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Caffeinated Coffee Trade

Free Markets work best when they’re, well, free. In the case of “Fair Trade” certified coffee, which is the rave at restaurants, coffeehouses and grocery stores, markets are manipulated to make folks feel better. As with a plethora of progressive policies, the only people that benefit from the program are those who came up with it, and even that in the form of feelings. The tangible result of manipulating markets is false hope and shattered dreams.

Fair Trade certified coffee products are actually creating a class of impoverished farmers, though the aim is to aide the existing poor. The reason is that Fair Trade certification pays a premium for coffee products, above that which the free market mandates. This creates an illusory, or false, profit incentive for folks in developing nations to engage in the coffee farming business. The artificially inflated price paid for the beans by progressive companies sends a false signal to farmers, and currently non-farmers, that there is pent-up demand for coffee beans. Believing money is to be made, folks flock to the coffee industry to get in on the action. Alas, however, they are sorely disappointed.

The artificially high price artificially grew the supplier base, while demand remained unchanged. Farmers have been lured into the coffee farming industry, and have been left struggling to break-even, much less make a profit. Wishful thinking by secular progressives always leads to pain. Ignoring reality, however, doesn’t make the consequences any less real.

 

From today’ stack…

http://www.csmonitor.com/Commentary/Opinion/2008/0808/p09s02-coop.html


Filed in: Economy, Headlines, State Economy

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One Response to "Caffeinated Coffee Trade"

  1. Brian says:

    I agree with Mr. Kimbrell’s monologue today. Mr. Kimbrell characterized fair trade policy as leftist which I understand and its criticism seems legitimate. Conversely, lets look at a situation that is characterized as rightist, and offer our criticism based on the biblical model. I have read that the ratio of entry level salary to CEO salary in corporate America has changed from 1:40 in 1950 to 1:4000 today. This information should be verified. But,if true, can the biblical model of fairness be applied here. If not, what biblical principle should we look to?

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