Fair-trade column missed the mark, Guelph Mercury, August 21, 2008

Posted on Tuesday, August 26, 2008

Letter to the editor

Sean Field

Dear Editor - In his Aug. 14 column "Fair-trade coffee far from a fair deal," Gene Callahan is right about a few things but rather sensationalist and off the mark on others.

He argues that fair trade is a poverty trap that lures small farmers in low-income countries away from better paying jobs. However, fair trade aims to help farmers already growing particular crops, not lure new farmers, and establish a price floor to help them maintain a minimum standard of living.

Farmers in high-income countries receive numerous forms of support, which are much greater than the benefits accrued from fair-trade premiums, to achieve this same objective. Targeting fair trade as a market-distorting force is making a mountain out of a mole hill and unfairly targets the poor.

I also wonder which "better paying jobs" Callahan was referring to. Evidence suggests small agricultural households in low-income countries typically engage in a portfolio of activities to carve out a livelihood, but most do not have a great range of employment choices and the prospective benefits of each of these choices are usually pretty low.

This bleak situation is demonstrated by rising rates of poverty and urban unemployment -- due to urban migration -- in many low-income countries.

Furthermore, supply and demand analysis can be a very useful tool but it can be more insightful when used on a smaller case study basis.

Fair trade attempts to enhance the value of historically volatile commodities by adding an ethical attribute and marketing them to a group of consumers who are willing to pay more.

Yes, there is an oversupply of fair-trade coffee on the market, but in this case small farmers are not necessarily worse off because of it.

It's true that fair trade will not bring about poverty alleviation on its own, but in conjunction with other initiatives it can be an important tool.

Vague references to broad economic principles without framing them in the context of the case study to which they are being applied leads to bad assumptions and hollow arguments.

-- Sean Field, master of science student, Food, Agriculture and Resource Economics, University of Guelph