Perhaps the most worry feature of human nature is our willingness to accept things at face value, and not to question orthodoxy.  Fair Trade is a classic example.  Last weekend I visited a friend in Liverpool and whilst waiting for him to finish work on the Friday decided to pop up to my university and see what had changed.  My first port of call was the Guild of Students (Liverpool’s equivalent to a Student Union) where I decided to get a cup of coffee.  Before reaching the cafe however it was more than apparent what produce was being sold - Fair Trade.  It was obvious because of the marketing material on many of the walls.  Posters with smiling farmers telling all who looked upon them that Fair Trade is good, and that if you buy it you’re good. 

The exposure to Fair Trade didn’t end there however, the marketing was there to be seen at various other places across the campus and in coffee houses doing their best to market themselves as ‘ethical’.  The message was clear, Fair Trade good, free trade bad. 

But how many people who buy Fair Trade goods actually know how their purchase, and the Fair Trade movement in general, contributes towards a fairer deal for farmers in less economically developed countries?  I’d wager very few. 

When purchasing Fair Trade the consumer is doing so because they believe their purchase will make a farmer in the less economically developed world a little better off.  In essence it’s a quasi-charitable donation.  But one of the questions often asked about charitable donations is ‘how much actually goes to those in need?’  How much of a cut goes to Oxfam guy who just approached you on the street with a clipboard, how much goes on admin, how much goes on the salaries of the charity’s directors? 

With Fair Trade products the amount that reaches the beneficiary of Fair Trade is only 10% of the price paid.  The thing is though that I used the word beneficiary for a reason.  Even if you think a 10% return is a good deal it might be worth taking into account that the beneficiary of Fair Trade is the land owner, not those who actually work on the land who aren’t guaranteed any particular cut of the Fair Trade pie.  Moreover, in order to qualify as a Fair Trade producer the land owner has to agree not to hire full-time workers; consigning those below land owners to a life with less certainty and security.  

It’s also worth noting that the biggest beneficiary of Fair Trade is Mexico; which it’s fair to say is significantly more developed than many, arguably ore deserving, countries in the world. 

But then what does all this matter when you can purchase a cup of coffee with a smiling farmer on the side?

So is Fair Trade a terrible thing?  Well that depends on your perspective, but whatever way you look at it one thing is clear - we need to look a little deeper than the shiney poster, and the smiling farmer; we need to actually ask some questions about our collective perception of Fair Trade and the practical reality of Fair Trade. 

Personally I’ll be purchasing free trade coffee and arguing for the removal of tariffs in both the developed and less developed world, along with massive de-regulation in the markets of LEDs. 

[For those who would like to take a look behind Fair Trade's marketing you could do worse than picking up a copy of a recent Adam Smith Institute publication 'Unfair Trade' by Marc Sidwell which points readers in the direction of questions they might want to ask about the Fair Trade system whilst providing some basic facts about the Fair Trade system that aren't available in the masterful marketing deployed by Fair Trade.]