Market Power

Musings by an academic economist on the power of markets and the power over markets.

Tuesday, January 04, 2005

What's Fair About Fair Trade Coffee?

The Econoclast writes about Fair Trade Coffee here. Although I'm in Caribou Coffee country, I buy from Lakota Coffee (from god's country). If I buy their fair trade coffees, then I'm going to spend about 25 cents more per pound than if I buy their other (not-fair?) trade coffees of similar style. For example, their Colombia Supremo goes for $9.75 per pound via mail order. Their "fair trade organic" Colombia Supremo goes for $10.00 per pound. They claim that the fair trade stuff is softer in the cup. It's tasty, but I don't notice a difference between it and the not-fair trade Colombia Supremo.

If I buy the fair trade stuff, that is a pound of coffee that I didn't buy from the not-fair trade farmers. How is that fair to the not-fair farmers? The additional 25 cents I must spend to get the fair trade stuff represents 25 cents not spent on some other good, perhaps a couple of carmels for my durables (i.e. my two sons), for each pound of coffee purchased. How is that fair to my durables and to the producers of the other goods?

I may not play fair, but I hope I at lease play efficiently.