Combating Global Poverty with a Cup of Coffee
Millions of people in the developing world struggle to survive on just a couple of dollars a day. Fair trade claims that buying fair-trade labeled coffee is a way to help the poor. But is it the best way? Professor Colleen Haight has been researching fair-trade for the past 10 years; she’s also spent time on coffee plantations in Central America talking with the coffee farmers there about their experiences. She says that while fair trade has done a lot to increase consumer awareness, it may not be the best way to actually help the poor.
Fair-trade coffees cost a little bit more than necessary and the extra profit is returned to the farmer. Fair trade farmers are small landowners, but migrant workers—who are much poorer than any landowner—do not benefit from fair trade. Fair-trade farmers are required to pay migrant workers the minimum wage in their country, but that’s already the law.
Prof. Haight says there is a better way to help these poor migrant workers. You can help them by buying premium coffees instead of fair trade coffee. Premium coffee beans are harvested with greater care and fetch higher prices at the market. As a result, migrant workers receive higher pay working for farms that produce premium coffees. Premium coffees and fair-trade coffees cost about the same amount, but buying premium coffees does more to help the poor than buying fair-trade labeled coffees. You have a limited amount of money; you should be able to use it in a way that maximizes the benefits to the poor.
Does Fair Trade Coffee Help the Poor? Evidence from Costa Rica and Guatemala [report]: Drawing on field work conducted in Costa Rica and Guatemala, this report finds that Fair Trade may actually harm the long-term interests of small farmers in high-cost production areas
Is Fair Trade a Fair Deal? [article]: Gene Callahan at the Freeman argues that the Fair Trade movement embodies a mixture of sound ideas for improving the state of the coffee industry and well-meaning but misguided attempts to fight the realities of supply and demand
The Problem with Fair Trade Coffee [article]: Fair Trade-certified coffee is growing in consumer familiarity and sales, but strict certification requirements are resulting in uneven economic advantages for coffee growers and lower quality coffee for consumers.
How Fair Is Fair Trade? [article]: A BBC article asks the question, “Does Fair Trade promote self-sufficiency or cause dependency for third-world farmers?”
Fair Trade: Improving Lives (video): Paul Rice of Fair Trade USA explains how Fair Trade certification empowers farmers and communities to develop themselves
Fair Trade Coffee (video): A video explaining the basics and benefits of Fair Trade Coffee
Unfair Trade [report]: This report by the Adam Smith Institute argues that contrary to popular belief, the Fair Trade label does more harm than good to the poorest third-world farmers
Desert Island Game (game, beginner): Can you learn something about trade and cooperation by being marooned on a desert island?
Trade Ruler (game, advanced): As the Supreme Ruler of an island, you want the country to prosper. By engaging in international trade, you can achieve this goal.