Monday, October 09, 2006
HOW "FAIR" IS FAIR TRADE COFFEE...
According to information published on Fair Trade Labelling Organization's (FLO) website www.fairtrade.net (Fair Trade's umbrella organization), the Fair Trade price paid to coffee farmers is set at $US 1.06 per pound or $US 2.35 per kg for Robusta coffee and $US 1.26/Ib or $US 2.80/kg of Arabica coffee,inclusive of a Fair Trade "premium" of $US 5 cents/Ib to be used for so-called "development projects" within the community. (see graphs above).
The same coffee - after having been processed in northern countries - is marketed and sold to socially-conscious (and naive) consumers under the Fair Trade label at an average retail price of $US 20/kg, which means that the HUGE difference between the so-called "fair" price paid to small-scale farmers ($US 2.35-2.80/KG) and the average retail price of coffee labelled, marketed and sold as Fair Trade generated from value-addition has ended up enriching the numerous mostly foreign economic agents within the supply chain (i.e. traders, exporters, shippers, processors, marketing agents, wholesalers & retailers, etc.) In this context, one wonders who is helping who...?
Furthermore, the coffee has not been processed in the country of origin, thus failing to create much needed local investment, employment and income within the local economy. Equally importantly, processing the coffee in the country of origin would enable coffee producing nations and farmers break free from the dictate of the world market and from the vicious trap cycle of declining prices of coffee and other primary agricultural commodities on the world market ( which Fair Trade claims to be addressing, but is in fact profiting from) accentuated by further increases in production to offset the initial price decline, thus further decreasing world prices and further impoverishing coffee and other primary agricultural commodity producers in poor nations. This is a vicious trap cycle, which the Fair Trade "business" is brilliantly exploiting to its advantage...The Fair Trade "business" is capitalizing and prospering on both continuously declining prices of primary commodities on the world market and on the social-consciousness and naivety of Western consumers...
-1 KG of coffee makes on average 50 cups of coffee.
-The average minimum retail price for a cup of coffee in coffee shops and restaurants in the West is $US1-$US2: Thus, the equivalent price paid for a cup of coffee is $US 50-100/kg. The so-called "fair" trade price paid to small-scale farmers represents less than 5% of the average retail price of a cup of coffee in the West.
In this context, one wonders how "fair" the Fair Trade price paid to coffee farmers is and who is helping who...?