What is fairtrade?
‘a trading partnership, based on dialogue, transparency and respect that seeks in greater equity international trade. It contributes to sustainable development by offering better trading condition to, and securing the rights of, marginalized producers and workers-especially in the South. Fair Trade organization (backed by consumers) are engaged actively in supporting producer, awareness raising and in campaigning for changes in the rules and practice of conventional international trade’[2]
The aims of Fair Trade are implicit in above definition as being:
1. To develop the income and welfare of producers by progressing market access, reinforcing producer organization and providing continuity in trading relationship.
2. To prevent disadvantaged producers and children from exploitation in the production process.
3. To elevate alertness to consumers about the negative effects on producers of international trade in which they exercise their purchasing power positively.[3]
Criticisms of Fairtrade
The notion of Fairtrade seems to address the poverty of agriculturists, nevertheless there are several arguments which are opposing and supporting on its impact as following:
1. Impact of Fair Trade on supply chain
Fair trade has guaranteed a minimum price of products, in which the price is steadier than the market price for the producer. Hence, their major purpose is to impede the capitalists from exploiting agriculturists.[4] Whereas Fair trade declares to aid the farmer but many facts are opposite; for the example in the coffee industries, the agriculturists usually have not their owner farms and they work for wealthy landlords, which imply that the aim misses its target.
Likewise; the premium price is not effective method to reduce the poverty as it cannot improve the technology of agriculture. As a result, it waste human resource such as In Guatemala, 500 people do the same work in coffee farms as five people would do in Brazil where they apply mechanical harvest.[5] Furthermore, there is a theoretical critique agues the premium price is disturbing the automatic market mechanisms of Adam Smith’s invisible hand which may create oversupply.[6]
Moreover, according to the FLO rules farms to hire part time working instead of full time working so as to qualify as fairtrade.In almost countries, the legal rights of part time employees are inferior to full time employees, they obtain cheaper labor; for instance, in Kenya where employers usually hire employee for 3 months and rehire them to exempt labor rights[7]. In addition, there are some cases where payment to producers has been delay for more than 3 months, arising serious financial pressures for them such as in Lyon and in El Salvador. Besides, the premium is deducted by multiple margins (retailer, distributor, importer, and producer) it seems less efficient to develop the income of agriculturists. A study at Sainsbury’s, a British supermarket chain, the price of Fair trade bananas was US$2.74 per pound(quadruple of the market price’s bananas).The producer obtain only 16 cents per pound and the rest go to other units in supply chain. However, Fair Trade attempts to resolve these problems by trading directly with producers[8].
Another concern is mainstream corporations practice their exploitative trading by vending a little among of their products in certification of Fair Trade; this strategy is well known as “parallel production” which is used to enhance their image as social awareness without essentially adjusting their sourcing practice. Whereas some small trading organizations which vend 100 percent of Fairtrade products lost their profits for the example: The Asda Wal-Mart excused they provided Fairtrade bananas from small farms in the Caribbean but the fact suggests they were sold in a small percentage of all their trading bananas.[9]
Finally, evidence demonstrates there is the corruption. In China, the cultivators instead of receiving their premium, they got Thermos, gas cylinder or laundry baskets[10].
2. Impact on consumers
A significant personality of fair trade is that, it emphasizes the value and intrinsic quality of product through revealing facts about production process in order to reach the hearts and minds of the consumers while the conventional products only contain of the physical appearance and the brand without other details. Beside, Fairtrade campaigns ethical consumer which is taking social and environmental significance in market behavior and is partially enthusiastic to pay more. Its impact has been cause of forcing industrial factories to change their trading policies by concerning about the social and environmental exterior of the production process [is called “Corporate Social Responsibility”][11].
Is Fairtrade fair?
Although many allegations illustrate ineffective management .Nonetheless, the Fairtrade is still helpful for improving the life of poor in underdeveloped countries and conferring welfare to mankind ,thus It had better to seek the more efficient means to resolve problematic.
Bibliography
Journal-Articles Used:
D Henderson, ‘Fair Trade is Counterproductive and Unfair’(2008)Economic Affairs 62-64,cited in A M Smith, Evaluating the criticisms of fair trade, Oxford: Blackwell Publishing,2009
P Bahra,’ Tea workers still waiting to reap Fairtrade benefits; Premium paid for ethical goods may not be passed on, reports Parminder Bahra’[2009]London Times
Matthias Schmelzer,’Is Fair Trade a neoliberal solution to market failures or a practical challenge to neoliberal trade and the free market regime in general?’p.
Mendez V.E.,’ Fair Trade, social network and rural livelihood in small farmer cooperatives of west El Savador’2003
Mugged:Poverty in your coffee cup,’Oxfam International,2002 p.18,cited in M Sidwell,Unfair Trade,London:Adam Smith Institute,2008
<http://www.adamsmith.org/blog/international/unfair-trade>
Young Graham,’Fair trade’s influential past and the challenges of its future’
Redfern and Snedker,’report of the International Labour Organization (ILO),2002
Websites Used
Fairtrade foundation,’What is fair trade?’
Fair Trade Labelling Organisations International,’Benefits of fairtrade’
<http://www.fairtrade.net/benefits of fairtrade.html>
Juliane Reinecke,’Is fairtrad moral’
<http://www.crassh.cam.ac.uk/events/826/>
[1] An informal association of four international fair trade networks Fairtrade Labelling Organizations International(FLO), World Fair Trade Organization, Network of European Worldshops and European Fair Trade
[2] Fairtrade foundation,’What is fair trade?’< http://www.fairtrade.org.uk/what_is_fairtrade/default.aspx>
accesed 27 October 2010
[3] Redfern and Snedker,’report of the International Labour Organization (ILO),2002
[4] Fair Trade Labelling Organisations International,’Benefits of fairtrade’
[5] Mugged:Poverty in your coffee cup,’Oxfam International,2002 p.18,cited in M Sidwell,Unfair Trade,London:Adam Smith Institute,2008<http://www.adamsmith.org/blog/international/unfair-trade>accessed 27 October 2010
[6]Juliane Reinecke,’Is fairtrad moral, <http://www.crassh.cam.ac.uk/events/826/> accessed 28 October 2010
[7] D Henderson, ‘Fair Trade is Counterproductive and Unfair’(2008)Economic Affairs 62-64,cited in A M Smith, Evaluating the criticisms of fair trade, Oxford: Blackwell Publishing,2009,p.30
[8] Mendez V.E.,’ Fair Trade, social network and rural livelihood in small farmer cooperatives of west El Savador’2003,p.27-29
[9] Matthias Schmelzer,’Is Fair Trade a neoliberal solution to market failures or a practical challenge to neoliberal trade and the free market regime in general?’p.<http:// www.threefolding.org/> accessed 27 October 2010
[10] P Bahra,’ Tea workers still waiting to reap Fairtrade benefits; Premium paid for ethical goods may not be passed on, reports Parminder Bahra’[2009]London Times
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