Thursday, August 27, 2009

Another reason to avoid Cadbury

Not only has it always been a sweet masquerading as chocolate, Opinionated Mummy shares my views on this, but is now pandering the the fatuous Fairtrade fad.

Let's not forget what Fairtrade is, a branded payment of more than the market price of a product to engage in a transfer to those who sell the product.

Yes people can choose Fairtrade, but with fair trade comes one assertion, one assumption and one deception.

The assertion is fair trade is good for people in developing countries. Paying people more than the market price for something is good for them. This of course encourages them to produce more, putting more pressure on the market price. You see, the market price is a signal of demand compared to supply. Interfering with that means overproduction, further distorting what people produce. It's basic economics, but it is hardly surprising the do-gooding left don't understand that.

The assumption is that free trade is bad. Of course free trade is comparatively rare in agricultural commodities. You can blame the EU first, US second, Japan third and others, but whilst attention is taken away from liberalising trade in agriculture with the Fair Trade trend, it means the gross distortions and subsidies seen in global trade in agricultural commodities continues. These are distortions that increased due to Barack Obama and which the EU shows precious little sign of confronting, largely because of the parasitical French.

The grotesque fraud is Fair Trade diverts attention from trade barriers that impoverish farmers in developing countries, but the economic illiteracy of the left continues to support this nonsense.

So what is the deception? That the premium paid for Fair Trade all goes to the poor farmers. Nonsense. Much of the premium is skimmed off, because Fair Trade products attract people who are less price sensitive, so everyone from retailer back can skim a little more off. It's a nice way of ripping you off under the guise of helping the poor.

You want to know more? Read this IEA report, which exposes Fair trade as being an wholly inappropriate way of helping the poor. Notably 50% of the revenue from Fair Trade levies is spent on the Fair Trade corporate brand itself on self promotion.

"50% of this income was spent on so-called educational activities and most of the remainder was spent on certification, licensing and product development. In fact, the educational activities involve campaigning and promoting the Fairtrade brand through Fairtrade fortnight, promoting Fairtrade schools etc. These are all activities that effectively promote Fairtrade’s own brand....It is most unusual for a charitable foundation whose objectives are to help the poor in under-developed countries to use such a large proportion of its revenues on activities simply designed to increase its own size. It would be surprising if Fairtrade customers were aware of this."

The Adam Smith Institute found that 10% of the Fair Trade premium actually got to the producer.

Indeed. If you want to help people in poorer countries you might do two things:
- Support campaigns for free trade, oppose politicians and lobbyists who oppose it; and
- Donate to charities with sound reputations for high quality development projects. Note, none have the initials UN attached to them.

Meanwhile, Cadbury now sells overpriced poor quality chocolate flavoured candy. I will be even less likely to buy it now.

3 comments:

Anonymous said...

Sorry mate... you're an idiot. If you knew anything about Fairtrade you'd know that producers on the Fairtrade system do not get paid more than the market rate, they get paid exactly the same as the market rate. Where it differs is when the market rate drops to an unsustainable rate for farmers, Fairtrade certified farmers will receive a so called minimum market rate, enough to pay their workers, get supplies to continue their livelihood etc and generally live. So when the market rate stabilises they can continue to farm and produce instead of abandoning their livelihood and their workers who need jobs and money to support their families, who some already live in extreme poverty. I don't know where you get the nerve slagging off a system that has done so much for farmers and producers in developing countries, which I have personally seen the benefits in a lot of these countries. I agree it isn't a perfect system but I see you offering any solutions, just criticisms and saying we should stick with free trade. Free trade is a joke along with the WTO and with views like yours, you aren’t far off from becoming one yourself.

libertyscott said...

Yes, people will listen to you if you say "you're an idiot".
Oh so is Fairtrade cheaper when the market rate goes up? No. So does Fairtrade encourage farmers to change commodities if the price is perpetually "low"? No.

You don't know where i get the nerve? It's called free speech. Whilst people like you wank off about fair trade, others like me are fighting so that developing country producers don't face protectionism in developed countries. You campaigned or even voted for anyone determined to destroy the vile EU CAP, which destroys wealth and is environmentally destructive as well by encouraging carbon intensive production of foods better produced outside the EU.

Free trade is a "joke" is it? Yep, well done - you really destroy hundreds of years of economic thought by saying that. All those countries with open markets do so badly compared to North Korea and pre 1991 Albania, yes isolationism works delights. You might see how the Depression was extended due to rampant protectionism in the 1930s, but that involves reading about economic history.

You'd prefer people were told by self satisfied smug smart arses by you what prices they should buy and sell goods at, because you know better. Someone always knows better than the customer and the producer don't they?

I guess you like most of the Fairtrade premium going to developed country retailers and wholesalers too. Yep, very smart, but keep believing it obviously is a religion for you. Makes you feel better whilst governments in most rich countries treat agriculture with corporate welfare and those in poor countries run corrupt crime syndicates siphoning aid and denying private property rights and independent courts from their people.

Anonymous said...

Ahhh, anonymous. Oh wait, I am too!

"which I have personally seen the benefits in a lot of these countries"

Really? It's amazing how many people turn out to be a first hand expert in things or have been involved directly with something or other with without giving any verifiable specifics.

I invented the keyboard, and the blog and all written languages so I my argument is perfect and yours isn’t true and I hate you.
^Isn’t this the average attitude anonymous people have the luxury of posting with no worries of losing any face, or even people with avatars. If you were in a bar and butted into someone’s conversation in real life with the average attitude of most posters you’d end up with a glass in your face.

I suppose the next step for you is to point out a misspelled word or incorrectly placed punctuation mark, that’ll prove how right you are ;)