Lawrence Solomon believes so. From a recent op-ed of his in the National Post:
“Saturday, on World Fair Trade Day, we have something else to feel guilty about. That fair-trade cup of coffee we savor may not only fail to ease the lot of poor farmers, it may actually help to impoverish them, according to a study out recently from Germany’s University of Hohenheim.
The study, which followed hundreds of Nicaraguan coffee farmers over a decade, concluded that farmers producing for the fair-trade market ‘are more often found below the absolute poverty line than conventional producers (…)’
These findings do not surprise me. I speak as someone who has had contact with various Third World producers in my capacity as president of Green Beanery, a company I founded seven years ago to raise funds for Energy Probe Research Foundation (…).”
Solomon’s op-ed is interesting throughout. As for the study he cites, I have not yet had time to read it in its entirety, but it was published in a reputable scientific journal. As far as I can tell, the results cannot be argued to be causal, but the authors have taken great care to supplement their quantitative analysis with qualitative data from extensive interviews.
For technically minded readers, the bottom line of the study is that while organic and organic-fair trade coffee farmers receive a higher price at the farm gate, their exploitations are less profitable. Since farm profits — and not prices — are what matters in determining welfare, it appears that organic and organic-fair trade labeling is not what it’s cracked up to be.
[…] aside for a second the fact that the poverty-reduction claims of organic farming might not be all that they are cracked up to be, my coauthor Zack Brown just defended his dissertation, and in one of the chapters in his […]
Not to go ad hominem here, but look at the source. Solomon’s group, PERC is all about conservative anti-regulatory agendas; in short it’s based on the same principles as the Tea Party. Now what he says sounds great on the surface, but scratch only a little deeper and you see the same pro-Corporate Randian capitalism that underlies the pseudo-libertarian Tea Party. He calls the organic/fair-trade a high-priced honor system, but what are you going to end up with if you leave the Nestles and Kraft Foods of the coffee industry to take care of it? Absent regulation, what keeps the corporate giants from keeping producers in poverty when the less they pay growers the higher the bottom line? Sure, there are certification fees, and Solomon is correct in observing that charing a fee as part of the process of remediating poverty is perverse. But what Solomon conveniently neglects to mention is that in a majority of cases, those fees are not paid by the growers, but by the buyers or distributors who are committed to bringing fair wages to growers. Solomon’s essay is just another double-talk effort to make the the corporate giants look picked on, and anyone who wants to limit corporate abuses look like the bad guys.
Thanks for your comment, Raven. And don’t worry about it being ad hominem — it is not. I agree that Solomon probably has a vested interest in the answer. I was more interested in his op-ed for the article it discusses. I have some colleagues who have worked with Manfred Zeller, and he is a serious (and honest) researcher. That said, it is difficult to tell what the external validity of Zeller’s findings are (i.e., whether they apply partly or in whole to other places), so one can likely not make a general statement about the welfare impacts of Fair Trade certification.