Is “Fair Trade” Really Fair?

The famous coffee chain Starbucks is known for its participation in what is called “fair trade” coffee. In general, fair trade is in the business of offering coffee farmers more than the market price for their coffee.

The exact price is determined by what it costs to live a decent life where the farmer lives.* Because these prices are based upon what it would cost the farmer to live rather than the actual market price, the cost of the coffee at Starbucks is higher than most coffee shops and outlets.

Much of the rave today is that Starbucks is acting “socially responsible.” Starbucks is applauded for its “social justice” since many coffee farmers reside in conditions (often in developing nations) not conducive to a decent living.

Certainly, as Christians, we ought to be concerned about justice and fairness. But is fair trade really fair? A closer look at the concept of fair trade shows that it does not meet the standards of justice.

“Justice” is commonly understood to be “that which one is due or deserves.” For those who act criminally, they deserve punishment; for those who keep the law, they deserve reward or freedom from punishment. We see this concept clearly described in the Bible as it relates to the role of government:

“For rulers are not a cause of fear for good behavior, but for evil. Do you want to have no fear of authority? Do what is good and you will have praise from the same; for it is a minister of God to you for good. But if you do what is evil, be afraid; for it does not bear the sword for nothing; for it is a minister of God, an avenger who brings wrath on the one who practices evil.” (Romans 13:3-5)

In a real sense, this concept of justice is what we also mean by fair: The person receives what he deserves. Justice as fairness is illustrated by the common icon of lady justice: She stands blindfolded and holding balances. The blindfold symbolizes that justice is to be applied equally to all – there is no favoritism. It is fair.

We, too, are familiar with the outcry of feuding siblings (“Hey, that’s not fair!”) when a parent appears to be applying punishment (or reward) unequally. Children always demand fairness! Even Scripture tells us that “a just balance and scales belong to the Lord; all the weights of the bag are His concern” (Prov. 16:11; cf. Micah 6:11). God himself demands fairness and is the standard of fairness!

The question before us, then, is whether fair trade is really fair. In particular, we need to ask whether coffee farmers are receiving what they deserve. Do coffee farmers get what is due to them in fair trade?

In a free economy, what one deserves is to have access to correct market prices in order make informed business decisions. In fair trade, however, coffee farmers are not privy to this information. The market price for coffee is skewed by the fact that they are paid more for their coffee than the market currently allows. In turn, coffee farmers continue to provide the same old coffee beans and/or use the same old methods, while others not in fair trade see the shift in market demand and begin reallocating resources to accommodate the shift. The fair trade coffee farmer thus ends up being blindsided and his farming business possibly going belly up. In addition, it could easily stunt the growth of innovative techniques in coffee farming and production.

In a real sense, the farmer has been lied to.

How fair is this? Is this just?

No. Rather, it is just the opposite. Masking the market price for coffee in order to provide better living conditions temporarily (if at all) is not just. It is deception and merely kicks the can down the street. In fact, there are numerous reports on how “fair trade” is not really fair for numerous reasons, including that it does not benefit the poor at all.** Masking market prices is just one way in which it is not fair. (At this point, one might be tempted to ask the question, “What is a fair wage?” That would be beyond the scope of this blog, but let it suffice to refer to a biblical text for now: Matthew 20:13-15.)

If we truly care about being fair and just to coffee farmers who reside in subpar living conditions in developing nations, Christians ought to stand and work for economic and political freedom. We ought to attack the root of the problem: dictators who keep their countries poor through oppressive regulation and even in some cases through outright confiscation of resources, food and other things needed for a decent living. In other words, dictators and corrupt political-economic systems make countries poor, and “fair trade” is not going to help solve this social justice problem.

Does this mean that Christians ought to give up sipping their favorite Starbucks java? No, not necessarily. If Christians were to boycott every product associated with injustice, then they would most likely have to become monastic.

Sinful injustice will never be entirely escaped in this world. Just keep in mind, however, that just because someone slaps a “fair trade” sticker on a product or throws more money at a coffee farmer does not make one’s living conditions more just. Perhaps the next time you gulp down a latte, you can think of a way to spread economic and political freedom to others rather than attempting to fix social justice through the deceptive practice of “fair trade.”

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*Jay Richards has a good, brief explanation and analysis of fair trade in his book God, Greed, and Money. The main ideas expressed here can be found in this text.

**See for example:

• Tim Worstall, “Surprise! Fairtrade Doesn’t Benefit the Poor Peasants,” Forbes (May 25, 2014) at forbes.com/sites/timworstall/2014/05/25/surprise-fairtrade-doesnt-benefit-the-poor-peasants/#2e543b461eac
• Colleen Haight, “The Problem with Fair Trade Coffee,” Stanford Social Innovation Review (Summer 2011) at ssir.org/articles/entry/the_problem_with_fair_trade_coffee
• Bruce Wydick, “10 Reasons Fair-Trade Coffee Doesn’t Work,” Huffington Business (August, 7, 2014) at huffingtonpost.com/bruce-wydick/10-reasons-fair-trade-coffee-doesnt-work_b_5651663.html