The “fair trade” coffee campaign (not to be confused with “free trade” coffee) is gaining traction beyond its early beachhead on college campuses and grungy latté shops. Increasingly, the campaign is finding new adherents in religious organizations, which are busily issuing guidelines for consumers. In churches and synagogues all over America, the once ideologically innocent coffee klatch has become a forum for international trade policy.
Prominent religious advocates of fair trade include the Interfaith Fair Trade Initiative, an outreach of Lutheran World Relief, and the Presbyterian Coffee Project of the Presbyterian Church (USA). The Presbyterian Coffee Project, among other things, advises its churches to “offer gift baskets of fairly traded coffee and tea for new members, as Christmas presents, or on other occasions.” And in December, Catholic Relief Services announced the launch of an effort to boost fair trade coffee consumption among the nation’s 65 million Catholics.
People of faith are working with groups like Global Exchange, a San Francisco human rights organization, which claims , “Agriculture workers in the coffee industry often toil in what can be described as ‘sweatshops in the fields.’” The fair trade movement, encouraged by victories among the religious and in corporate America, has ambitions that range all over America’s supermarket. TransFair USA, the only third-party certifier of fair trade commodities in the United States, announced on January 22 that fresh fruit is its “Newest Fair Trade Certified Product Offering.” Soon, even the purchase of a bunch of bananas will force shoppers to make a political statement.
But let’s be fair to the fair traders. Their techniques are based on convincing the consuming public and working through the market to achieve their goals. This approach is vastly superior to relying solely on governmental subsidies, which has historically been the chosen means of influencing agriculture policy for many like-minded activists.
The main difficulty with this lies in the fact that these campaigns rely on guilt-tripping people who drink coffee, rather than arguing from sound economic principles. The rhetoric of the fair trade movement attacks “big business” coffee companies, and favors smaller, cooperative farms.
In addition to using such rhetoric as “sweatshops in the fields,” Global Exchange implicitly blames consumers and big business for the “crisis,” with an explanation that does not explain: “Many small coffee farmers receive prices for their coffee that are less than the costs of production, forcing them into a cycle of poverty and debt.”
The “middlemen” involved in coffee importation into the United States are often called “exploitative.” The Lutheran World Relief Coffee Project asserts that big business coffee involves “a lengthy, and expensive, cast of middlemen between the coffee farmer and the consumer.” Most people, and not just economists, refer to this as a supply chain, the system by which food is delivered from field to table.
And corporate America is caving in. Last September, Proctor & Gamble announced it would begin offering Fair Trade Certified coffee though its specialty coffee division, Millstone.
The fair traders’ answer to the “sweatshop on the fields” situation is simple: fix the price of coffee at a level that will provide an adequate standard of living for the farmer. Currently they affirm that this fair level is a minimum of $1.26 per pound (compared to the current 50 cents per pound prices in the actual marketplace).
Such artificial and arbitrary measures fly in the face of economic reality. The law of supply and demand is a major player in regulating the price of coffee, which is bought and sold like any other commodity. The economic price mechanism takes into account a variety of factors that an artificial price standard cannot hope to deal with justly.
Fair traders also ignore one of the main reasons coffee growers face price drops: worldwide production has greatly expanded, especially in Southeast Asia. Increased supply equals lower prices, given a static demand.
From 1995 to 2002, according to CoffeeResearch.org and the International Coffee Organization, Brazil increased coffee exports by more than 200 percent. Colombia has shown a slight decline in production over the same period, while Vietnam’s production has almost tripled. So, the three largest exporters of coffee in the world had all either maintained or increased their production during the seven-year period. Worldwide coffee production peaked in 2002 and because of a long buildup of surplus, finally showed a 15 percent decline last year. There’s simply too much coffee on the market.
Even though the U.S. is one of the largest importers of coffee in the world, per capita consumption of coffee has declined steadily, dropping from 38.8 gallons in 1960 to 22 gallons in 2000, according to the USDA Foreign Agricultural Service. This is indicative of a downward trend in global demand, which, combined with increased supply, is a major cause of the plummet in coffee prices.
Most troubling is the fact that the fair trade movement effectively pits the poor against the poor. It’s a case of coffee farmers in the fair trade co-ops versus conventional farmers. Those who sell coffee in the traditional commercial manner are forced to compete with those who are artificially enabled by the fair trade movement to maintain production through such guilt-driven, market-based subsidies.
The Apostle calls us to live godly lives, to “keep these instructions without partiality, and to do nothing out of favoritism” (1 Tim. 5:21 NIV). This stems from our proper reflection of God’s holiness and justice, “For God does not show favoritism” (Rom. 2:11 NIV). While these words are spoken especially in regard to salvation history, they have application to our morally informed economic lives. Religious groups, especially, should reevaluate their position with respect to fair trade in the interest of true justice. The fair trade movement needs to take into consideration the poor who are left out of their arbitrarily constructed system of privilege.
The fair trade movement’s only response to this disparity is to argue for a complete standardization of its price-fixing methods. Global Exchange calls for “a total transformation of the coffee industry, so that all coffee sold in this country should be Fair Trade Certified.” The success of this sort of endeavor will never be comprehensively effective, especially in a free economy like the United States. As Global Exchange admits, “Despite the growing popularity of Fair Trade coffee, demand has not yet matched supply: Last year about 200 million lbs. of certified Fair Trade coffee was sold at normal market prices because of insufficient demand.”
Rather than attempting vainly to maintain the status quo, the fair trade movement should look for other, more innovative ways to provide resources for the world’s poor. For example, Ronald J. Sider in his book Rich Christians in an Age of Hunget (Dallas: Word Publishing, 1997, pp. 233-36) outlines ideas about micro-enterprise development that might offer a better solution. Those who care about small coffee growers, according to Sider’s view, might invest capital and enable farmers to grow crops that are in higher demand.
In this way, those who choose to stay in the coffee growing business would see less competition and, in theory, rising prices resulting from decreased supply. How much better than fair trade price fixing and guilt trips, which demand partiality for a select group of the poor.