Fair trade, a popular concept among consumers in western Europe and the US, ensures everyone involved in the making of a product is fairly paid; there is no child labour or forced labour; there is gender equality; and there are no damages to the environment.
Understanding the concept: The movement was born out of concerns over western consumers exploiting farmers, artisans and labourers in countries in South America, Africa and Asia. Standards for fair trade are laid down by not-for-profit organisations like Fairtrade International, World Fair Trade Organisation (WFTO) and Fair Trade USA. Fair trade is linked to the principle of triple bottom line, which looks not just at financial gains, but also social and ecological benefits.
Proponents logic:
- Fair trade will bring stability in the supply chain. It is essential to protect the interests of the farmer as they wonʼt grow if they donʼt get the right price.
- Supporting local farmers is critical, because they’re taking care of the land for the next generation. The economy won’t matter if we can’t feed ourselves. We need their food, and they need our money. They do the hardest work, and they need to be paid, whatever it costs.
- Fair trade will conserve biodiversity by protecting traditional seed varieties. Companies can tap their corporate social responsibility funds to better the lives of those in their supply chain.
- Fair trade will ensure quality and sustainability (social and economical), both indispensable to the brand and leads to long-term financial sustainability.
- Adopting a green supply chain will reduce costs, while introducing new eco-friendly products will open up new markets and build consumer confidence – thereby enhancing corporate reputation and generating investor interest.
- It’s believed that social involvement brings in more customers at off time of the year, and continues to bring them during the recession as people who want to feel that they’re part of this bigger movement want to support.
Opponents logic: Fair trade is not without its share of critics.
- There are doubts and concerns over fair trade international audit system. It is believed that the labelling system is not very effective and the benefits (of fair trade) go to a minority of producers who dominate a cooperative rather than to the poorer producers and wage earners.
- Given the state of the economy, such certifications and extra-costs seem unrealistic. Cost-conscious buyers can sometimes be wary of the price attached to joining such certification schemes.
- While much research has been carried out into consumersʼ opinions, showing that many wanted to see sustainability marks on their foods, it is yet to be seen if they are actually prepared to pay a premium for them
Practical Uses: Coffee is by far the biggest fair trade product, with around half of Fairtrade farmers and workers growing it. Fairtrade is focused on smallholder farmers (<5 Ha) since 80% of the worldʼs coffee is grown by them. Coffee chains like Starbucks and Peetʼs Coffee sell fair trade coffee.
Challenges:
- The world of produce certification has shifted considerably in recent years, with a raft of new sustainability marks entering the market and “raising the benchmark of what is happening on the ground”.
- Companies are thinking about their own sustainability label. Mondelez, the American owner of Cadbury has been accused of backtracking on ethical Fairtrade rules and replacing them with its own scheme. Mondelez claims its ‘Cocoa Life’ programme will secure the future of farmers and will ensure all of its chocolate is sourced sustainably.
- Fellow chocolatiers fear replacing Fairtrade will encourage other global brands to follow suit and could undermine the future of the foundation, which has become a symbol for ethical sourcing and ensuring farmers get a good deal.
Trends:
- Soft power side of global business, centred on certification and corporate social responsibility, has been increasingly bringing agriculture companies together with the NGOs.
- Businesses are understanding the benefits of partnership with sustainability causes. Sustainable sourcing and clean labelling are becoming common sense.
- Productʼs environmental credentials are becoming an influencing factor for millennials purchase decisions.
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