Food For Thought
Fairtrade helps the relatively rich
In order to join Fairtrade, cooperatives must meet quality and political standards which means their farmers must be relatively skilful, educated and well capitalized, and therefore far from the poorest farmers. Critics say this is diverting the aid/charity money from the poorest to the rather poor. They also point out that, since Fairtrade recruits the relatively rich farmers, any impact study that showed that Fairtrade farmers were relatively rich now would prove nothing: a meaningful study would have to compare incomes before and after joining Fairtrade, and have a control group of non-Fairtrade farmers. The majority of Fairtrade suppliers are in the higher income or middle income Third World countries, such as Costa Rica and Mexico, with relatively few in the poorest countries. Mexico has 70 times the GNP per head of Sierra Leone. The minimum wage of agricultural workers in Peru is $3 a day and the average income of Fairtrade farmers in Bolivia was US$900/year, very much higher than normal agricultural incomes in Africa and much of Asia. Again, critics say this is diverting money from the poorest farmers.
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The Overproduction Argument
Critics argue that Fairtrade harms all non-Fairtrade farmers. Fairtrade claims that its farmers are paid higher prices and are given special advice on increasing yields and quality. Economists state that, if this is indeed so, Fairtrade farmers will increase production. As the demand for coffee is highly inelastic, a small increase in supply means a large fall in market price, so perhaps a million Fairtrade farmers get a higher price and 24 million others get a substantially lower price. Critics quote the example of farmers in Vietnam being paid over the world price in the 1980s, planting lots of coffee, then flooding the world market in the 1990s. The Fairtrade minimum price means that when the world market price collapses, it is the non-Fairtrade farmers, particularly the poorest, who have to cut down their coffee trees. This argument is supported by mainstream economists, not just free marketers. This argument falls away if, as critics and FLO state, farmers do not get a higher price.
Lack of evidence of impact
There have been very few attempts at impact studies. It would be methodologically and logically incorrect to use these to conclude that Fairtrade in general does or does not have a positive impact. Griffiths (2011) argues that few of these meet the normal standards for an impact study, such as comparing the before and after situation, having meaningful control groups, allowing for the fact that Fairtrade recruits farmers who are already better off, allowing for the fact that a Fairtrade cooperative receives aid from a dozen other organizations – Government Departments, Aid Agencies, donor countries, and NGOs, and allowing for the fact that Fairtrade may harm other farmers. Serious methodological problems arise in sampling, in comparing prices, and from the fact that the social projects of Fairtrade do not usually aim to produce economic benefits.