Pros and Cons of Fair Trade

 

Fair Trade: Pros and Cons

Pros: •

The benefits of trading using Fair Trade principles are economic, social and

•

environmental: Fair payment for products. There is a guaranteed minimum payment. o Humane working conditions. o ages are fair. o orking o rking conditions are safe and ethical. o !iddleman avoidance. avoidance. !ore profit and empowerment. "emocratic decision#making. Power is in the hands of those that will be affected. development% profits are reinvested back into the local community. $ndogenous local development% $nvironmentally sustainable practice is rewarded. &ustainable farming techni'ues are

•

rewarded. Chemicals and genetically modified species, as seen in other methods of farming and production, are prohibited (Transfair )&*+. Fair Trade is, in essence, a model of production and echange that is more conducive to

• • • •

eco#social sustainability. sustainability. Cons: • • • • •

comprises an etremely small segment of the market Costs associated with certification (i.e. obtaining a Fair Trade logo+ can be unaffordable Certification favors co#operatives. -ndividuals can be disadvantaged. disadvantaged. aw products are favored over value#adding. Thus prevents obtaining higher profits. -ncreasing associations between large and/or multinational companies and the Fair F air Trade movement. This defeats the purpose of the Fair Trade movement. -t is considered

•

0selling#out1 to the very organi2ations and ideologies that got us into this mess in the first  place. Fair Trade does not get to the core of the problem. -nstead of tackling the real issues (such as oversupply/low prices+, Fair Fa ir Trade supports unsustainable markets and provides unrealistic prices.

*nna !. 3ralton, Fair 3ralton, Fair Trade Trade – the pros and cons, cons, last modified "ecember 44, 4556, accessed 7uly 48, 4599,  4599, http://www.altglobe.com/blog/fair#trade#pros#and#cons

Pros:

 

•

•

•

Producers get a decent living, gain necessary skills and knowledge, obtain access to credit, find technical assistance and market information, learn about trade and ac'uire eperience in eporting. etter prices for farmers do not increase consumer costs, since the fair trade organi2ations cut out intermediaries by handling all the operations between production and retailing themselves. consumerism.. Consumers get an educational tool promoting tool promoting thoughtful consumerism

Cons: Critics sometimes treat fair trade as if it were offering a comprehensive solution to development  problems. This can mislead mislead strategists who are considering whether fair#t fair#traders raders will make good  partners for their development efforts. efforts. However, this m much uch is admitted: !arket share is much too small to have a ma;or impact on general living standards in • developing countries. $ven if it epands epand s significantly, significantly, only 45< of consumers at a maimum seem ready to pay more for fair trade products. This limits possible epansion. Producing more low#priced commodities for over#supplied markets postpones what is • really needed for development: diversifying eports and adding value, rather than depending on commodities and crafts. =r finding new social solutions for upland communities whose economic viability remains in doubt. •

•

•

•

ich markets can do more for poor countries by allowing bigger 'uantities of normally  priced products in their markets. >abelling organi2ations may cut out middle traders, but they may not return the full savings back to the farmers. Fair trade is an epensive niche market to maintain, because it needs constant promotion and re'uires educated educa ted consumers. High marketing costs are one reason why all those fair trade premiums don?t make it back to the producers. etailers may take advantage adva ntage of consumers? social conscience. *fter looking at prices in his local coffee bar where fair trade cups of coffee are sold at a premium, Tim Harford, a orld o rld ank economist, econo mist, concluded in The Undercover Economist : 0Charging an etra ten  pence gave a misleading impression of how much it really cost to get hold of that fair trade coffee.1 "oubling a producer?s family income should add less than one penny to the price of a cup in a )@ coffee shop, he observes. The coffee shop later dropped the  price differential. There are many different standards and criteria, and little discussion outside the organi2ations themselves. &o consumers cannot decide whether the trade really is fair.  Aot all fair#traders fair#traders are members of F>=, e.g., ugmark and the Clean Clothes Campaign. The standards themselves can cover working conditions and environmental measures (or not+ as well as stable pricing.

Peter Hulm, International Hulm, International Trade Trade Forum: advising, empowering and inspiring trade, trade, published  published February 455B, accessed 7uly 48, 4599, http://www.tradeforum.org http://www.tradeforum.org/news/fullstory /news/fullstory.php/aid/959 .php/aid/959

Fair trade started with a vision in the 9D85 to e'uali2e the rights of poverty#stricken communities abroad. &ome ).&. and $uropean organi2ations started selling their handicrafts and produce for a

 

fair price in developed countries. -n 9DD5, 9DD 5, a fair trade labeling system was started, and cha charities rities worked closely with Fair Trade )&* and Fair Trade Trade of other countries. !odern fair trade  protects growers and farm laborers of crops such as coffee, coffee, tea and cocoa from eploitation by multinationals and middlemen. etter >iving Conditions for 3rowers: =ne of the pros of the fair trade movement is the improvement in living standards and conditions of workers of small farms in coffee co ffee and tea growing regions. *ccording to Fair Trade )&*, influence from the Fair Trade involvement has improved communities with schools, rights for women, sound business knowledge, work safety procedures and much more. The communities are encouraged to be self sufficient.. sufficient oom for -mprovement: Charles Cain from the Tea etailer website eplains that wealthy tea  barons have taken advantage of the Fair Trade movement. *ccording *ccording to &Es article Child >abor $radication in AicaraguaEs Coffee ones, there is a need for global intervention to  protect children from eploitation. The Fair Trade Trade movement has encouraged education for  children. Fair Trade )&* believes compulsory education for children to be vital for the  progression of these countries% the literacy literacy rate is increasing. For The $nd )ser The Price -s Higher: Fair Trade coffee costs a little more than some other coffees that are non Fair Trade. This is due to the cost of labeling and administration costs. *ccording to Fair Trade )&*, which admits that consumers pay a little more for a cup of coffee, far more is going back to the grower and the community at large. =verall the eetra tra cost of the coffee is still positive for Fair Trade, although some see the higher price as a negative. Fair Trade aises Cocoa Prices: *ccording to Fair Trade *ust *ustralia, ralia, the increase in cocoa prices p rices and sponsored initiatives gives the producers a sweet deal% d eal% the etra money will finance farm improvement pro;ects to help create a more sustainable future for many communities. hile cocoa prices are high, the communities prosper. hen the prices drop, the communities are protected by the minimum price floor. &i2e ofscale Fairlargely Trade Farms: of thewhich disadvantages of Fair Trade business is the small organic=ne farming it promotes. hile this for is abig positive for the environment, the small scale farming does not allow for larger#scale larger#scale farming methods which attract business from bulk buyers. >arger buyers generally stay away from Fair Trade produce as they have less control over production p roduction methods and prices. This can be a disadvantage for the developing nation as a whole but does protect the small farmer from eploitation. 7ohn >ondon, Fair >ondon, Fair Trade Trade Pros & Cons, Cons, last modified *pril 9B, 4599, accessed 7uly 48, 4599, http://www.ehow. .ehow.com/infoG64B469Gfair#trade#pros#cons.html com/infoG64B469Gfair#trade#pros#cons.html http://www