Percolating Questions About Coffee

The very first entry on the list of Stuff White People Like is coffee, particularly of the free-trade variety. Indeed, for those of us who live in London (or similarly wealthy latte-lands across the globe), we are regularly bombarded with ethical choices regarding organic this, free-range that, and fair trade whatchimacalit. So what gives?

Well after doing a little research over my morning (open market) coffee, here's what I've found. According to a reliable source, "Fair Trade is a trading partnership... [that] contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South." Once we get past all the bits about 'dialogue,' 'empowerment' and some antiquated neo-Marxist language about the Global South, the Fair Trade argument boils down to this: free trade isn't working for certain commodity producers in developing countries. The existence of information asymmetries, predatory government policies and restricted access to global markets means that coffee producers are not reaping the benefits of their labour. The Fair Trade movement attempts to accommodate for this by providing more direct market access for marginalized producers, creating more 'equitable' trading relationships and helping with capacity building. So far, so good.

But does it work? I remember hearing the argument that Fair Trade benefits some poor farmers, but leaves behind the uber-poor farmers that are not wealthy/organized enough to meet the criteria and earn accreditation. And in fact, here's an article that absolutely rips into the Fair Trade movement pointing out that Mexico is the biggest producer of fair trade coffee despite paying wages 18x higher than some of its impoverished African competitors and easy access to N. American markets. The article goes on to argue that a) the farmers' biggest obstacles are their local government, not rich-world consumer preferences, b) Fair Trade leads to market-distorting effects that crowd-out other ethical alternatives, and c) Fair Trade might actually attract lower quality beans.

The ever-reliable folks at Marginal Revolution have also tackled the issue here, discussing some potential pros and cons in a more systematic way. So far, I remain highly suspicious but willing to be proved wrong. Consider the comments section an open thread.

UPDATE: Patrick at Zeitgeist provides his answer here.