Fair Trade at Salvation Army

This morning (Sunday) I woke up to my alarm which is set to 7:50am and after setting it off and realizing it was 45min too early, I headed back to sleep. When I next woke up it was a good 10 minutes past 9 and the Church Service at Howick Baptist was starting at 9:30. So after quickly showering and brushing my teeth, I sped off to pick up Kathy. Thinking constantly that we would be late again for the 4th consecutive time I was also thinking about other churches we could attend.

After picking Kathy up and learning that her parents would be attending Salvation Army (a few blocks away from Howick Baptist which had a service starting at 10am) it gave us a moment for a breather and some breakie! So I stopped at McDonalds and used my good 'ol entertainment book to grab 2 McMuffins and a hash brown (mmm yummy hash browns!) and a McCafe Mocha, we headed over the service.

Upon ariving, we noticed the hall laid out with tables like it was a restaraunt with a variety of cookies and chocolates and sandwhiches on it. Wow this isn't a church service! So after a song and a welcome, the leader or speaker announced that this was a special occasion which to try out some fair trade food and coffee. After some messages we watched a video clip about fair trade coffee. All the while I was thinking about the coffee I had purchased and was still sipping! it had approved by the rainforest alliance but nothing about fair trade stamped on it...

The economics behind the Oxfam fair trade cooperative is quite interesting. This however is purely my take on it. Bassically you have many many farmers selling coffee beans at a low price due to supply (see Economics 101 Supply and Demand theory). The problem arises because the price is barely enough to break even, and the standard of living in those countries is simply unacceptable. The Oxfam organization essentially unites all these farmers and sellers to pool their supply and boosting their selling power. They can demand a higher price, turning a "perfect competetive" market into more of an "Oligopoly". Some can argue that this creates market inefficiencies but I think that there are market externallities which need to be taken into account. The cost of such low priced coffee beans is having a negative impact on their economies and the world. Deforestation, Crime, Instability, Visous-cycle of uneducated communities... you get the picture.

It certainly has achieved what it set out to though, which is to raise awareness of fair trading and I will definintely think twice before buying that coffee next time!