How Fair is Fair Trade?

fair_trade_logo After a bit of coursework ranting by me, this was question we considered today 😉 . Fair Trade can be defined as when the producer is paid a price for their product that covers the cost of production. Fair Trade products certified by the Fair Trade Foundation are branded with the logo shown in the inset.

Fair Trade products are more expensive, not only because an above market price is paid, but because a social premium of usually around 20% is added to the price. Basically Fair Trade items are a niche market.

This social premium is used to develop the quality of life of the producers.

So what are the advantages of buying Fair Trade?

  • You are providing producers in LEDC countries with a fair price for their product that covers the cost of production. Basically, they aren’t working for nothing.
  • Fair Trade represents a different way of production. Producers are encouraged to work sustainably with the environment, are prohibited from using child labour, are encouraged to take collective democratic decisions through co-operatives, on behalf of their communities, they must provide suitable working conditions and allow the protection of workers rights through unions.
  • The social premium may be used to fund social programmes like health and education, support small affordable loans to encourage diversification, and provide advice on marketing or improving yields.
  • In buying Fair Trade, people hope that they are actively helping to reduce the inequality between the world’s richest and poorest people.

Fair Trade does have its critics

  • Basic I know, but I have a limited budget!
  • Fair Trade does nothing to tackle the root causes of the inequality that LEDC producers face, Trading laws that protect MEDC farmers. Fairer trading laws would allow access to MEDC markets, but are you willing to see a potential loss of employment in British farming?
  • From an economic viewpoint, the price of certain products is low for a reason (We will consider coffee later.), overproduction, people suggest that it is unfair to subsidise these products by paying an over the market price for them. It disadvantages millions of farmers that aren’t involved in Fair Trade Co-operatives. Wouldn’t it be better to fund their diversification into differing products that demand a higher price?
  • There have been recent concerns about the marketing of some products as Fair Trade by supermarkets, who in reality pay only a slightly increased premium to the producers and pocket the difference in profit. 🙁
  • As Fair Trade is a niche market, doesn’t encouraging the movement to Fair Trade actually cause the value of the products to fall?
  • People are also a little concerned that multi-nationals are producing and marketing their own Fair Trade products, this is slightly ironic, taking using one hand and giving using the other.
  • In reality some people see Fair Trade as a guilt purchase, ‘I’ve done my bit…’ I don’t have to worry now’.
  • Then there is the environmental impact, is it really environmentally friendly purchasing products from Africa? How does this impact on my carbon footprint? Though I reckon I might struggle for British coffee…

Anything I’ve missed here?

So, is it worth it?

As we have already seen, this ethical shopping has two sides….

We might be meeting tomorrow, all depends on the weather and Sports Day…

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