The Market-Based Approach of Fair Trade: Empowering Producers

Fair trade is a social movement which is well organized; it adopts an approach that is market based. This social movement aims at assisting producers in the nations that are developing and also promoting the sustainability of such producers. Fair trade advocates for fair pricing of as well as environmental and social standards in regions related to production of goods and services of a wide variety. Its main focus is the exports of various products from the countries that are developing to the nations that are already developed.

The most favoured exports include coffee, handicrafts, tea, sugar cocoa, honey, bananas, wine, cotton, fresh fruits, flowers and chocolate (DeCarlo, 2007).

The fair trade social movement

The strategic intention of fair trade is working together with workers and producers who are marginalized, in order to enable them to progress towards stability and also be economically self sufficient. The social movement of fair trade also aims at allowing the marginalized workers and producers to play a bigger role in their various organizations by becoming greater and more relevant stakeholders.

Get quality help now

Prof. Finch

Verified writer

Proficient in: Business

4.7 (346)

“ This writer never make an mistake for me always deliver long before due date. Am telling you man this writer is absolutely the best. ”

+84 relevant experts are online

Hire writer

This will enable them to attain greater equity as far as international trade is concerned. Fair trade has lot of support world wide; its proponents include various social, environmental, religious and international growth aid organizations (Brown, 1993).

Most of the organisations involved in the fair trade are either members or are duly certified by one of the many international or national federations. These federations are responsible for facilitating, promoting and coordinating the work of the organisations under the fair trade umbrella.

Some of the biggest federations include the one concerned with labelling the fair trade products, the federation of the world fair trade, the network world shops of Europe, the association of trade fair in Europe (DeCarlo, 2007).

The above federations came together in 1998, to create an association which was largely informal; their main objective was to harmonize the guidelines and standards of the trade fair, increase the efficiency and quality of the systems of monitoring being used by fair trade and also to advocate for political will in both the developing countries and the developed ones in order to support the fair trade (DeCarlo, 2007).

The fair trade has a mission labelling all its products so as to link producers and consumers through a standard certification mark of the fair trade. This mark signifies conditions which are fair to both the producers and the consumers. It therefore, provides enhanced capacity for the marginalised producers to reduce and eliminate poverty, take a significant part in international trade as well as strengthen their economic positions. Fair trade has been very successful in its certification and in fact there is no other organisation that has such start in its certification (DeCarlo, 2007).

Close to two decades ago the labelling initiatives of fair trade were started by the main development charities. These NGOs, who were the pioneers of these labelling initiatives, had the aims of attaining sustainable development and eliminating of poverty as their main purposes. The guidelines and standards of fair trade were developed to deal with issues concerning disparity of power in trade dealings, conventional trade injustices and unstable markets. Thus the standards and guidelines of fair trade apply equally to both the producers and the traders.

This is a very important aspect of the fair trade. Unlike other forms of certification fair trade is capable of empowering the producers, enables them to tackle poverty effectively and also promote sustainable development (Brown, 1993).

Fair trade has a number of factors that make it unique: it is the only system of certification which prices for products are included, that cover all the sustainable production costs.

As stipulated in its core objectives, fair trade assists producers and workers to reduce and eliminate poverty, invest in viable projects and also improve their live as a result of increased earnings. In order to support objectives development fair trade usually favours small scale farmers who are well organised to produce certain products for the market. Fair trade uses a criterion that is designed at empowering of producers and workers and finally the producers under fair trade are not just mere beneficiaries but are indeed partners in the trade (Brown, 1993).

Positive impacts of fair trade

Several communities from developing countries throughout the world have benefit tremendously as result fair trade. Their incomes have been enhanced and thus their quality of life has been improved significantly. This has been due to the fact that through fair trade, several local communities in the developing countries have been able to market their local products to the developed countries and thus fetch money out of the exports.

This has also enabled the developing countries to make maximum use of the local resources found locally and thus creates value and enhances the gross domestic product of such countries. The social movement of fair trade has to a very great extent assisted the developing countries creating job opportunities which are a great challenge to several if not all the governments in the developing world (Nicholls, & Opal, 2005).

Through fair movement the producers in the developing countries are guaranteed of fair market prices of their prices which are able to cover their production costs and enable them to make a good profit.

This is very important as it ensures that the producers are well motivated to continue producing more for the international market as this will guarantee them of a stable market and an income which they can rely on to cater for their daily needs as well as for development purposes. Competitive prices in the international markets are the driving force for several producers in the developing world to continue producing more quality products which meet international standards and thus trade is well enhanced (Stiglitz, & Charlton, 2005)

Fair trade facilitates the process of democratisation since only cooperatives that are organised democratically can obtain certification from the movement of fair trade. This therefore, means that the producers have to make decisions in the manner in which surplus will be utilised. In many cases this has resulted in social responsibilities for various communities, they have benefited with various community projects such as schools, health facilities, provision of water and other social amenities.

Therefore, the fair trade movement does not only improve the quality of life at the individual level but also at the community level. The community also benefits from the fair trade since the organisation deals with workers who are well organised, mostly in cooperatives. In most cases such cooperatives, eventually invest their profits in the communities they come from and thus in the long run the entire society benefits from the fruits of fair trade. Education is well promoted under fair trade since once people’s incomes are enhanced they are in a position to educate their children instead of engaging in child labour which is against the rights of the children (Nicholls, & Opal, 2005).

The consumers also benefit significantly from fair trade, this is because they are able to purchase commodities in line with the principles and values they carry. They are also provided with a wide range of wonderful products which increases every now and then. The shoppers who opt to purchase into fair trade, they are thus in a position to support the producers who would otherwise have been marginalised and whose products could not have been able to reach such markets, thus such consumers support such struggling producers to improve the quality of their lives (Stiglitz, & Charlton, 2005).

Several companies and traders are able to display their products in various shows that are organised by the fair trade movement and thus effectively advertise their products to their target markets and consumers. Ever since it was launched, the mark of fair trade has been recognised all over the world as a development and a social label.

Thus the traders who are given a chance to advertise their products in shows organised by the fair trade movement are at a good position of attracting very many consumers and hence have their businesses grow as a result of increased revenues from increased sales. Therefore, the fair trade movement offers the traders and companies a trustworthy way to make sure that their business affects people and communities positively in the entire chain of commerce (Nicholls, & Opal, 2005).

 Fair trade encourages and rewards production of products that are sustainable as far as the environment is concerned. The movement further encourages the producers to work hard towards achieving organic certification. Fair trade thus ensures that the producers protect and conserve their living and working environment. Such areas that need conservation and protection from the producers under fair trade include forests, natural water resources and other areas that are significant in dealing with waste management and erosion problems. Producers under the fair trade are encouraged to monitor, develop and implement their producing techniques and operations in a manner that ensures that the desired business results are realised and the environment is well taken care of in a sustainable manner (Stiglitz, & Charlton, 2005).

Fair trade has a criterion of following both international and national standards for regulating the use of certain chemicals in farming activities that are deemed to be harmful to the environment and to the consumers of such farm products. This measure ensures that both the environment and the consumers are well protected from toxic chemicals that could lead to harmful effects. The fair trade movement supports the use of chemical that are less harmful such as the organic ones which are bio degradable and thus have less if any harmful effects to the producers, consumers or to the environment (Jaffee, 2007).

Stable prices are usually promoted for all the products that are traded internationally via the fair trade movement. Such stable prices are usually enough to cover all the production costs even at times when the world market is not performing well and the prices have fallen significantly. Fair trade operates a premium that that enables the producers to work hard towards improving the quality of their products and their lives too. The premium is an additional payment that is made on top of the fair price that is agreed, the producers have to agree in a democratic manner how they are going to spend the premium.

This premium is usually paid as a reward to the producers who have produced products of high quality and thus competition, creativity and innovation are encouraged. This ensures that the products supplied to consumers under the fair trade movement continue to improve in terms of quality and thus such products are able to attract competitive prices in the international market, and hence the producers’ incomes are enhanced further (Stiglitz, & Charlton, 2005).

 Partnership is encouraged under the fair trade movement; this is because producers are encouraged to join efforts together in order to produce and market their products together. Producers working together are in a position of producing much more products than what they could have produced if each of them was working separately. Since more people are involved in fair trade cooperatives, this ensures that creativity and innovation are enhanced since different people will have different approaches and opinions towards performing various tasks. This makes the producers to learn from each other and as a result more development is achieved (Nicholls, & Opal, 2005).

Negative impacts of fair trade

Most of the products traded in under the fair trade movement are usually not fully processed, they thus attract fewer tariffs and hence the governments obtain less revenue from such products. The developing nations are not promoted to make more investments in processing facilities which would further enhance their incomes since more value would be created in the developing countries. The points of sale for fair trade products are quite limited since most of them are traded in shops that are specialized with very few products making it to the main distribution chains. This makes only a few consumers to be able to purchase such products or even know about their existence (Eyre, 2008).

The producers have to pay a certification fee which is a great barrier for the many marginalised producers wishing to join fair trade movement and thus enhance their incomes. The pricing under fair trade does not cater for the living and wage disparities that exist in different developing countries as the pricing is based on the assumption that there are similar conditions in different parts of the world which is not the case.

The lack of transparency is a major disadvantage that applies to most products that are traded under the fair trade movement especially in circumstances where the producers are yet to be certified. Clothing, paper, handicrafts and several other products that are being sold currently under fair trade movement by various businesses selling and importing them lack transparency on the payments they are making to the producers of such items and thus it is possible for the marginalised producers to be exploited by the importers (Ransom, 2001).

Conclusion

The fair trade social movement has been very successful in promoting international trade especially the flow of products from the developing countries whose producers would otherwise have been marginalised and it could have been very difficult for them to access the international market. The incomes of producers in the developing nations have been enhanced and as a result fair trade has been able to reduce poverty levels to of such producers.

The fair trade movement ensures that sustainable development is achieved through its programs of promoting good business activities as well as helping the producers to protect and conserve the environment. Fair trade has enabled everyone who is involved in its chain of commerce to be a beneficiary, thus the consumers, traders and producers have all benefited significantly from the movement and will continue deriving more benefits from the movement as it continues to grow to incorporate more stakeholders.

Reference:

Brown, M.B. (1993): Fair trade: reform and realities in the international trading system; ISBN 1856490734, Zed Books.

DeCarlo, J. (2007): Fair Trade: a Beginner's Guide; ISBN 1851685219, one world Publications.

Eyre, C. (2008): Fair-trade branded unfair by UK think tank, Retrieved on 2nd June 2009 from,

http://www.confectionerynews.com/The-Big-Picture/Fairtrade-branded-unfair-by-UK-think-tank.

Jaffee, D. (2007): Brewing Justice: Fair Trade Coffee, Sustainability, and Survival; ISBN 0520249585, University of California Press.

Nicholls, A. & Opal, C. (2005): Fair trade: market-driven ethical consumption; ISBN 1412901057, SAGE.

Ransom, D. (2001): The no-nonsense guide to fair trade; ISBN 1859843344, Verso.

Stiglitz, J.E. & Charlton, A.H.G. (2005): Fair trade for all: how trade can promote development; ISBN 0199290903, Oxford University Press.