Thursday 22 January 2009

Marking up on fair trade


Is Fair Trade delivering as much as it could to farmers?

In my local supermarket today I bought some very tasty dried mangos. They help offset my chocolate urges.

They cost 3 swiss francs for 150g (20 francs per kg). Their texture is perfect and the colour a nice bright orange. They come from South Africa.

On the shelf above sits a smaller pack of fair trade dried mango from Burkina Faso costing 2 swiss francs from 100g (30 francs per kg). The fair traded product is thus 10 francs per kilo (50%) more expensive that an equivalent product. Given its lower quality (dark colour of the dried fruit), the mark up is arguably higher.

Is the higher price due to higher production and processing costs in the fair traded product or simply Coop exploiting the ethical shopper's insensitivity to price.

According to the fair trade standard, dried mango from West Africa gets an fair trade premium of 0.70 euro/kg. So all things being equal, the producer gets around 10% of the higher price that fair trade commands. Even less, if you take into account the lower quality of the fair trade product.

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