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Why pay more for fairness?

Peter SingerPeter Singer is Professor of Bioethics at Princeton University. His recent books include Writings on an Ethical Life and One World.

by Peter Singer 

Marks & Spencer, a supermarket and clothing chain with 400 stores throughout Britain, recently announced that it is converting its entire range of coffee and tea, totaling 38 lines, to Fairtrade, a marketing symbol of “ethical production.” The chain already sells only Fairtrade tea and coffee in its 200 Café Revive coffee shops. It is also boosting its purchases of shirts and other goods made with Fairtrade cotton. The announcement came during “Fairtrade Fortnight,” a two-week promotion of Fairtrade products that included speaking tours by farmers from developing countries, telling Britons how Fairtrade has assisted their communities.

The movement toward more ethical consumption has made significant gains in the United States as well, as consumers increasingly turn to organic, locally produced foods, and eggs from hens not kept in cages. In the UK, a survey has found that half of those shown the Fairtrade symbol recognized it and understood that it refers to products that give a better deal for Third World farmers. There is no comparable US research, but related data, and discussions with my own students, suggests that the figure would be much lower.

Traders seeking Fairtrade certification must pay producers a price that covers the costs of sustainable production and provides a living wage. For example, the minimum price for coffee is $1.26 per pound, no matter how low the market price may fall. If the market price rises above that figure, the fair trade price will increase so that it remains five cents per pound higher.

Small farmers, for their part, are required to be organized in cooperatives or other groups that allow democratic participation. Plantations and factories can use the Fairtrade label if they pay their workers decent wages, comply with health, safety, and environmental standards, allow unions or other forms of workers’ associations, provide good housing if workers are not living at home, and do not use child labor or forced labor.

Not every one approves of Fairtrade. Brink Lindsey, director of the pro-market Cato Institute’s Center for Trade Policy Studies, believes that the campaign for Fairtrade coffee is a “well-meaning dead end.” With some justification, he argues that the real cause of the fall in coffee prices was not the profiteering of multinationals, but big increases in coffee production in Brazil and Vietnam, combined with new techniques that make it possible to grow coffee with less labor and hence more cheaply.

In Lindsey’s view, if we want to assist coffee growers, we should encourage them either to abandon coffee and produce more profitable crops – and here he rightly points to rich nations’ trade barriers and subsidies as obstacles that must be dismantled – or to move into higher-value products, like specialty coffees, that bring higher prices.

What is curious about Lindsey’s argument, however, is that the Fairtrade coffee campaign can be seen as doing just what he recommends – encouraging coffee farmers to produce a specialty coffee that brings a higher price. Pro-market economists don’t object to corporations that blatantly use snob appeal to promote their products. If people want to pay $48 for a pound of Jamaican Blue Mountain coffee because that’s what James Bond prefers, economists don’t object that the market is being distorted. So why be critical when consumers choose to pay $12 for a pound of coffee that they know has been grown without toxic chemicals, under shade trees that help birds to survive, by farmers who can now afford to feed and educate their children?

Economists might reply that if you want to help people feed and educate their children, you can pay $10 for a pound of non-Fairtrade coffee that tastes the same and give the $2 you save to an aid agency that provides food and education to poor children.

That’s a possible strategy, but there are advantages to Fairtrade. The growers know that they have to provide a product that consumers like, both for its taste and for the way it is grown. If their product sells well, they can take pride in having produced something that is sought after around the world. From the growers’ perspective, receiving a premium by selling a Fairtrade product is preferable to receiving a charitable handout that they would get whether they worked or not and regardless of the quality of what they produce.

Paying more for a Fairtrade label is no more “anti-market” than paying more for a Gucci label, and it reflects better ethical priorities. Fairtrade is not a government subsidy. Its success depends on market demand, not political lobbying. Fortunately, in Europe, that market demand is growing rapidly. One hopes that it will soon reach similar levels throughout the developed world, and wherever people can make choices about their discretionary spending.

Copyright: Project Syndicate, 2006.
www.project-syndicate.org
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Fairtrade coffee online

Jenny, you can buy Ian some fairly traded coffee (or tea or chocolate) from Oxfam online if you want. Add 10% to the cost for postage. Also, there are discounts for orders over $150 if your local church, Ag Bureau or whoever wanted to put in a group order.

Sorry I missed that

Robyn: Sorry I missed that. But thanks and I will definitely try it on his nibs. He drinks so much of the black stuff they could make a tidy profit. He has just spent a week down an 1857 cellar helping my brother shore up the walls to stop the old home collapsing. He found half a dozen 1860s black gold beer bottles buried deep in the clay, all lined up against the wall, but sadly not a drop left.  Oh the disappointment! So he is in dire need of something uplifting.

Fiona: Hello Jenny. Your spelling is impeccable. If you are interested in the derivation, it’s from Middle Dutch / Middle German “schore” – meaning prop – “of unkn. orig.” (Concise Oxford).

Thanks Fiona

Fiona: Thanks. I was a bit lazy, Ian has the OED in his office and it’s such a shambles, and I have not yet worked out how to do spell check when posting direct as the tool bar does not seem to want to work. Anyway. Now I know. Cheers.

Moral suasion in the market place

Jenny Hume: "Will and others, people will, and do in fact pay more for some goods if they feel strongly enough about how those goods were produced, provided of course that they can afford to."

I agree, Jenny. Assuming people "feel strongly enough" and provided "they can afford to".

However, realistically any campaign that seeks to change people's behaviour contrary to their personal material interest and tastes is likely to be sustainable only to a certain level, and only for so long.

"Compassion fatigue" sets in even for the most deserving "charities" and on behalf of the most righteous causes.

Mobilisation of public opinion is perhaps most effective where it can bring about permanent, environmental or legislative change that directs an outcome.

So, campaigns to make child labour illegal , or to compell certain safety standards in building design were effective because they didn't rely on constantly beefing up public opinion about the fate of child workers or the dangers of asbestos or fire hazards or whatever.

Once the labour reform or new building code is on the statutes, so to speak, it's there for keeps.

And you no longer have to keep trying to hold people's attention, or motivate their behaviour for the cause. It's a done deal.

The trouble with the Fair Trade campaign is it doesn't aim to compel legislative change.

It just aims to persuade people to consume Fair Trade products. In a competive Free Trade market.

My bet is the Fair Trade promotional effort will have to be continuing, and always in competition with new market entries.

And that a lot of people with vote with their wallets rather than their hearts.

I mean, have Big Macs gone off the market because people are concerned about rain forests and youth labour?

Or will they eventually go off the market because they make you fat and sick if you eat too many?

Or will they ever go off the market at all?

If you were investing your life savings in a coffee shop, would you risk it all on Fair Trade products if people didn't actually like them?

I agree, mostly

C Parsons, yes, you are right, people do lose interest in causes unless constantly reminded with diminishing returns the frequent outcome. Without legislative change each new generation has to be educated to the cause. That is why the animal welfare movement always knew that it had to get new and better legislation if farm animals were to get any sort of protection. The existing laws were way out of date and afforded some protection to domestic animals and little else.

So just asking people to demand and then buy free range eggs was never going to be enough in itself, and if they could not afford them, they would not buy them. But they had to be given the choice and that was lacking. So new laws to protect the animals became the ultimate goal and have now been enacted in I think, all States, and laws about product labelling gave people the choice. Of course getting laws enforced is another matter. For instance, in my article for WD on the live export trade, I pointed to a case currently before the WA Supreme Court. It took some extraordinary legal footwork to force the WA Govt to act on a complaint over a standard shipment of live sheep, ie to enforce its own legislation. It will be interesting to see the outcome of that case as big interests are at stake.

But legislative change does shift the emphasis as you do not necessarily then have to go on, as you say, beefing up public opinion. So I take your point and agree, the Fairtrade exercise could well have its limitations.

We have of course the notion of ethical investments and I accept that they can give returns almost if not equal to other forms of investment, and that gives people another option to invest, if you like, in the things that concern them. But yes again, people have to be able to afford risk and most will vote with their wallets if it comes to the crunch, not matter how strongly they feel about a tree, or a starving child.

So to answer your question. No, I could not see myself (and I think that would go for most people) risking my life savings in any venture that was likely to fail no matter what the good cause. That would simply make me a likely liability on society. I have been prepared to go to gaol for what I believe in, to be shot at, to be publicly abused, but I am not into living under a bridge.

But of course, some people are prepared to risk everthing and some of my friends have done just that for the animal welfare cause: marriages, money and their freedom, doing "time" (often more than once) for petty offenses such as trespassing to rescue animals and collect evidence, then refusing to pay the fines. One friend was accidentally killed. They are of course a minority and all over the world individuals are doing that sort of thing, for human as well as animal rights. I do not see myself as one of them.

Then again, when I think about it, I worked for 25 years and gave almost all of it away so maybe...! But I think I am a bit more circumspect now and am making an effort not to work my way through the family inheritance. As I said, I am not into living under a bridge.

I don't like coffee much but if I can find some Fairtrade stuff I'll test it out on my other half. He loves the stuff. Cheers.

Good to the last drop...

What will determine the success or failure of 'fair trade' initiatives like Marks & Spencer's is, ironically, whether the coffee and tea products sold in its Café Revive shops can survive in the 'free trade' market for coffee and tea.

If the product is no good, it will go under. If it can attract a market, it will survive.

No amount of special pleading on 'Fair Trade' grounds, or 'Fair Trade' logos will alter that.

It puts me in mind a bit of the multinational cosmetics corporation Body Shop.

If girls came out of Body Shops smelling like cow dung or onions, they wouldn't care how many jute bags came from Kenya to package the stuff.

The Body Shop concept works because it has a wide range of cheap, dependable products that work as much as, or are no worse than more expensive alternatives.

This is not to say that buying your jute bags from Kenya or your coffee from Ghana isn't a good thing, and it sure makes great corporate PR.

But don't expect crappy coffee to outsell good coffee just because it was produced by a collective of bio-ethicists and share-croppers in Africa.

The outcome will depend on the free market, not the 'fair' market. Sorry.

I'm thinking of starting a chain of travel agencies specialising in sending tours to really unappealing places, like the Congo or some of the more backward former Soviet Republics.

Tourists will stay in accommodation run by local collectives and will enjoy the nightlife of Brazzaville and Minsk.

Called 'Guilt Trips', its marketing will stress that while you'll never have a good time, you will have a clear conscience.

Would anyone like to lend me the venture capital?

Cato Crazies

The Cato Institute - another shadowy Libertarian lot - would hate Fairtrade. They believe corporate tax should be abolished and is a hinderance to "free" trade. They are firmly behind George Bush's plan to decimate social security and privatise pensions, under the guise of "rescuing" it.

They are backed by people who are the sons and daughters of men who have been attempting to furiously dismantle the great FDR "New Deal" that humanised US life and brought America into it's unparalled era of prosperity. Knowing that Americans will never accept the end of social security and the great benefits it has brought it's people which in turn radiates throughout the world they are the ones who devise the creepy words that proclaim one thing but mean the opposite.

Thus when George Bush is "saving" SS he actually means to destroy it . A Cato backer is one who named and devised the "Clear Skies Initiative" a wonderful vision if implemented but which actually removed all corporate responsibilties to prevent pollution and instead has lead to the pumping of poisonous pollution into some of the great wilderness areas of the US.

So when Brett Lindsey describes something as " “well-meaning " he actually means he would like to take this idea and stuff it down a well where it belongs as it hinders corporate billionaires to plunder at will.

Fair Trade coffee not that expensive

The East Timor Organic Fairtrade Espresso Dark Roast is really good stuff.

It's a bit pricey in the Oxfam shop here in Hobart CBD, but one of the mail order places sells the 250g packages of fine ground for $7.50. That price is not especially expensive for coffee.

So it's not clear to me that the low-price/good-conscience trade-off is necessarily a choice you have to make.

Paying more for good reason

Will and others, people will, and do in fact pay more for some goods if they feel strongly enough about how those goods were produced, provided of course that they can afford to. Take free range eggs for example in the major supermarkets today. It was an active campaign over two decades by the Animal Liberation Movement  that led to these eggs being labelled and made more freely available, giving consumers a choice between those and eggs laid in the caged hen system. The big cage egg producers fought fiercely against it, their argument being no one would pay the price they would have to charge for eggs if they went back to free range production. They were wrong and some of them now have dual production systems. The supermarket shelves now tell their own story, with big demand for this more humanely produced alternative product.

The focus of the publicity campaign by Animal Liberation was based largely on the argument that the battery cage system was inhumane. That was not hard to prove. Over the years AL Groups "rescued" many hens (and still does) and the ones I took and looked after were in such a terrible state that few survived even with veterinary care. It was not hard to convince the general public, the images spoke volumes. One part of our campaign was to suggest to people that when they went to the supermarket to ask where they could find free range eggs on the shelves, even though they knew at that point in time there were none. The rest is history. We are now working on labelling of pork products on similar grounds.

Some supermarket chains in the UK have long been responsive to campaings against products produced inhumanely so Marks and Spencers are just indicative of that trend. I cannot recall which chain it was but in refusing to stock veal products from the white veal industry that very cruel production practice in the UK was closed down. And the "buy cruelty free cosmetic campaign" led to real change in costmetic testing on animals. Those products were in fact more expensive and I certainly do not find the body shop cheap!

So I believe the same sort of success could be achieved in this Fairtrade exercise. Many people often wonder how they can make a difference other than by just giving money to charities. So I hope this works out.

Hamish, I am pleased to see Singer's article here. While he has been a rather controversial figure he has in my view taken philosophy out of the clouds and made it something ordinary people can understand. He challenges us to think about things that most people would not dare touch, let alone put their views on out there for the world to examine. I've known him since his early days with the animal rights movement and must say he had the most profound effect on my life of any person I have ever known.  It pays sometimes to pick up a book in the airport lounge. It can change your life, even if you finish up missing the plane! And yes, I am still hanging around a bit, but nothing too deep at present. Cheers.

Hamish: always glad when you poke your nose in Jenny.

Market realities

And somewhere in the world someone not unlike Brink Lindsey,  director of the pro-market Cato Institute’s Center for Trade Policy Studies, swivels on the heal of a limited-edition Lilian shoe by Lombardia-based Tanino Crisci, swishing the tail of a bespoke suit from somewhere exclusive (say Huntsman's of Savile Row), sipping sweet nectar from a flute filled with Krug's Clos du Mesnil and, snaking a hand out to pick a black Périgord truffle sprinkled hors d’oeuvre from an underpaid waiter’s platter as it passes through a room packed with his pro-market peers, he sighs: “These fair traders ignore market realities”.

Re: Market Realities

Craig Rowley notes: "someone not unlike Brink Lindsey*, director of the pro-market Cato Institute’s Center for Trade Policy Studies, swivels on the heal of a limited-edition Lilian shoe by Lombardia-based Tanino Crisci, swishing the tail of a bespoke suit from somewhere exclusive (say Huntsman's of Savile Row), sipping sweet nectar from a flute filled with Krug's Clos du Mesnil and, snaking a hand out to pick a black Périgord truffle sprinkled hors d’oeuvre from an underpaid waiter’s platter."

Maybe he'll smoke a "FairTrade" Cuban cigar after he's had his Armagnac ;)

* C'mon - is that a real name? Or is it generated by a invent-a-preppy-sounding-name algorithm?

Priorities Gentlemen Please. Priorities.

To hell with the rest of that stuff. Where can I get some "Fair Trade" Armagnac?

Coffee Machine Working Fine

The thing I like best about this article is the way it immediately attracted several ads from Gooooooogle for coffee and coffee products.

Gooooooooooooogle

And two out of four (on my screen at least) were for Fair Trade coffee.

thumbs up for this

Very clever of Marks and Spencer to get in on this but they always were ahead of the game in marketing. This sort of ethical trading is only going to get much bigger and the sooner manufacturers and retailers jump on the bandwagon the better they will do.

Otherwise we are going to end up with situations like WalMart in the US where everything is imported from China which is killing US manufacturing. Alternatively the Kusco chain in the US is attempting to introduce ethical trading along with other out-dated concepts, trade union membership for employees with share schemes etc, and it's doing extremely well because of it. The crazies who seem to want to kill off capitalism and drive down wages in the west to third world prices which will in turn kill third world wages would naturally hate these schemes. Similar schemes have been run in the garment industry and designers who trade this well are also finding it a boost.

After a visit to Sydney's Paddy's Market on the weekend I concluded that just about every good on sale, apart from the fresh produce, comes from China and is probably produced under slave-like conditions. I'm sure that's what our present leaders desire.

If the Cato Institute is knocking it that's a sure sign it will work.

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