Fairtrade - The Problem

Yesterday, sweet-toothed trader Anthony Ward bought pretty much the entire European market in Cocoa beans, in the largest Cocoa trade for 14 years.

How boring, you may think. But there is a comment from a FairTrade representative at the end of the first article, which is I think sums up the problem inherent in the FairTrade concept. Here it is in full (emphasis mine).

Barbara Crowther, a spokesman at the Fairtrade Foundation, said that no farmers in West Africa would benefit from the higher prices. She said: "This speculation only serves to increase volatility and uncertainty. Part of the problems in rent years have been the lack of investment in improving cocoa farms. But the farmers have already been paid a set price – none of this money will filter down to them."

All that she says is true. However, in theory, the purchase of these cocoa beans should ultimately benefit these farmers. They wouldn't benefit this year of course, but next year they should be able to command a higher premium for their beans, or produce more, as evidently there is a mild supply shortage. This additional money would then provide the investment required.

The problem is, of course, the FairTrade intermediary will prevent any of this happening. Ironically, FairTrade has no real desire to help farmers invest and grow, as they have this romantic idea of subsistence farming that bears no relation to the reality of hours of back-breaking toil actually required.

Perhaps allowing a free market to set a fair price might allow these farmers to speak for themselves rather than being ripped off by an organisation answerable to no-one except themselves.