When people are dying of starvation, it is easy to stir up the masses. Fair Trade Awareness Week involved student groups, speakers and a movie designed to do just that. However, even though fair trade has positive goals in mind, the results of a fair trade world benefit no one, not even the farmers.

Many people still do not know who controls the regulations with fair trade. The largest U.S. fair trade certifier is a non-profit group called Transfair. According to its Web site, Transfair requires importers of high-grade coffee to pay at least $1.25 per pound. Regardless of whether the price of coffee is above the minimum sustainable level, distributors are required to pay a 10 cent premium on the fair trade price. For the majority of 2008, the world coffee price was above $1.25 and at times $1.35. This means that for a distributor’s product to be fair trade certified, at times it must spend well above the fair market price. Of course, Transfair sees this as perfectly acceptable.

Those who live in areas where fair trade is popular see many small fair trade-based retailers. Those producers cannot compete in terms of efficiency with the giants, and so they cannot offer lower prices. The only way for them to compete is to offer a superior product, or at least one that enough people consider superior so the company can turn a profit. If every company had solely fair trade goods, then there would be no distinction between the small niche producers and the giants, and so a lot of small businesses would be forced to shut their doors.

The effects of a fair trade world would also hit the very people the concept is supposed to help – the producers. The small-scale farmers who produce fair trade products would have fair trade prices at least 10 cents more than the real market price. This means that even if the farmer received a higher price for his coffee, the demand that existed at $1.30 may not exist at $1.40, and he will not be able to sell all of his crop.

The above example outlines the main problem with fair trade. Higher prices attract farmers to stay in an unsustainable system. If coffee is unsustainable at a certain price, farmers will not be able to sell all of their goods. The main way to fix a market inequity would be for farmers to leave the market and find another line of work. While this is hard to accomplish in Third World countries, the amount of money that people spend to prop up a fair trade system that relies on only partial implementation would be a good start.

Another problem with fair trade is all of the middlemen. There are importers and distributors at every step of the process. While fair trade organizations push for a decrease in middlemen, the true innovator in that concept is not fair trade, but free-market capitalism.

Andrew Carnegie, the founder of U.S. Steel, started the process of vertical integration. Carnegie, in an effort to decrease the amount of intermediaries, bought the iron mines and the railroad tracks leading to his factory. While small farmers have no ability to do that, if an end distributor could accomplish such a feat, costs would greatly decrease. Farmers then would at least have the opportunity of being paid more rather than having to sell their coffee and seeing every person along the way try to carve out a share of profits.

There are many issues with the world economy. Development for a Third World country can take decades. Until that happens, there will continue to be advocacy groups expounding the virtues of fair trade, a system that has good motives, but fails in practice.