Fair-trade movement gains speed, criticism

October 16, 2005|By JAY HANCOCK

Between them, U.S. Lutherans and U.S. Catholics, each coached and cajoled from Baltimore, drink 12 million cups of higher-priced, "fair-trade" coffee a year. That's up from next to nothing a decade ago. The Lutherans, who like to joke that coffee is the third sacrament after baptism and communion, are especially keen.

But "the Presbyterians are close behind us," says Sarah Ford, fair-trade boss at Baltimore-based Lutheran World Relief, which sold about 115 tons of fair-trade coffee (9 million cups) through American congregations last year.

And Catholics, Universalist-Unitarians, various Jewish groups and many other denominations are also pitching in, not to mention student and other secular groups.

The fair-trade movement claims to deliver a "fair" or "just" price (often WAY above market) for producers in developing nations.

The movement is gaining momentum, making a bit of a difference, and, in perhaps the best measure of success, fetching unjustified criticism from right and left.

More than 700 people from more than a dozen countries attended this month's Fair Trade Futures Conference in Chicago, coordinated in part by Lutheran World Relief and Baltimore-based Catholic Relief Services. (Baltimore-based evangelical Christian group World Relief is also involved with fair trade.)

Last year, Americans spent close to $370 million on coffee certified by TransFair USA, a private group that licenses fair-trade commerce.

TransFair figures fair-trade coffee, which for years has guaranteed a price to growers of $1.26 per pound even at times when the market price is 20 cents or 30 cents, had a 1.8 percent U.S. market share last year.

Fair-trade coffee, which proponents say is priced competitively in stores with other high-end "specialty" brews, has spread from church socials to national distributors such as Sam's Club, Starbucks, Dunkin' Donuts and Procter & Gamble.

A week ago, Nestle said it would start selling fair-trade-certified coffee in Britain. There are growing programs to sell fair-trade bananas, tea, chocolate and other products.

Advocates say fair trade gives Third World growers a non-starvation living and helps Americans fulfill ethical or religious obligations to look out for fellow humans.

"Fair trade is about creating opportunities for Catholics to live out their faith more fully, but it's also a solution for low-income producers overseas," says Michael Sheridan, fair-trade czar for Catholic Relief Services.

But critics on the right carp that fair trade subverts the market, distorts prices and subsidizes inefficient producers, keeping the supply higher and prices lower for everybody else. (By overpaying for coffee, the argument goes, fair-trade buyers keep some growers in business who might otherwise switch to a different crop.)

People on the left complain that fair trade doesn't help enough farmers, provides do-gooder camouflage for evil corporations and, even worse, generates big profits for people other than the Third World growers.

But criticism from both sides is misguided.

Fair trade is the free market in action. No government compels Americans to buy fair-trade coffee or Nicaraguans and Colombians and Tanzanians to grow it. The relationships are freely made, subject to the private contracts that libertarians hold so dear.

Do people who buy fair-trade coffee subsidize "inefficient" producers by paying so high above the market price? It's possible, although I can't imagine why anybody should care.

You're subsidizing inefficient producers anytime you buy a Louis Vuitton purse, a Prada loafer or a Rolex watch. Like fair-trade coffee, all these products cost more to buy than the market price of the components that go into them or the utility you get from owning them.

TransFair's "Fair Trade Certified" label is a brand like any other. If I'm going to blow money on a luxury nameplate, I'd rather subsidize some Nicaraguan child's education than Vuitton boss Bernard Arnault's mansion.

Complainers on the left are just as mistaken. Yes, fair trade's market share is puny, but you have to start somewhere. If fair trade is to have a future, it must come through mass distribution by big U.S. companies, and they're not going to participate if they can't profit.

For my money, the fair-trade movement is far more constructive than the "socially responsible" investment fad, which tries to wear the same halo. Social investing hasn't kept one cigarette from being smoked or one slots lever from being pulled.

United States purchases of fair-trade coffee, on the other hand, delivered $26 million directly to Third World villages last year that they wouldn't have otherwise gotten, according to TransFair.

During the 2001-2004 crash in coffee prices, says Lutheran World Relief's Ford, such payments "truly became the difference between people being able to stay on their land and keep their farms - and moving out."

jay.hancock@baltsun.com

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