We will write a custom Essay on Example of Fair Trade – Essay on Trade System specifically for you
301 certified writers online
Introduction: Fair Trade
In business, fair trade is a structured social movement and market-based system whose fundamentals lie in exchange of ideas, transparency, and respect aimed at promoting equity in international trade. Fairtrade plays an important role in the social and economic lives of people.
For example, fair trade promotes sustainable development through enhanced trading conditions and ensures that marginalized manufacturers and workforce, especially from developing countries enjoy their rights.
Through fair trade, manufacturers and workers can sell their products at a higher price in addition to improved social and environmental standards. Under a fair trade system, developing countries get an opportunity to export goods such as coffee, bananas, tea, chocolate, gold, sugar, handicrafts, and flowers to developed countries thus promoting international trade.
Today, there are so many fair trade organizations dedicated to the mission of promoting good business among various countries. Together with consumers, these trade fair organizations engage in activities that raise trade awareness, support producers and change the manner of operation of conservative intercontinental trade.
In most cases, the concept of fair trade goes past trading to ensure that justice prevails in international trade. Besides, fair trade emphasizes the alteration of various operations and policies of conventional trade to promote equity in the business (What is Fair Trade? p.1).
Goals of Fair Trade
The prime mission of fair trade is to promote sustainable development and enhance trading conditions. Nevertheless, the mission itself is not enough to ensure sustainable development and better trade conditions. The goals of fair trade provide a solid foundation under which countries exchange ideas of international trade.
So far, there are five primary goals of international trade common in many countries. The first goal of fair trade is to improve the livelihood and welfare of manufacturers through refining market accessibility and empowering producer groups.
Moreover, paying an equivalent amount for the goods and endorsing continuity among international trade stakeholders will improve the livelihoods and welfare of producers. Secondly, fair trade aims to prop up development opportunities for underprivileged manufacturers, particularly women and aboriginal persons and prevents opportunists from taking advantage of children participating in the production process.
The third goal of fair trade is to create awareness among the class of consumers to apply their purchasing power optimistically to curb the adverse effects on manufacturers who participate in iniquitous international trade. Fourthly, fair trade aims to promote ethical trade partnership through discourse, lucidity, and reverence.
Additionally, through social impartiality, economic protection and sustainable standards brought by fair trade, marginalized and indigenous people are in a position to enjoy their human rights. Lastly, fair trade aims to alter the statutes and practices of conventional international trade to improve trading conditions (Hayes, 450-468).
How it works
Under a fair trade system, numerous merchants, producers, and organizations involve themselves in the exchange of Fair Trade products. Nevertheless, to facilitate fair trade, consumers ought to purchase products that have the mark or logo of fair trade. Noticeably, the fair trade system involves independent international principles and parameters, which assures producers that their commodities are of great us in foreign countries.
In a fair trade system, consumers and producers have a common agenda, that is, to build up a commercial relationship based on mutual support and reliance. This forces every consumer or producer to stick to the established criteria of a particular trade fair organization.
Take for example a trade fair for coffee. The buyer and the producer fix a price under which coffee of specific measurements will trade. Therefore, the buyer must oblige to buy coffee at a Fair Price so long as the price remains stable. It is vital to note that under fair trade, the cost of products represents the living wage; hence, justice even to the marginalized and indigenous people.
Furthermore, consumers must assist producers in implementing a long-term business plan, which guarantees potential progress and investment in individual farms. On the other hand, the producer has no otherwise except to provide excellent working conditions, protection and ample health standards to the workforce. At all circumstances, to ensure equity, a democratic process must dominate the sale of fair trade premiums.
Get your first paper with 15% OFF
Additionally, producers commit themselves to produce goods under environmentally friendly techniques, which guarantee sustainable development. Lastly, both the consumer and the producer oblige to observe human rights at all levels to promote social justice and transparency (Renard, 87-96).
Fair Trade Coffee
Among the very many goods that undergo fair trade exhibition is coffee. Lucky enough, there are so many coffee growers around the world. Most developing countries rely on coffee as the bulwark of their economy. Once the farmers grow coffee, they expect a better price once they sell it.
However, this is not the case. Most farmers end up receiving low prices for their coffee, which is less as compared to the cost of production. Eventually, many farmers end up languishing in abject poverty and constant debts. To snatch farmers out of this crisis, fair trade provides a viable solution.
A fair trade system starts with the farmer as the principal producer. For example, the farmer in Ethiopia employs a workforce to harvest coffee and pays them wages for every pound of coffee harvested. The farmers will then sell the coffee to a local cooperative for washing and drying.
It is essential to the note that the farmer is a member of the cooperative as part of the fair trade criteria. The local Ethiopian cooperative will then measure and pack coffee of specific measurements (pounds) and export it to Alternative Trading Organizations (ATOs) in developed nations.
Typically, there is a fixed price of selling coffee to developing countries or alternative trading organizations, that is, US$1.26 per pound. This is one of the requirements of trade fair certification. An importer must comply with the fixed price. Otherwise, there is no fair trade certification.
Also, the importer should provide additional expenses in the form of a credit to producers and technical expertise, which will help farmers to transform their inorganic farming into organic farming to achieve better yields.
The Alternative Trading Organizations also participates in the production process by roasting and packaging coffee before vending it to the final consumer under retail channels or established ATO vending mechanisms. Thus, fair trade of coffee means more to farmers as it enhances their livelihoods and welfare ranging from education to health to community development (Global Exchange, p.1).
Example of Fair Trade in Sugar
Another trade fair is that of the sugar production industry. Most developed countries like the United States grow sugar that is insufficient for consumption. For instance, the internally produced sugar in the United States caters for 80 percent of its use. This means that there is an additional 20 percent consumption fulfilled through importation from developing countries.
However, the dilapidating international market prices, poor working conditions, and environmental deprivation pose severe challenges to farmers in developing countries.
Nonetheless, fair trade sugar ensures that cane farmers from developing countries get reasonable prices for their commodity. Also, fair trade in sugar establishes a trade connection between farmers and importers. Moreover, the money realized from the sale of sugar to importers enables farmers to improve their livelihoods besides improving their yields (BBC News, p.1).
In conventional non-fair trade farms, farmers spray their sugar cane with pesticides without following standards. In some of these farms, farmers burn the left sugar crops without taking in mind the impacts of pollution.
However, in trade fair farms, farmers ought to adhere to the standards of spraying pesticides and herbicides and other environmental protection measures aimed at preserving the ecosystem and provide ecological value.
Research shows that farmers who sell their sugar cane to certified fair trade organizations enjoy higher fair trade prices on top of receiving expertise on sugar cane production sustainable techniques.
In the recent past, importers have opted to import sugar placed under fair trade thus extending more profits to the producers. This is because the final consumers want to consume socially responsible commodities to raise the standards of the poor under the social justice system.
It is also imperative to note that the fair trade price of goods under this system do not change so much as vending agents must adhere to the standards and rules of selling (Fair Trade Certified Sugar, p.1).
A fair trade system is vital to the farmer as it enables farmers to receive better pay for their products. Since the inception of this system, sugarcane and coffee farmers have significantly benefitted from the associated higher prices.
Besides, the products under fair trade system do not have excessive amounts of pesticides and always exhibit quality wanted by many consumers. Notably, the consumption of products bearing the trademark logo of fair trade not only helps to support the small farmer but also raising the living standards of many families in developing countries.
BBC News. Tate & Lyle sugar to be Fairtrade. 2008. Web.
Fair Trade Certified Sugar. (n.d.). Web.
Global Exchange. Fair Trade Coffee. 2007. Web.
Hayes, Mark. On the efficiency of Fair Trade, Review of Social Economy, 64 (4), 2006, 447-468.
Renard, Marie-Christine. Fair Trade: quality, market and conventions. Journal of Rural Studies, 19, 2003, 87-96.
What is Fair Trade? 2010. Web.