4 Reasons Why Fair Trade Coffee Is a Scam

Coffee is the second most valuable resource exported from poor and/or developing countries (Angelina Jolie's children being the first). Thus the Fair Trade model was established, which is supposed to pay coffee growers a set "fair trade" price if they meet labor and production standards. The idea was to prevent them from being exploited, but the reality is that in practice, Fair Trade just makes exploitation easier.

#4. Growers Are Paid Very Little for Fair Trade Coffee

The FLO (Fairtrade Labelling Organizations International) sets a floor price of $1.40 per pound of coffee, which is supposed to be a "higher than market" price, but is actually hardly more than what growers were being paid to begin with. This is like assuring an employee that she will be earning more than the $7.25 minimum wage entitles her to, and then only paying her $7.26 and a lollipop.

In many cases, growers can make three or even four times as much per pound if they don't sell within their Fair Trade contracts. This is like a Blockbuster clerk being able to earn more cash if he just takes all the videos home and charges admission to his living room.

Mauricio Duenas / Getty
"A man's gotta make a living. Horse college ain't free."

#3. Consumers Are Charged Much More for Fair Trade Coffee

On average, retailers are charged 65 cents more per pound of Fair Trade coffee. That might not sound like a lot, until you remember how retail markup works. Take a look at the $1.40 that the growers sell their beans for, and compare that to the $9 or $10 you pay for a pound of decent, non-Billy-Bob-Thornton-poop coffee. That's a 700 percent increase. If the retailers are being charged 65 cents more on average for that Fair Trade label (almost an additional 50 percent), then you can guarantee that's going to mean an additional 300 to 400 percent price increase for you, because retailers need to have a large enough markup to make a worthwhile profit. Otherwise, they'd just filter day-old coffee from the break room through the manager's sock, call it something with "Nicaraguan" or "Colombian" in the name, and sell that to you.

Getty
"It's 'Colombian.' By which we mean that Carlos reheated it in the microwave."

#2. Fair Trade Is Essentially a Marketing Organization

For a nonprofit organization working to combat the exploitation of impoverished countries, the FLO makes a rather tidy sum from licensing fees. For every pound of Fair Trade coffee a retailer sells, they have to pay the FLO 10 cents -- that's like Drew Rosenhaus collecting 50 bucks for every Terrell Owens jersey that gets sold (this is hypothetical -- we are well aware that no Terrell Owens jerseys are being sold).

In 2009, the FLO had a budget of $10 million, 70 percent of which was funded entirely by those fees. In short, the anti-exploitation organization is using Third World coffee growers to generate revenue, which as you may notice is very nearly the literal definition of exploitation. This has led many in the industry to argue that the FLO exists primarily to market Free Trade coffee, rather than to protect the interests of growers. This is the same relationship that Disney has with children.

Ted Aljibe / Getty
"We deal with fewer carnivorous mice. Not none, but fewer."

#1. Growers Receive a Higher Percentage from Non-Fair Trade Coffee Sales

A recent study in the Netherlands found that despite the higher prices consumers were being charged for Fair Trade coffee, less than 12 percent of that money was actually reaching the growers. That is, none of that revenue they were responsible for producing was making it back to their countries in any way (see "literal definition of exploitation," above). In fact, the study found that growers actually received a higher profit percentage for non-Fair Trade coffee. Basically, the FLO is like KONY 2012 -- sure, they're raising awareness of an important issue, but goddamn if they aren't being total shitheads about it.

Charlie Gallay
But at least the KONY people aren't using our donations to train more child soldiers.



You can hang out with Gregory Myers at the Star Wars forum Port Haven or follow him on Twitter.

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