Merchants find fair trade marketing a win-win situation

Our Archdiocese of Milwaukee selected as its feature article this by Amy Guckeen from the December 13, 2007 issue of "our" Milwaukee Catholic Herald. Among those interviewed was

Steve Braun, owner of Fair Grounds Coffeehouse, who was educated in Catholic schools, including Catholic Memorial High School and Marquette University...

who, despite that education, said

“Coffee is like the second most traded commodity in the world. It’s made in Third World countries and First World countries drink it. I wanted to support the communities that make the coffee and make sure the farmer can support himself and his family.”

I notice he leaves out the Second World; didn't it go out of business using a variation of this theory of non-market pricing? It happens that these questions come up in P. J. O'Rourke's review of Starbucked by Taylor Clark.

Is “Fair Trade” coffee rather than Starbucks coffee the answer to the third-world coffee growers’ plight? In the first place, Starbucks is the largest international purveyor of Fair Trade coffee, 18 million pounds of it in 2006. And in the second place, no. As of the book’s writing, Fair Trade contracts guaranteed a price of $1.26 per pound ($1.31 if organic) as opposed to free market prices that have fallen as low as 41 1/2 cents per pound in recent years. But applicants for those fair market contracts “must obey a structure of rules that often seems more like a socialist wish list than a structure designed to help growers,” Clark writes. “All aspiring farms must be small, family-run plots that are part of democratic, worker-owned cooperatives. Private ownership and capitalist practices are completely off limits — even hiring day laborers can take your farm out of the running.”

It turns out the villain behind low coffee prices is right in the third world itself. Vietnam has been dumping tons of pittance-price coffee beans on the market. And they are the stinky, bad-truck-stop robusta variety beans, not the yummy, hippie-living-room arabica type.

When Clark suggests what we should do for impoverished coffee growers, he does so with the same spark of insight about market freedoms that must have once flashed upon the young Adam Smith: “Demand the best-tasting coffee you can get.”