The Benefits of Fair Trade - Research Paper Example

Evaluate the impact of Fairtrade Contents Evaluate the impact of Fairtrade Contents 2 Introduction 3 A. Discussion 3 a. Impact of Fairtrade 3 b. Economic Effect 4 c. Advantage of Fairtrade 4 d. Problems 5 e. Labour benefit for families and community 6 f. Negative impact of labour 6 g. Social Impact 7 h. Healthcare 7 i. Equity & Inequity 8 j. Gender 9 Conclusion 9 References 10 Introduction Fair trade is considered as a trading partnership based on transparency, dialogue, and respect. It has the potential to offer better trading conditions to marginalized workers and producers. It also acts as a means to secure the rights of marginalized workers. It is considered to be more than just involving in trading activities. It highlights the fact that there is a need for change in the regulations and rules and also in the way of practice of conventional trade. It provides a way to successful businesses regarding how people can be put first by them. Alternative trade organizations that are based on philosophies of well being of environment, and also social justice are creating new channels for marketing and trade alongside conventional agricultural export sectors. Social responsibility and ethics have become an important factor in consumer marketing which provides an organization with competitive advantage with respect to its competitors. A. Discussion a. Impact of Fairtrade The changes that are brought about by fair trade have to be looked at first to analyze the impacts of fair trade. One has to consider in this regard the changes that were not possible without the existence of fair trade. When the existence of fair trade benefits farmers, they start to control a significant part of the production chain and also employ workers. When farmers who are certified by fair trade employ workers, those workers have a high standard of living and a working condition that is considered better. If workers have a standard of living that is considered better, they will invest more money in their children’s education. b. Economic Effect Favourable economic opportunities are provided by fair trade to small farming families such that they also get the opportunity to join manufacturing organizations and produce products with market specifications. These farmers are considered to enjoy higher and stable incomes as compared to those farmers that sell in the conventional market. Buyers pay a stable minimum price known as fair trade price to cover the sustainable cost of production. There also exists opportunity for pre-financing and also contracts for long term planning. It also has an increased access to the export markets (Bassett, 2010, pp. 44-49). The fair trade price is considered to have a lot of significance when in the volatile world the prices of commodities and products fall below the cost of production. Importers tend to import the products of fair trade in their respective countries for further processing of such products and to sell those products themselves or through retailers or other processors. There are agreements in the fair trade such as importer agreements, and producer agreements. The existence of agreements in fair trade can be termed as the major factor which makes it reasonable for importers to import goods from fair trade producer. In this regard, the fair trade price holds a lot of value in situations when there is a fall in the prices of products below the cost of production. c. Advantage of Fairtrade The main objective of fair trade is to remove poverty in the poorly developed countries and establish sustainable development in these countries. Fair trade practices aim at creating increased opportunities for the producers and farmers who face economic disadvantages as compared to the multinational companies across the world (Fair trade Organization, 2013, pp.6-8). The producers and the workers are provided with better conditions of trading to create sustainable development, especially in the developing economies which are far behind the developed nations. The main benefits of fair trade practices are as follow. Fair trade practices help the producers and the farmers to increase their income levels through two phases. The prices of the products are decided on a guaranteed and agreed fair price. The distribution channels under the fair trade practices are reduced so that the producers and farmers get more shares from the sale of the goods produced by them. The prices of the produced goods are decided in such a way that the cost of livelihood of the farmers and sustainable producing processes can be maintained. This helps the producers to get an extra income which can support them in improving their livelihoods. A premium is added to price which can later be used for investment purposes in the development projects like funding scholarships, funding low interest loans for producers, building schools and other social uplifting activities. Another advantage of fair trade is that it ensures greater protection of the environment. Many environmental certifications are provided to mark the safety of the goods manufactured through agricultural and farming processes. The certifications ensure the customers that the products are not environmentally harmful. For example, the fair trade practices do not allow the use of pesticides which makes the agricultural goods safer to consume. Fair trade practices also help the producers to have stronger footholds in the global market and enable a better link between the consumers and the producers. d. Problems There are numerous issues with fair trade such as producer certification fees, lack of importer certification differentiation, and lack of transparency. Producer certification fees can be considered as irritating for small farmers who do not have enough money to feed themselves and as such it is very difficult for them to pay for such fees. Given the fact that most producers in the developing world are poor, such fees can be considered as excessive for them to pay for (Arnould, Plastina and Ball, 2009, pp. 186-189). TransFair have certified numerous importers as fair trade importers and as such the amount of their imports and the prices that they pay in this regard are considered as confidential information. These importers are considered as fair trade importers while they import only a fraction of their imports through fair trade. This has resulted in numerous small importers pulling out of the certification process of TransFair and choosing to make their entire information in this regard public. Lack of transparency refers to those goods that are sold as fairly traded but the producers of such goods have not been certified as fair trade manufacturers. Moreover the transportation system in this regard is not that much convenient. With regard to cotton industry, the selling price of cotton in this regard has been reported to be greater than that reported by the cotton companies (Terstappen, Hanson and McLaughlin, 2013, pp. 21-25). e. Labour benefit for families and community The producers of fair trade are almost always supported by a group of laborers, which in certain cases extend beyond their families. It has been considered that the existence of fair trade leads to creation of more jobs in the community in general. The initiatives and programs of fair trade are considered to have a positive impact on labourers and labour relations. It has also been found that the existence of fair trade leads to higher pay for hired labour. The existence of fair trade has fundamentally reorganized the relations of labour because of the need for certification criteria (Tiffen, 2002, pp. 383-387). Moreover higher occupational safety and health standard has lead to more job statuses. It has been perceived that there is a need for new professionals such as inspectors, technicians, and administrators due to the existence of fair trade. f. Negative impact of labour There are numerous negative aspects of labour in fair trade such as the existence of overtime work. Labourers are made to work overtime to fulfil the demands of consumers, retailers, and the market in general. There are also existences of numerous labourers who are considered not to have benefited from the experiences of fair trade (Torgerson, 2010, pp. 475-479). This is considered as such because there is no existence of criteria and standards in order to protect the workers. The existing criteria and standards are not considered as sufficient to transform labour relations. The situations of hired labour have not challenged the existing labour practices and norms and as such it is considered that there is no incentive to change such economic realities. It also has been viewed by some that the influence of fair trade on labour relations is contextual which may imply a radicalized segregation of labour. It is a fact that fair trade producers are associated with a group of labourers and if there is any migration of labourers in this regard it may lead to the crash of the local labour system. g. Social Impact The risks associated with access to food are mainly focused by fair trade. The existence of fair trade has helped farmers to address such risks in an effective manner. Its influence on primary education of children of farmers has been considered as positive because it has resulted in a higher standard of living for farmers. This has reduced the dropout rate in a significant manner (Tulet, 2010, pp. 133-137). The members of fair trade must possess agricultural skills and need to have some knowledge in this regard. In this regard, it may be said that financial aids may work to a large extent. A major requirement of fair trade is that child labour should be abolished which can be considered as an important positive factor. h. Healthcare The fair trade practices facilitate the access of medical and healthcare facility for the rural communities and small farmer across the globe. The fair trade is based on standards that ensure that the farmers and their families in the poorly developed regions have proper access to medicines, vaccinations, doctors, nutrition and health education (Global Exchange. 2011, pp.3-4). The fair trade process involves farming cooperatives that look after the healthcare needs of specific communities. The fair trade premiums are invested in setting up lifesaving facilities and other healthcare facilities in the lesser developed regions (Fair Trade Organization, 2011, p. 7). Fair trade practices help to improve the healthcare services for the backward communities by ensuring public services like providing access to clean water, health education, medical services and facilities. Also, since the fair trade policies try to minimize the use of chemicals in the manufacturing and production processes, therefore the health risks related to chemical usage for the producers as well as the consumers are minimized. Other initiatives included in the fair trade practices like decreasing child mortality, improving health education and decreasing environmental diseases. All these factors contribute to improve the health of the farmers and consumers in the non-developed countries as well as the developed countries across the globe. i. Equity & Inequity The social aspects of fair trade comprise the idea of access and equity within its network. The values of solidarity and justice which forms the basis of fair trade have been considered to have created elite groups and inequities within and amongst manufacturers. Fair trade may be considered to have excluded the most marginalized organizations and manufacturers which have led to deepening of inequities. It also does not cover landless labourers. The producers find stronger communities more attractive in this regard. It can give rise to asymmetric information which can lead to a situation where one party takes the advantage of lack of information of the other party. In this regard, fair trade has to be more inclusive with respect to weaker people in the society. It should not lead to deepening of inequities but should lead to equity where the marginalized doesn’t get excluded. j. Gender With respect to fair trade, gender has shown little improvements and it is widely considered that fair trade reinforces existing inequitable systems and institutions. In this regard, it can be said that the role of women and gender equity is considered much less in the fair trade system. In this regard, the way forward is women’s land stewardship and ownership which plays a vital role in equitable distribution of benefits of fair trade. Men have been considered to control land in most places and as such it leads to a situation of dependency for women which limits their ability to participate in the fair trade. Moreover women’s projects may be initiated only through funding and pressure from those considered outside of local organizations. It is really true that women have to come forward in this regard and accept the challenge which can act as a possible solution in this regard. Conclusion It can be concluded that fair trade should not be condemned but should adopt best practices with regard to challenges that are there in different contexts with the sole objective of fair trade contributing to its true potential. The literature of fair trade poses a big question regarding alternatives that are available to existing trade relationships that are considered to be unfair. The initiatives of fair trade are not considered to offer counter hegemonic alternative to transform the agro food system into something that can be considered as quantitatively different or something presumably better. The social dimensions of fair trade are considered to offer valuable insights which can contribute in a large way to the fair trade realizing its true potential. Fair trade comprises of diverse and rich stories and in this regard each case must have contextual reference within its history and the lived experiences of a specific community. References Arnould, E. J., Plastina, A. and Ball, D., 2009. Does fair trade deliver on its core value proposition? Effects on income, educational attainment, and health in three countries. Journal of Public Policy & Marketing, 28(2): 186-189. Bassett, T. J., 2010. Slim pickings: Fairtrade cotton in West Africa. Geoforum, 41(1): 44-49. Fair Trade Organization. 2011. The Five Benefits of Fair Trade. [Online]. Available at http://www.fairtradeshoes.org/the-five-benefits-of-fair-trade. [Accessed on 7 March 2014]. Fair trade Organization. 2013. The fair trade mark. [Pdf]. Available at http://www.fairtrade.org.uk/includes/documents/cm_docs/2008/F/1_Five%20Key%20Fairtrade%20Benefits.pdf. [Accessed on 7 March 2014]. Global Exchange. 2011. The World Bank and the International Monetary Fund. [Online]. Available at http://www.globalexchange.org/resources/wbimf. [Accessed on 7 March 2014]. Terstappen, V., Hanson, L. and McLaughlin, D., 2013. Gender, health, labour, and inequities: a review of the fair and alternative trade literature. Agriculture and Human Values, 30(1): 21-25. Tiffen, P., 2002. A chocolate-coated case for alternative international business models. Development in Practice, 12(3/4): 383–387. Torgerson, A.M., 2010. Fair trade banana production in the Windward Islands: Local survival and global resistance. Agriculture and Human Values, 27(4): 475–479. Tulet, J.C., 2010. Peru as a new major actor in Latin American coffee production. Latin American Perspectives, 37(2): 133–137. Read More