Pros and Cons

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Coffee drinkers should buy Fair Trade coffee


ForAgainst

  
buying Fair Trade coffee will improve the livelihood of small coffee growers
ForAgainst

  
under the certification of the Fair Trade, a much more reasonable income of small coffee growers can then be secured
ForAgainst
  • the minimum price is a guaranteed price which at least covers the sustainable production cost of the coffee growers
  • the fixed price floor for coffee beans suggested by Fair Trade is US$1.26/lbs , which is much higher than the current market price ($0.6-0.7/lbs) 
     

  
the system helps the certified growers organize cooperatives or establish direct linkages with importers and roasters
ForAgainst
  • setting up direct linkage releases the certified small coffee growers from exploitation by ‘coyotes’ and other intermediaries 
     

  
the monetary benefits derived from selling Fair Trade coffee often goes to the retailers instead of the coffee growers
ForAgainst
  • retailers charge huge markups on Fair Trade coffee 
     

  
the amount of help offered is very limited
ForAgainst
  • as the system spreads worldwide, help will be spread to a larger portion of coffee growers 

  
the portion of certified small coffee growers worldwide is small
ForAgainst
  • most fair trade coffee are grown by coffee growers in Central and South America with only some grown in East Africa and the Pacific 
     

  
Fair Trade coffee is environmentally-friendly
ForAgainst
     

  
around 85% of Fair Trade coffee is certified organic or shade-grown under a canopy of existing forest, instead of higher-yield methods on cleared land
ForAgainst
  • most Fair Trade coffee is grown by small growers who use traditional farming techniques, instead of modern practices like pesticides or cutting down forest  

  
employing organic farming techniques does not mean that the coffee can grow sustainably
ForAgainst
     

  
the soil can be easily over-fertilized with organic composts
ForAgainst
  • it is always difficult to know exactly how much nutrient is in the organic composts 
     

  
the actual Fair Trade coffee movement is not ideal as itself suggests
ForAgainst
     

  
buying the Fair Trade coffee indeed supports the unfair market
ForAgainst
     

  
Fair Trade will inevitably favor large companies over small ones
ForAgainst
  • large companies pay more licensing fees, which in turn allows for a wider marketing campaign 
     

  
many large companies who claim to be selling Fair Trade coffee are indeed not supporting the movement, but merely a strategic propaganda for business
ForAgainst
  • large companies are still the main buyers of the Fair Trade coffee 

  
e.g. Starbucks, who claims itself to be a supporter of Fair Trade, sells only a very small proportion of Fair Trade coffee (brew on customer's request only)
ForAgainst
     
  • Starbucks states they bought 4.5 million kilograms of Fair Trade coffee in 2005 (approximately 10% of global Fair Trade Certified™ coffee imports) 

  
coffee drinkers may suffer from an increase in coffee price
ForAgainst
  • given the price floor set by Fair Trade, the cost of a coffee becomes more expensive, while coffee companies always want to retain their profits 
     

  
Fair Trade coffee offers only a limited selection of coffee, unlike regular coffee which has a large selection from all over the world
ForAgainst
  • not many coffee farmers are committed to the Fair Trade system, and the certified are concentrated in Central and South America 
  • the selection will increase if more people choose to purchase only Fair Trade coffee which would help expand the market for it 

  
Fair Trade coffee has a lower quality
ForAgainst
  • there is no incentive for the growers to improve the quality of the beans since the price is guaranteed by the system 
  • the greater access of growers to training and enhanced ability under Fair Trade helps improve the farming technology of coffee growers, so enhancing the quality 

  
the production of Fair Trade coffee is economically inefficient
ForAgainst
  • fair trade is a market-responsive model of trade: the farmers receive the Fairtrade minimum prices and premiums only if they have a buyer willing to pay
  • social welfare systems are always economically inefficient, but socially necessary to ensure the observation of basic welfare needs of the individuals 

  
the setting of price floor suggested by Fair Trade would worsen the root causes of poverty among coffee growers instead of helping them out
ForAgainst
     

  
setting a price floor will lead to overproduction
ForAgainst
  • theoretically, a price floor would keep the price above the optimum level, where quantity supplied exceeds quantity demanded, excess supply will prolong 
     

  
the guaranteed floor price fails to move coffee growers to alternatives e.g. diversification or a change to growing another crop; as a way to alleviate poverty
ForAgainst
  • the price floor artificially covers up the fact that the coffee growers may not be growing something to their best advantage 
  • there may be no alternative crop that pays more than regular market coffee prices