Tuesday, December 18, 2007

FInd the Mistake: Fair Trade Bananas

You know those cartoons where you are supposed to find the mistakes?

One could apply the same approach to this "white paper" on fair trade
bananas. Wow. Find the mistakes.


Anonymous said...

My personal favorite: "This cut-throat competition actually benefits no-one – farmers, shippers, ripeners and retailers all make less money and overall the sales of bananas has remained fairly static for the last few years." Apparently consumer welfare is irrelevant in the banana market.

Jeff H said...

"This means that retailers will make slightly more gross profit on each kilo of premium bananas than they do on cheaper conventional bananas but they may also incur higher costs."

If this sentence's absurdity is not already plainly apparent, I'll rewrite it substituting "gross profit" for its definition.

"This means that retailers will make slightly more revenue relative to cost...but they may also incur higher costs."

Anonymous said...

Let's all pay 3 dollars more per banana so that those "higher-cost producers such as those in the Windward Islands" don't have to actually learn a new trade that has some sort of economic advantage. Who's with me!?

18-Pins said...

Well Said JR - not really a good idea to prop up an uncompetitive industry - if its not economically feasible to produce Banannas resources should be used in a more productive way.

"Segmenting the market" - well theres nothing wrong with choice.

"additional income to producers where fruit can be bagged" - surely outwieghed by the negative demand consequences of handling costs around 3 times higer.

"guaranteed minimum price that varies accross dif countries" - so efficient producers are penalised with a lower guaranteed price ?

"Price for loose fruit in volatile" - administered prices are stable because they ignore real economic signals.

"Does not control prices in the supply chain" - yes it does by setting a base price to which supply price is related