Today, Sameh El-Shahat (I assume a columnist at the UK’s Telegraph) published a rant against fairtrade. I guess, the paper tries to make hay by attacking “holy cows.” Below is the reply I posted in the paper’s comment section.
As they say, a little knowledge can be a dangerous thing. But let’s start at the beginning.
I have no quarrels with the complaints about trade. Indeed, the tariff structures are discriminatory and cocoa producers all over the world know that. Still, there is chocolate made in Africa and Latin America. Check out Omanhene chocolate from Ghana or Chocolates El Rey in Venezuela.
But even if there were lots of chocolate factories in the Global South, the fate of cocoa growers would not necessarilyÂ improve because prices for cocoa beans are set in London and New York. Yes, the workers at the chocolate factories might earn more money, but the cocoa farmers would still be stuck where they are now.
Sameh El-Shahat really misses the boat on fairtrade. There are lots of economic reasons why primary commodities face highly fluctuating prices. Farmers facing these fluctuations are helped by fairtrade. First, the price guarantee smooths out the fluctuations and creates predictability. Then there isÂ the social premium which, for cocoa, amounts to $150/ton. Between the guaranteed price and the social premium, cocoa growers receive clear benefits. I have seen the fair trade financed water pumps, privies and the schools in Ghana and the farmers were happy to have them.
The Fair Trade Labeling Organization ensures that the guaranteed price and the social premium are indeed getting to their intended recipients, so the suggestion that the extra funds are pocketed is just a frivolous accusation.
Yes, some fairtrade goods are more expensive but that’s not necessarilythe norm. When I buy Divine chocolate at $2.50 a bar, I pay less than what the fancy non-fairtrade bars cost. Same with my coffee. My fair trade coffee costs less that Starbucks.
But there is another explanation for the higher fairtrade price. Most companies producing fairtrade chocolate are small companies who don’t have the economies of scale the Cadbury’s and the Nestle’s have.
Sameh El-Shahat shows his true colors in the last paragraph. Let free trade reign. That’s the hidden message. But the Ghanian farmers I spoke with have experienced free trade themselves and they like fairtrade better. Maybe Sameh El-Shahat should worry less about condescendence and speak to some farmers who have experienced the benefits of fairtrade.