The Definition of Fair Trade given by one of the Fair Trade Foundation’s conference is “a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South.”[1]
The Vision of Fair Trade Foundation is of a world in which justice and sustainable development are at the heart of trade structures and practices so that everyone, through their work, can maintain a decent and dignified livelihood and develop their full potential.[2]
The Mission of Fair Trade Foundation is to work with businesses, community groups and individuals to improve the trading position of producer organizations in the South and to deliver sustainable livelihoods for farmers, workers and their communities.[3]
Under the Definition, Vision and Mission of Fair Trade Foundation, it seems really fair for the small producer such as farmers, workers and their communities, who does not have the power to negotiate for the price. These people are the one who work really hard but get pay less, this demonstrated by two billion people working hard for less than $2 a day.[4]
Fair Trade has set a minimum price for products, in which the price is more stable than market price. It has also added premium price on top of minimum price to invested in social, environmental and economic developmental projects. However, if the market price is higher than Fair Trade price, the market price will be deem a Fair Trade price, even so the premium price has to be add on top of market price too.
For example:
Example 1. Market Price = $1, Fair Trade Price = $2
Then, Fair Trade price going to be $2 + premium
Example 2. Market Price = $3
Then, Fair Trade price going to be $3 + premium
Nevertheless, where Fair Trade can improve the conditions of some farmers, it will impose a high cost on others who may be even more deserving. To be eligible by Fair Trade, the farmers have to qualify with Fair Trade standards, not on the basis of need. Those who do not meet the standards may get worse, because if the prices in one part of the market are fixed, the prices in other parts of the market must fall by more.[5]
Fair Trade maybe regard as marketing ploy, some ethically people willingly to pay more for the Fair Trade product, believing that the overpaid money would help poor producer to improve their product’s quality and their living. It could highly increase the sale of products with Fair Trade’s mark, but it may harm many other products by stigmatizing other products as unfairly and exploitatively.[6] However, in the end only 10% of the premium paid for this type of products reaches the producer. The other 90% go to the retailers. It would be better off donating money to any charities organization, this way more amount of money could reach the producer.[7]
As far as it is concerned, Fair Trade does not aid economic development, it functions to keep the poor in their place and creates a barrier on their conditions and make them uncompetitive farmers on their land and holding back their development.[8] As an example it takes 500 people in Guatamala to fill a coffee container, which can be filled by 5 people and a mechanised harvester in Brazil.[9] However, if the container can by filled by 5 people, the other 495 people have to find a new job. These people are in the land of agriculture; it wouldn’t be easy for these people to find a new job. It could be better to let them be like this under the Fair Trade, or else these Fair Trade Organizations have to be able to provide a job for them.
As whole of the above facts, Fair Trade provides a better opportunity to producer by set up a minimum price and premium, but not all of them get this opportunity, it only for the producer who meets with Fair Trade’s Standards. Furthermore, it does not cover the labourers who works all day long in the field to gets a permanent job. It also leaves the producers to stay undeveloped, unable to get involve in world trade’s competition.
[1] Fairtrade Foundation, ‘Fairtrade Supporter Conference 2010’ Fairtrade for first timers <http://www.fairtrade.org.uk/get_involved/news_events_and_urgent_actions/supporter_conference_20_10.aspx> accessed date 14 Oct 2010.
[2] Fairtrade Foundation, ‘The Fairtrade Foundation’ <http://www.fairtrade.org.uk/what_is_fairtrade/fairtrade_foundation.aspx> accessed date 14 Oct 2010.
[3] See note 2 above.
[4] World Fair Trade Organization (WFTO), ‘Charter of Fair Trade Principles’ <http://www.wfto.com/index.php?option=com_content&task=view&id=1082&Itemid=12> accessed date 14 Oct 2010
[5] Marc Sidwell, ‘UNFAIR TRADE 2008’ <http://www.adamsmith.org/images/pdf/unfair_trade.pdf > accessed date 17 Oct 2010.
[6] Brink Lindsey, ‘GROUNDS FOR COMPLAINT?’ Adam Smith Institute, London 2004 accessed date 14 Oct 2010
[7] Marc Sidwell, ‘UNFAIR TRADE 2008’ <http://www.adamsmith.org/images/pdf/unfair_trade.pdf > accessed date 17 Oct 2010.
[8] Marc Sidwell, ‘UNFAIR TRADE 2008’ <http://www.adamsmith.org/images/pdf/unfair_trade.pdf > accessed date 17 Oct 2010.
[9] Andrew Chambers, ‘Not so fair trade’ <http://www.guardian.co.uk/commentisfree/cif-green/2009/dec/12/fair-trade-fairtrade-kitkat-farmers> accessed date 14 Oct 2010
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