For a movement whose products have such a small market share, Fairtrade attracts more than its fair share of critics. The latest, the London-based Institute of Economic Affairs, last week published a 132-page analysis, Fair Trade Without The Froth.
Given the IEA’s 55-year championing of free markets, you might expect its attack to follow familiar lines: that Fairtrade, which guarantees farmers minimum prices for products from coffee to cotton, distorts the markets in which it operates. By effectively subsidising growers, it encourages over-production and discourages poor communities from shifting to more promising ways of supporting themselves.
The IEA’s author, Sushil Mohan, an economist with long experience in the tea and coffee industries, as well with India’s commerce ministry, is more nuanced than that.