Sunday, May 9, 2010

Why is Fair Trade Important?

By Rose M. Boras

I recently discovered that most soccer balls are made in India or Pakistan with child labor. Even when adults are involved in production, they are rarely paid a decent living wage. Fair Trade Sports was created in Seattle, Washington to reconcile this complex issue. The non-profit ensures that all of their sports balls are made by adults paid under Fair Trade certified wages and healthy working conditions.

Now you are probably wondering what sports balls have to do with Chiapas. And I would say everything. Most consumers are unaware of where and how the goods they purchase are created - from soccer balls to coffee. Everyday millions of Americans get their morning caffeine fix at home from Folger’s or on their way to work at Starbucks or Dunkin’ Donuts. While Fair Trade awareness among coffee consumers doubled from 12% in 2004 to 27% in 2007, these numbers are still too small(Taylor). Also, they only refer to awareness, not a conscious decision to purchase Fair Trade coffee all the time.

So then, why is Fair Trade important? Isn’t capitalism working? In his opus,Wealth of Nations, Adam Smith (2004) refers to the invisible hand that naturally guides a society through self-interest. In other words, if I have something to sell and you have the means to buy it, we should reach an equitable agreement. Therefore, if green coffee is being sold on the stock exchange at a dollar a pound,coffee farmers are able to pay for their production costs and earn a small income. How is it then that millions of farmers worldwide receive less than fifty cents a pound for their coffee beans after the middlemen take their cut? This seems to be in no one’s self interest.

According to Amartya Sen (1999), the reason this poverty continues to exist is because “there are unequal advantages in converting income into capabilities.” In other words, prevailing market prices for the goods produced in developing countries are too low for farmers to reap a living wage reflecting their dignity. Hence, the reason, organizations such as Fair Trade Labeling (FLO), Transfair and coffee co-coperatives such as Maya Vinic and Union Majomut are so vital to the economic lifeblood of coffee farmers. These organizations take on the responsibility of buying coffee at super competitive prices in order to alleviate poverty.

My trip to Chiapas was full of excitement because of my own coffee background. I was thrilled at the prospect of visiting coffee co-operatives and learning how they were practicing sustainability and surviving the global market. We first visited Maya Vinic where we learned about the coffee production process,basically turning green beans into the coffee beans we love to drink. At UnionMajomut, we were given an insiders’ perspective into running a co-operative. Union Majomut believes their most important struggle is for land and coffee production. They feel it is their duty to empower the indigenous coffee farmers by helping them grow quality beans and providing micro credit. They also keep profits out of the hands of middlemen or coyotes.

Interestingly enough, both Maya Vinic and Union Majomut complained about the cost of maintaining a Fair Trade label. FLO comes out yearly for 2 or 3 days to certify the co-operatives. The cost to both is $35,000 Mexican dollars or 2,300 Euro annually. However Fair Trade is still the best answer to balancing the volatile global coffee market. It is also less confusing to consumers. Many coffee retailers, large (Starbucks) and small (Intelligentsia) have converted to direct trade. Thereby, eliminating Fair Trade as the middleman and claiming they would rather the $3,000 branding fee go toward the coffee farmers. However, stressed out consumers do not have the time or inclination to review every single coffee retailer to see whether they are paying a fair wage to farmers. Since, most corporate contracts are proprietary, consumers have to take the word of coffee retailers. Fair Trade, by its very nature is not only fair, but transparent. And that is why Fair Trade is important to consumers and coffee farmers.


Fair Trade Sports.

Sen, Amartya. 1999. Development as Freedom. New York: Anchor Books.

Smith, Adam. 2004. The Wealth of Nations. New York: Barnes & Noble, Inc.

Taylor, David A. 2007. “Certified Coffee: Does the Premium Pay Off?” Environmental Health Perspectives, Vol. 115, No.9: 456-459.

Transfair USA.

Union Majomut.