This article by Shannon Christman provides a good overview of the concept of fair trade products and organizations. The idea is an intriguing one for libertarians like me because it allows us to maintain an environment of voluntary exchange (that is, actual free trade) while also ensuring a degree of fairness and helping to alleviate some of the social problems that may arise from excesses of unrestrained capitalism.
I was reminded of this topic when I ran across a product from our local HEB store that seems to fall under this category. It is a bag of fair trade organic coffee that is sold by a company called Ruta Maya. The company is based in Austin, Texas but the product itself (coffee beans) is grown and harvested locally in the Chiapas region of Mexico. Here is the description from the label:
Shade-grown and handpicked by farmers on small, family-owned farms in Chiapas, Mexico, Ruta Maya organic coffee has exceptional richness that combines ancient growing techniques with gentle roasting to extract the ultimate in coffee depth and flavor. Founded in 1990 in Austin, Texas on the simple premise of creating a marketplace of superior products produced in Latin American countries and to return to the producers of those products a fair portion of profits generated, the Ruta Maya guiding principle is Oportunidades para las Americas (Opportunities for the Americas). The complete Ruta Maya line of products embodies Mayan, Mexican, and other Latin cultures working together with Texans to foster a universal message of respect and friendship through economic coooperation.
While I have not yet tasted the coffee or compared prices (my mother can probably give me a good review of these in the near future), the overall idea seems like a pretty good deal. Meanwhile, here is the text of Shannon’s article:
Though they’ve been around for more than sixty years, fair trade products have been gaining popularity in recent years. They seem to have made the jump from something only bought by earth mothers to a common way for mainstream shoppers to purchase responsibly. Though not without its critics from various points on the political spectrum, the fair trade movement is gaining acceptance.
To be considered a fair trade product, the production process must meet several criteria, including the most obvious one — the producers must receive a fair price (negotiated locally) for their goods. Other criteria include providing safe working conditions (which includes not using forced labor or mistreating children) and being environmentally responsible. Most fair trade products are agricultural products such as coffee, tea, chocolate, or handicrafts.
Some buyers want to help poorly paid workers who produce their goods but are reluctant to try fair trade products because they wonder whether these products really benefit the producer. Could they be buying candy bars labeled “fair trade” and have the extra cost go directly into the pockets of the retailer or the distributor? After all, the seller could argue that he and the buyer had just made a “fair trade”. In other words, the reluctant buyer might be willing to pay extra for a product if she knew that the people making it were really making a greater percentage of the profit, but how can she know for sure that the claims are true?
Consumers are right to be skeptical; a product can be labeled “fair trade” without really ensuring that producers are receiving fair wages. However, products with an official fairtrade (FLO) mark are generally a safe bet because to earn this label, the products must meet several specific standards, including accountability to an independent inspector. Similarly, organizations calling themselves fair trade organizations can earn an FTO label from the International Fair Trade Association if they meet certain standards.
Recognized fair trade organizations need not be for-profit businesses; established charities can become fair trade organizations by helping producers set up a fair trade business. For example, Ten Thousand Villages, a store with over 160 locations in the U.S., is a non-profit organization that has sold fair trade handicrafts since 1946.
As expected, fair trade products are generally more expensive than similar products traded in the conventional way. Just because producers are receiving more money for the goods doesn’t mean others in the supply chain are necessarily going to reduce their shares of the profit. However, the goal of improving living conditions in developing countries (without giving handouts) is a worthy one, and whether or not you agree that fair trade is the best way to do it, the fair trade movement has gained enough of a foothold to be around for a while. The movement’s recent growth and development has brought about greater internal regulation, so consumers are now more confident that the extra money they pay for fair trade goods really does make a difference.