Fairtrade Comment. Generous consumers pay £1 billion a year extra for Fairtrade products. Nearly all this extra money is pocketed by firms in the rich countries. Most of what is left is spent on extra operating costs incurred in producing Fairtrade, and some Fairtrade cooperatives make a loss from their Fairtrade membership. Any money left over is spent on social products which may have no economic impact. The farmers do not receive a higher price for Fairtrade and may receive a lower price. Their costs when producing Fairtrade are, however, higher, so their net income is lower. All these established facts contradict the assumptions in the recent paper by Tedeschi and Carlson, so their argument is incorrect. Published in the Journal of International Development
‘Ethical Objections to Fairtrade’ is based on the knowledge that if aid is diverted from the poorest and most needy, it causes death and destitution. Nearly all the extra money that generous people pay for Fairtrade coffee is pocketed by firms and organizations in the rich countries. Most of what is left goes on the extra costs of marketing Fairtrade. None goes as extra prices to farmers, though they incur higher costs. This paper shows the damage Fairtrade does to the vast majority of farmers, those who do not belong to Fairtrade. There are no impact studies showing that Fairtrade farmers in general benefit, let along other farmers – it is not possible to do a study on Fairtrade that meets the rigorous standards for an impact study. Much of the trade is the criminal offence of Unfair Trading under EU and UK law: consumers are given false and misleading information and key information is withheld. Published in the Journal of Business Ethics
BBC World Business Report My criticisms lead. Fairtrade Foundation UK will not appear on a platform with me because I produce hard research evidence and they produce only anecdotes, so the BBC got someone from the Netherlands. Note that he does not give figures for extra amount paid by consumers, amount going to the Third World, or any extra amount paid to farmers. Nor does he suggest that there is any impact study meeting the standards of the development agencies (there are not). And he does not mention that the Chief Executive of Fairtrade International and a range of researchers have said that the auditing and monitoring of the system is woeful.
See my website for these and other reports http://www.griffithsspeaker.