Last week, guest columnist Harry Graver (“The cost of moralizing coffee,” Feb. 15) forcefully argued that Yale and our co-operative, Equal Exchange, were unwittingly hurting the same small-scale coffee farmers we seek to support because there are, he contended, powerful negative unintended consequences to our Fair Trade importing policies.
While we appreciate the vigor of Mr. Graver’s argument and that he shares our concerns for the fate and welfare of small farmers around the world, we strongly disagree.
Thankfully, we can reassure the News’ readers that the Yale community need not worry about the decision to serve our Fair Trade coffee in their dining halls. To the contrary, Yale students, faculty and staff should be proud that your dining services have been one of the leaders among university programs in thinking about the real world ramifications of where and how you source your food and beverages.
As for Mr. Graver’s assertions, most of them seem to be borrowed from the Adam Smith Institute that he cited in his column. Over the years this institute has periodically attacked the efficacy of Fair Trade, but has not taken the time to learn how it actually works. In total his column contained more factual errors than we can address here.
To start, both the Institute and Mr. Graver present an over-simplified picture in which Fair Trade is only about price; where farmers base their production decisions solely on price signals; and in which there is a single homogenous coffee market. In reality, price is only one of five major components of Fair Trade; farmers make their production choices based on dozens of variables; the coffee market is fragmented into many regional, quality and production-method sub-categories; and so on. Consequently, a simple equation of “price signals equals production decisions” actually obscures the situation more than it illuminates it.
Secondly, and more importantly, the prices paid by Fair Trade importers like ourselves apply only to the crops we import, which, with other Fair Trade buyers, collectively represent about a mere 5 percent of global coffee production. The other 95 percent of the global coffee crop is still priced according to traditional free market forces. In most years this means that most farmers make a very meager income — maybe $500 a year or $1,000 a year if they’re lucky. Because of Fair Trade’s targeted impact it is not a “price setter” for the whole market that inadvertently lures farmers into growing the wrong crops. Unlike government price support programs it is not a promise to buy all coffee grown everywhere at a set price. Thus, rather than setting a minimum wage for all the world’s coffee, we and other fair traders are simply promising a fairer price for the coffee we do buy.
And we do this because we know that often markets actually don’t work well enough, and that many of the assumed market elements described in textbooks do not exist in farming communities. In rural Peru, Mexico or Kenya, there is often a great asymmetry between the few well-connected and resource-rich buyers and the many, usually disconnected and physically isolated sellers. There is asymmetry in access to information, markets, credit, insurance, land and labor.
The point is that when we make business and moral decisions we all do so in a specific, real context, not within a stripped-down, theoretical abstraction. For example, a typical coffee farmer grows up on a mountain or hillside, on a plot his or her family has tended to and invested in for a generation or more. The farm is a day’s walk from the nearest town and maybe a four-day drive from the nearest port. This person has very limited economic choices. He/she cannot simply choose to replace their coffee orchard with a cherry or apple orchard. They cannot follow one season’s price signals and switch to soy beans or strawberries, and then switch back again. With very limited schooling in their community they have little or no access to “professional” career paths. Unfortunately, some of the choices they do have before them are to grow drugs, move to the slums around Lima or Nairobi, or migrate illegally to the U.S. or Europe.
The fact is that farmers the world over are usually making prudent decisions in very constrained circumstances. Even at the typically low-market prices, growing coffee is often the most rational, utility-maximizing, risk-minimizing decision among many poor choices. With Fair Trade we make their hard work a little better compensated, a little less risky and a little more sustainable (both economically and ecologically), and in this way we try to make the transaction a little more just.
Rodney North is a worker-owner for Equal Exchange .