Tuesday, October 13, 2009

How Fair is That?

Are you familiar with the Fair Trade idea in buying certain commodities? The idea is, many of the world's farm workers are exploited and under paid and much of this is due to the fact that the price paid for the commodities they produce is unfair.

There are, however, some inherent problems with this Fair Trade movement, which has been most highly publicized with coffee. For one, only those farms that have a cooperative ownership are eligible for the "Fair Trade" appellation. So, if Mr. Valdez saved up his money and bought his own farm, out of a desire to improve his life or to make the best coffee ever or whatever, he could not get the designation.

The idea of paying a fixed price for a pound of coffee also does nothing to make sure that the quality is consistent. Coffee connoisuers will tell us that not all coffee beans are the same. When the farmers realize this, the temptation must be strong to cut costs, selling a cheaper
product for the same price. Is it really that fair to have t pay the same cost regardless of quality?

And what if the price of coffee goes up? Commodities, and especially coffee, are highly volitile in their prices due to a variety of circumstances. The farmers have agreed to sell their coffee at what has been pre-determined to be a fair price. However, why would they want to sell it for
these prices if the market is asking for a much higher price?

Believe it or not, a free market system is still the best one that anyone has found for promoting fairness in pricing, purchasing and paying of employees.

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