Private certification schemes are the unsung heroes of a market economy. They are far more effective than state regulation. It is therefore with a heavy heart that I have always had reservations about Fairtrade-labelled products. The foundation pounces on critics with its well-oiled publicity machine, always responding with anecdotes. But doubts remain.
There are many ways in which poor farmers can get better prices. They can do so through speciality brands, via traditional trade channels and using other labelling initiatives. Does Fairtrade help? The evidence is limited, but even proponents of Fairtrade would argue that only about 50 per cent of the extra money spent by consumers is available to spend on social projects, and others have suggested a figure much closer to zero. No clear evidence has been produced to suggest that farmers themselves actually receive higher prices under Fairtrade.
Fairtrade cannot help all farmers. Some poorer or remote farmers cannot organise and join up; others cannot afford the fees; still others will be working for larger producers who are excluded from many Fairtrade product lines. Against that background, "Fairtrade absolutism" does not sit well. Fairtrade schools have to do everything possible to stock Fairtrade products – but, what about speciality brands produced by individual farmers? What about Rainforest Alliance products? Are poor producers to be expected to pay the costs involved to join every labelling scheme?
Fairtrade is a brand that promotes itself the way all brands do. As noted, the brand is prominent in schools. It is worrying that its PowerPoint presentation shows graphs of commodity prices that stop in 2001 and graphs of the coffee price relative to the Fairtrade minimum price that stop in 2006. The picture since then tells a different story. This is marketing, not education.
Fairtrade may do some good in some circumstances, but it does not deserve the unique status it claims for itself.
Philip Booth is from the Institute of Economic AffairsReuse content