Fairtradier than thou

This morning I read an article about the success of Fairtrade products in UK supermarkets in which a Steve Leighton, founder of online coffee retailer Hasbean, claimed not to stock Fairtrade goods because he believes that they do not offer big enough profit margins for suppliers.

"We build up a long-term relationship with the farmers," Leighton says. "We refuse to sell Fairtrade products because we believe it is the bare minimum for the supplier, and that is not good enough...We have gone from working out of my garage to where we are now because we have got 50 different single estate coffees from all over the world. It makes financial sense for us to pay the supplier well and keep a relationship over a number of years. If the quality dips then we walk away."

He added that he recently paid £2.60 per pound for a shipment of coffee from Bolivia, despite what he describes as a market value of 61p.

Now this is all well and good, but the Sentinel journalist writing up this story appears to have known very little about how the global commerce in coffee and particularly so-called 'Fairtrade' coffee actually works. For instance Leighton might reasonably have been asked which market price he was referring to: that for exchange-traded commodity beans (aka C market coffee) or that for speciality/gourmet coffees, which have been known to trade at up to £75 per pound. (And £2.60 per pound is frankly closer to the average price for exchange-traded beans than 61p.)

Leighton was giving the game away a bit when he used the term 'single-estate coffees,' by which he probably does not mean the kind of small scale cooperatives that are the only organisations certified to produce Fairtrade beans. A recent Mercatus Center report stressed that "no matter how well run or benevolent a non-cooperative private organisation is, or how well it pays and treats its employees, it cannot obtain Fair Trade Certification."

Hasbean are in an awkward position. They probably know that countries like Bolivia and Guatemala are better placed to produce higher-grade speciality beans, but must also be aware that many of their target consumers are being systematically trained by often quite cynical marketers to express a shopping preference which inevitably involves a conversion of the premium from improved taste towards improved ethics.

It worries me that the most visible brand of Faitrade instant coffee at my local ASDA supermarket appears to be based on beans from Guatemala, one country in Latin America that would in most cases be better off without the temptation towards mediocrity that this system of certification represents.

I've covered this issue in greater depth before...