Thursday
This morning I visited a Kenyan coffee co-operative (I am grateful to the Ministry of Trade & Industry for arranging this). They explained the liberalisation in the Finance Bill 2005 which came into effect last month, giving coffee co-operatives and farmers choice in who they deal with. Previously, they were not legally allowed to agree to sell coffee at a particular price to a particular company. They were only allowed to use one milling organisation: now they have a choice of three licensed milling organisations which have to compete.
Prior to liberalisation, the co-operative had to sell coffee through auction which is bad for farmers because they have very little idea how much they will get in advance. "The government made sure that middlemen took more money that farmers," one representative said. (I have been told separately that co-operatives have often been swindled because they have no way of them knowing how much was really paid at auction.) Needless to say, the people at the co-operative are very happy at the new flexibility they have been given.
But they told me that farm inputs, which are imported, such as fertilisers, chemicals and machinery are barely affordable, which they blame on high tariffs.
Crossposted from the Globalisation Institute Blog.
I would like to applaud your post but free trade is never fair trade. Ecomnomic might always has the power to rig the market.
Posted by Ian Thorpe at September 7, 2006 06:11 PM
Free trade is the only type of fair trade. As soon as a big player in the market uses influence to rig the market then trade is no longer free or fair.
Posted by ResidentAlien at September 7, 2006 10:51 PM
Of course.
When it's not free it's not "trade". "Free trade" is a redundancy. A transaction which is not done freely should be properly called "highway robbery".
"Fair" is what is free. Not free = unfair.
Posted by Jacob at September 7, 2006 10:56 PM
Three "licenced" millers? Well I suppose it is certainly an improvement. "No requirement for millers to be licenced" would be better.
btw how many people know that in the UK even today, sheep fleeces can (legally) be sold only to the Wool Marketing Board? Yup, a real live nationalised monopsony still exists.
Gotta keep up the efforts, chaps!
Posted by andrew duffin at September 8, 2006 12:22 PM
I would like to applaud your post but free trade is never fair trade. Economic might always has the power to rig the market.
Strong players will always try to rig the rules. To do so they need to buy politicians. However, the freer trade is, the more difficult it becomes. The farmers situation is far from perfect, but freer is most certainly fairer.
Posted by Serf at September 8, 2006 12:26 PM
Ecomnomic might always has the power to rig the market.Substitute "political" for "economic" and you might have a point - in today's climate, anyway.
What's scary is that the benighted, idiotic sentiment expressed in the quote above is standard fare amongst the chatterati.
Posted by James Waterton at September 8, 2006 05:07 PM
PS. I respectfully suggest that Ian Thorpe sticks to swimming. And jewellery making. And posing for Japanese billboards.
Posted by James Waterton at September 8, 2006 05:09 PM
Ditto what James said. I nominate Ian's comment for Dumbest Comment of The Month.
Economic inequalities are a natural result of the power law, not any nefarious conspiracy of market players, except of course when the state is imposing inequality through legislation, such as what the Kenyans previously suffered through.
Posted by Mike Lorrey at September 9, 2006 05:25 AM
I always try to avoid Fair Trade goods at the supermarket. I don't want to support a sanctimonious scam. But it's becoming harder and harder. Wouldn't it be nice if there was a Free Trade logo that I could look for instead.
For this I am regarded as a flinty curmudgeon, but I reply that any attack on free trade is the same as going to a third world country and randomly shooting people.
I also generally steer clear of goods marked organic and GM-free, regarding them as similar but lesser scams.
Posted by Graham Asher at September 9, 2006 12:55 PM
