The Fair-Trade Fallacy
Let me quickly respond to this week’s Acton Commentary:
While I agree in broad strokes with Dr. Larrivee’s analysis of the questionable assumptions of the fair trade movement, with respect to coffee in particular, I don’t agree that the problem is “low productivity in the countries in which farmers live.” I have previously argued that the source of the issue is in fact too much coffee, so that the market is saturated and cannot sustain high prices given the declining worldwide demand.
Dr. Larrivee later rightly observes that the fair trade system contributes to a situation which “would expand the supply until the price farmers receive dropped back to the subsistence level.” I think, in fact, this has already happened in the case of coffee, and the fair trade movement simply exacerbates the problem.
You can read more about my take on the situation here.
While I agree in broad strokes with Dr. Larrivee’s analysis of the questionable assumptions of the fair trade movement, with respect to coffee in particular, I don’t agree that the problem is “low productivity in the countries in which farmers live.” I have previously argued that the source of the issue is in fact too much coffee, so that the market is saturated and cannot sustain high prices given the declining worldwide demand.
Dr. Larrivee later rightly observes that the fair trade system contributes to a situation which “would expand the supply until the price farmers receive dropped back to the subsistence level.” I think, in fact, this has already happened in the case of coffee, and the fair trade movement simply exacerbates the problem.
You can read more about my take on the situation here.
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