I've written before here at CK about the highly questionable value of "Fair Trade" products. Apparently the subject hasn't just been on my mind: The Economist tackled the subject recently too.
And their conclusions are damning. Some choice quotes:
"Sales of produce carrying a fair-trade label have soared in recent years, from an estimated $1.1 billion in 2004 to $6.5 billion seven years later. Yet this is largely a marketing success..."
"...there is little evidence that fair trade has lifted many producers out of poverty, not least because most of the organisations that are certified tend to come from richer, more diversified developing countries, such as Mexico and South Africa, rather than the poorer ones that are mostly dependent on exporting one crop."
"And why the focus on agricultural produce, when a booming fair trade manufacturing sector potentially would help far more countries?"
"...so far, the fair-trade labelling movement has been more about easing consciences in rich countries than making serious inroads in to poverty in the developing world."
"...for each dollar paid by an American consumer for a fair-trade product, only three cents more are transferred to the country it came from than for the unlabeled alternative."
Three cents. Think about that for a moment. Three cents is all that finds its way to a poorer country, despite you, the consumer, paying price premiums as much as 100% for Fair Trade labeled products. So wait: Who do you think really captures the profits here?
There's one effect, of course, that Fair Trade products are guaranteed to have: they make us feel better about ourselves. And, needless to say, the companies selling to us want us to have these warm and fuzzy feelings because of an important knock-on effect: they encourage us to buy.
This is why fair trade revenues have gone up nearly sixfold in seven years. This is what they call "a marketing success." This, I would argue, is the central reason consumer products companies embraced this idea in the first place.
Rather interesting, isn't it? So who is it, then, who really benefits from Fair Trade products? Hint: it's not those who should.
Readers, what do you think?
Who Gains From Fair Trade Certified Products?
More Questions On Fair Trade
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