Sunday, 7 September 2008

Is fair trade fair?

Madsen Pirie posts over at the Adam Smith Institute blog on Misery wrought by ‘Fair’ Trade. Pirie is discussing a recent article by Peter Griffiths in August issue of Prospect magazine on why "Fair trade isn't fair". Pirie writes
Essentially his case adds to the one we made in Marc Sidwell’s ASI publication in February, Unfair Trade. It is that the Fairtrade movement selects some producers to favour over others, insisting on cooperatives at the expense of family farms. By paying higher than market prices, it ensures that its favoured farmers do not have to respect market conditions which might tell others to cut back production in the event of a world surplus. They continue to plant and expand production, adding to the surplus and depressing prices for millions of poor farmers. As Griffiths says,
This is not just a matter of one lot of farmers receiving a little more and another lot a little less. It means subsidizing 1.5m coffee workers while paying 25m farm families - the coffee growers who are not part of Fairtrade – a lot less. Most of these are subsistence producers, whose income from coffee is tiny. Any fall in income will mean children dying from malnutrition or malaria.
This is one of those cases in which what were probably good intentions have ended up doing far more harm than good. Indeed, Griffiths closes by describing Fairtrade in uncompromising terms as “a scheme which threatens the impoverishment of millions.”
Another example of the law of unintended consequences.

1 comment:

matt b said...

This is one of those cases...

An understatement, if ever I saw one.