According to The Weekend Australian, regular commenter Sinclair Davidson and Tim Wilson of the Institute of Public Affairs are going to the Australian Competition and Consumer Commission, alleging that Oxfam has engaged in misleading or deceptive conduct over its Fairtrade coffee. According to Oxfam:
The term Fairtrade refers to an independently audited product certification and labelling system that ensures those who grow and produce coffee get a fair go. It does this by:
Paying farmers and workers a fair price for their work
Helping them gain skills and knowledge to develop their businesses in the global economy
Providing a certification and labelling system to ensure Fairtrade standards are met and that the benefits of Fairtrade get back to the farmer who produced the product
But according to Tim, drawing in part on this Cato article:
there was evidence that Fairtrade products could do more harm than good for coffee producers in undeveloped nations. He cited reports alleging producers had been charged thousands of dollars to become certified Fairtrade providers and some labourers received as little as $3 a day.
I know nothing about how much Fairtrade affects coffee producers, but if we were to be a little cynical about Fairtrade consumers it perhaps doesn’t matter much whether it is good for producers or not. As I have long argued (eg here and here) there is a market for political gestures, and how effective the gesture is likely to be doesn’t seem to be a huge part of the calculation.
Business has seen the opportunity. In Tim Harford’s The Undercover Economist, in an interesting chapter on the retail coffee market, he notes how a UK coffee chain was able to price discriminate by offering Fairtrade coffee – it was a useful way of identifying those customers prepared to pay more than the standard price because they could add altruistic feeling to the sugar and milk in their coffee. I’m not sure whether local cafes price discriminate or not with Fairtrade coffee, but even if not it is still for them presumably a useful branding exercise to attract customers who want to appear to have a ‘social conscience’.
If Fairtrade is really selling a benefit to the coffee drinker rather than the coffee producer, it is perhaps no more deceptive than the other branding exercises designed to create image associations with particular products that have little to do with their intrinsic qualities or characteristics.
In other coffee news, the best item in yesterday’s Age was a brief report saying that Brunetti’s, the best cafe in Carlton, the place that puts the latte into latte leftism, is to stay. The threat that it may be forced to move or close by a landlord massively increasing the rent even made it to the ABC TV evening news, such is Brunetti’s status in inner Melbourne. Clearly the landlord had been stung badly by the negative publicity, as notices have appeared in Brunetti’s windows trying to salvage her reputation, as part of the deal finally struck by which Brunetti’s would stay where it is. I wonder how many thousands she knocked off her rental ask to try to get her reputation back?