Is Fair-Trade Coffee All that Fair?

Purchasing certified fair-trade, organic coffee helps improve the living conditions of coffee farmers in developing nations, right? Not necessarily. As Lawrence Solomon reports, a new study published in Ecological Economics found that over a ten-year period certified organic and organic fair-trade producers became poorer relative to conventional producers. Solomon comments:

The fair-trade business is filled with contradictions.

For starters, it discriminates against the very poorest of the world’s coffee farmers, most of whom are African, by requiring them to pay high certification fees. These fees — one of the factors that the German study cites as contributing to the farmers’ impoverishment — are especially perverse, given that the majority of Third World farmers are not only too poor to pay the certification fees, they’re also too poor to pay for the fertilizers and the pesticides that would disqualify coffee as certified organic.

Their coffee is organic by default, but because the farmers can’t provide the fees that certification agencies demand to fly down and check on their operations, the farmers lose out on the premium prices that can be fetched by certified coffee.

To add to the perversity, it’s an open secret that the certification process is lax and almost impossible to police, making it little more than a high-priced honour system. Although the certification associations have done their best to tighten flaws in the system, farmers and middlemen who want to get around the system inevitably do, bagging unearned profits. Those who remain scrupulous and follow the onerous and costly regulations — another source of inefficiency the German study notes in its analysis — lose out.

Labeling coffee as “fair-trade” enables merchants to charge a premium, but it’s not clear those consumers who are willing to shell out extra money for “fair-trade” coffee are getting what they pay for.