Saturday, June 07, 2014

“Fair Trade” Hurts Third-World Poor

We’ve never been impressed with the self-righteous moral preening of the “Fair Trade” crowd. Simply paying a few cents more for some politically correct coffee doesn’t sound like much of a sacrifice to us.

Further, the “Fair Trade” crowd typically has certain political views — opposition to free trade and to globalization, for example — that are sharply adverse to the interests of poor people in the Third World. It’s long been clear that the real path to a better life for Third World poor lies in market-oriented economic development. Impeding that does vastly more harm than “Fair Trade” schemes can even begin to repair.

But now the evidence is becoming clear that “Fair Trade” actually does little (if any) good.

Thus we have a large study, funded by the British government and conducted with a high degree of academic rigor. The results are summarized on the website of the University of London.

Research finds Fairtrade fails the poorest workers in Ethiopia and Uganda


24 May 2014

Fairtrade certified coffee, tea and flowers do not improve lives of the very poorest rural people in Ethiopia and Uganda, according to a four-year research project conducted by leading development economists at SOAS, University of London. The project studied rural labour markets in areas producing crops for export, under different institutional conditions that included, in some research sites, Fairtrade certification.

Low pay for wage workers, particularly women, and limited access to schools, health clinics, improved sanitation and other social projects in rural areas were among the findings in ‘Fairtrade, Employment and Poverty Reduction in Ethiopia and Uganda’, a report published today.

Teams of highly-trained fieldworkers studied wages and working conditions in twelve areas growing coffee, tea and flowers in Ethiopia and Uganda. As well as reviewing existing studies, the researchers collected new, detailed micro-level comparative evidence from areas producing agricultural exports on how rural labour markets affect poor people’s lives.

The study reveals that wage workers are commonplace on ‘smallholder’ farms in the areas studied, where between a third and a half of listed adults were recent agricultural wage workers. The research also found that these agricultural workers were much poorer than others. Wages were lower on average in research sites defined around Fairtrade certified producer organisations than in sites without Fairtrade certified producers.

Key findings from the report:
  • Most rural people in Ethiopia and Uganda enjoy a much higher standard of living than seasonal and casual agricultural wage workers. In rural areas, manual agricultural wage workers are the very poorest.
  • Where Fairtrade flowers were grown, and where there were farmers’ groups selling coffee and tea into Fairtrade certified markets, wages were very low – especially women’s wages. In fact, wages in other comparable areas and among comparable employers producing the same crops but where there was no Fairtrade certification were usually higher. This was not because the Fairtrade certified cooperatives were in more marginalised, deprived areas.
  • In some areas dominated by Fairtrade certified cooperatives workers in the samples did appear to have greater access to some fringe benefits (e.g., free meals in two sites, or on other sites more access to loans) than workers in areas without Fairtrade certification. Even here, though, other aspects of work conditions were often worse.
  • The findings on lower wages held true even after the effects of scale and other differences across workers and sites were taken into account in detailed statistical analysis, contrary to the claims made in the Fairtrade Foundation’s own statement about this research.
  • Fairtrade publicises its contribution to the funding of schools, health clinics, improved sanitation and other “social projects” in rural areas. From hours of quantitative and qualitative interviews with respondents and others, including in some cases cooperative managers, the SOAS researchers found that the poorest often had no access to these ‘community’ facilities in the research sites, even when they were or had been wage workers on the processing stations or for producer members.
A trenchant commentary on a British website describes the mentality behind “Fair Trade.”
From its very inception, the concept of Fairtrade was rooted in maintaining low ‘sustainable’ horizons for the poor by those who consider people in Africa and other parts of the Third World to be intrinsically different to the rest of us. The movement did not originate with the poor farmers of the developing world, but with Western NGOs and their army of gap-year do-gooders intent on imposing their reactionary ‘small is beautiful’ values on an Africa desperate for change.

According to the Fairtrade worldview, the poor farmers of the world are in fact quite happy with their lot and only desire a stable, if low, price for their produce. Once this is in place, they will be free to enjoy their simple idyllic existence. The fact that Western countries left extreme poverty behind through rapid industrialisation and urbanisation does not apply to Africa, they say. Instead, it is of paramount importance that Fairtrade ‘promotes and protects the cultural identity and traditional skills of small producers.’ They should receive enough money never to be in danger of starvation, but not enough to afford a foreign holiday or to send a child to university or, indeed, do any of the things we in the West enjoy, lest it undermine their cultural identity.
Thus the attitudes of contemporary urban, liberal yuppies begin to look a lot like those of the traditional European nobility. Yes, we want the peasants to live better, but we don’t want them to start rivaling us. So long as our moral and cultural superiority is recognized, we are all for making the peons better off. Noblesse oblige. But only a bit better off. And we aren’t going to be too scrupulous about whether we are really making the poor better off. The key thing is that it makes us feel better about ourselves.

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2 Comments:

Blogger Billiam said...

Well, Doc. In that 'world', Feelings and intentions are worth more than facts and results.

7:41 PM  
Blogger KeynesianPacker said...

I actually agree with you on this, as do most liberal economists. Check out Krugman's "In Praise of Cheap Labor" on slate. "Fair trade" and "eat local" are probably the two uppity liberal ideas that bother me the most.

11:20 AM  

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