Fairtrade markup

Guardian report on Fairtrade:

Oppenheim points out that of the £1 extra paid for a bag of Fairtrade bananas, the proportion going back to the farmer is 4p, while of the 99p paid for a Fairtrade chocolate bar, the return for the cocoa grower is ‘less than 2p’. If a supermarket charges £2.49 for a packet of own-brand Fairtrade coffee, when the combined cost of buying, shipping, roasting and packaging it ‘cannot be much more than £1’, it results in a gross profit margin of 160 per cent.

It’s not exactly ethical, but it’s not exactly news. Retailers stay in business by driving down the prices paid to farmers and preserving their own profit margins – making Oppenheim’s article an indictment of capitalism rather than Fairtrade. As Harriet Lamb points out, ‘We set the price for the farmers, which is the only bit we could ever begin to control. If we tried in any way to set the price for the consumer, we would be taken to the Competition Commission.’ In other words, it is the retailers and middlemen who determine the mark-ups – based on the amount we are stupid enough to pay. At least under the Fairtrade system, it is consumers in the north who are being exploited, not impoverished farmers.

via Swampcottage

2 thoughts on “Fairtrade markup

  1. Hey, good post. MAkes the people who try to buy fairtrade feel betrayed…
    Well I’m not in the income class yet where i can afford fairtrade anyway. But at the moment i guess it makes sense to not buy certain M-budget stuff. like eggs etc. Cause i suspect them being taken from not a animal friendly surrounding. But that is just a gut feeling. I mean they explain the low prices through selling of big quantities and low margins on the product. but i guess there must be some fishy stuff about it… anyhow any comments on that are appreciated…

  2. that is so depressing when you see the figures written out like that – however, as they say, I’ve got far less of a problem with the consumers being ripped off than the farmer. It’s still wrong.

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