8.1 About business @ wuy fair trade IS A BAD DEAL INTHE NAME of far trad, 1d to pay more for everythi bars from cups of coflee and chocola to cosmetics and eut lowers, Fora product 10 be certified as fair trade, the importer sellin st py a minimum prige to proiucers.\ voluntary price support sch ly ‘compatible with free trade there is no conic between slrvisen and the market ‘economy. But while filling the shopping trolley with fair trade goods may rel the guilt of middleclass consumers, its wider effects may not really be 50 positive. A combination of economic iltericy and misguided good intentions Inas created a monster that sresiens the prosperity of the poorest producers. Povey relief would be much beter sevved by fi na. Fait rade policies, whether soxemnient-enforeed of applied theo trade and nota fir wade cthical consumer schemes, distort the mirket, Producers in some counties may choese to prluce certain eva only because they ea Kicks ay producers who have no choive but to say in the market. Take the example of Mexico, which produces a quarter of fait ide from the poorest trade coffee, Because ofthe incentive of fair trade, Mexican producers have decided t keep producing colfee even expanding production. Without this ive, Mexico could he producing ‘other erops more distorting effect i unfair on poorer ‘countries such as Ethiopia where producing other erops is not an option Asa result of fir trade policies they are Faced with gr Fair trade also punishes producers who are less good at quality ~ generally the poorest Seiting @ minimum price for praduets encourages retailers 10 buy only from more that can invest in higher quality. Poorer producers may be able to supply lower {quality products more cheaply. but dere iso incentive to buy these, because the rears cannot allt fie trade By simply pronouncing it “unfit pay below a certain price, fair trade supporters seem to believe they can ‘snore market realities, wave a asic wand and make everything better. But fair trade i ike all at prices: the pores are cut out of the market. ciently, This xer competition, Tlvent producers 3s to conteol Pree marke have lifted hundreds of millions of people out of poverty over the lst ‘quarter century. They work because they 1d more open trade encourage producers to purse higher living standards by becoming more productive through mechanization and ‘modernization, By contrast, fair trade supports romantic view of peasant Farmers (oiling i the fields day in day ‘out, rater than helping producers buy ‘machinery and move into processing products, The Fairtrade Foundation, which peomotes the selime in the UK, adits it has no policy on mechanization, It has even heen encourauing producers to become less efficient by growing other erops inbetween coffee plants. Ths limits producers ability 19 mechnize, locking {them into poverty In stark comtast, Starbucks has be running community projeets to help producers construct coffe mills and limb up the economic ladder. Shops Tike Starbucks, Caffé Nero and Coffee Republic have encouraged consumers 10 ‘a premium product sre dropping the cheap this logic, fare now commanding higher prices. This isnot because of fair tad hat they are responding o the d the market Despite attacks from globalization activist, the trath is that Starbucks tnyone else in exp raising incomes for coffee producers in developing countries. Iti the eotee chains that are the real superheroes of the coffe market, not fair trade camps