectively. The premium means they can invest in improving their efficiency and in diversification. It also promotes social development by funding community projects in health, education etc.
Another important point is that articles like the one in last week’s Economist always compare Fairtrade with schemes like the Common Agricultural Policy as proof that guaranteed prices lead to over-production. But it’s a false comparison. The CAP encouraged wine lakes and butter mountains because it guaranteed a sale, regardless of how much was produced. Fairtrade doesn’t do that and demand is driven solely by consumer purchases. If there isn’t a Fairtrade buyer, the growers sell to the conventional market – and we encourage them not to just rely on Fairtrade anyway because we’re trying to promote sustainability and it’s not sustainable to be over-reliant on one channel of business.
Now none of this is rocket science. I studied economics for five years in my youth but most of what I’ve written comes from the first term of my O. Level studies. So how come the brains at The Economist don’t get this? Why do they use selective arguments and ignore or distort what we say in order to dismiss it? Which is why I wanted to make the point that rigid, dogmatic approaches are flawed whichever side of the debate they come from. The poor are not interested in our debates on economic theory. They want practical action. Where free trade works that’s fine, where Fairtrade has a role, why can't that be OK too?
Further critique of the Economist article here.
We shouldn't sneer at the goodwill of ethical shoppers | Guardian daily comment | Guardian Unlimited: Filed in: fair-trade, UK, ethics, market, Economist
No comments:
Post a Comment