About Efficiency of Fairtrade
Thursday December 14th 2006, 14:21h
Filed under: Fairtrade

As the Economist is also read by our team at ETH I got into the discussion with Stefan blogging his thoughts about the fairtrade article. My response concerning efficiency of fairtrade:

Hi Stefan

Yes, this Economist articles astonished me, too. Therefore I wrote a letter to the magazine - let’s see if they print it ;)

Concerning efficiency of the fairtrade model: I agree, if only 10% of the fairtrade extra charge would reach the farmers it’s not much. This would mean for a fairtrade product that costs 10% more than a conventional product only 1% more would reach the producers. But according to calculations of the Max Havelaar foundation (Switzerland) it’s a lot more as can be seen on page 27 in the annual report 2005. They state the fairtrade premium plus the minimal price make up 6% extra income for the farmers - notably six times more than written in the Economist. For the EUR 1.1 billion fairtrade market this sums up to EUR 66 million more income - a lot for poor people in the south. This is also the explanation why about 5 million people benefit from fairtrade according to the annual report of Max Havelaar.

Instead of bashing on fairtrade, as a clever business man I’d embrace a market with 37% annual growth rate! Well, maybe it’s happening the same with Linux and open source software: “First they ignore you, then they laugh at you, then they fight you, then you win.” (Mohandas Gandhi)

Greetings, Matthias

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