Fair Trade without the Froth: A Dispassionate Economic Analysis of 'Fair Trade'.

• Author: Boudreaux, Karol C.
• Position: Book review

Fair Trade Without the Froth: A Dispassionate Economic Analysis of "Fair Trade"

By Sushil Mohan

London: Institute of Economic Affairs, 2010.

Pp. 144. $18.00 paperback.

If you walk down the coffee aisle of your local Whole Foods Market, you will find a dizzying array of whole-bean and ground coffees from around the world. You will also discover that these products sport a bewildering variety of labels that identify them as "Organic," "Rainforest Alliance," "Utz Certified" (and no, that's not the purveyor of potato chips), "Fair Trade," and "Smithsonian Bird Friendly[R]." Some coffees have multiple labels to indicate that producers and retailers were cognizant of and sensitive to the needs of our fine-feather friends while also being concerned with the development of "sustainable value chains." Isn't the market wonderful?

Such is the basic message of Sushil Mohan's book Fair Trade Without the Froth: A Dispassionate Economic Analysis of "Fair Trade," a thoughtful, balanced, and, yes, dispassionate discussion of the claims of fair-trade advocates and critics. Mohan effectively argues that the fair-trade movement is a market-driven response to some consumers' demands for products that provide them with a set of benefits.

As long as consumers see some value in voluntarily exchanging a portion of their income for a fair-trade product or for a product with one of the other certifications, no one is worse off, the market has once again provided. Rather than see fair trade as an aberration that distorts markets, Mohan sees it as a small part of the rich diversity that a flee-trade system encourages.

And this segment of the market is increasingly diverse. Demand for fair-trade goods continues to expand, as does the variety of goods being certified. We learn that coffee remains the most valuable product in the fair-trade stable (bananas are second), but tea, rice, cosmetics, and handicrafts may also be certified. This market is expanding because consumers want these goods.

Take coffee as an example. It is not news to point out that Americans are worlds away from the experience of the 1970s and 1980s, when almost all of us drank coffee that came out of a big blue can or a big red can. Today we confront an embarrassment of riches. If you prefer to spend less and like the taste, you can buy a 33.9-ounce container of Folger's Classic Roast Medium Coffee for $9.59 ($0.28 per ounce). However, if your palate is more refined or you want to impress your...