Strengthening Agribusiness - Assignment Example

Fairtrade Introduction In the current world, agribusiness has proved to be one of the largest sectors of the economy employinga larger portion of the population. Different individual have diverted to this economic activity, mainly the small scale agribusiness, due to the relatively low capital it requires for its initial operation. In this particular sector, there is both livestock keeping and cultivation for crops, mainly for the market, or rather commercial activities. Even though the agribusiness sector is among the largest employers in the economy, mostly for developing nations, the individuals involved here experience a number problems as well as exploitation. According to Ronchi (2006) the problems arise from the market failure, failure of demand and supply forces, leading to workers exploitation and unfavorable and unhealthy competition for small scale farmers by the large scale farmers. This business assignment paper entails discussion on Fairtrade, and analysis on how it achieves better prices, decent working conditions and fair terms of trade for farmers and workers. Fairtrade According to Lamb (2008), Fairtrade is concerned with the best recommended prices, favorable working conditions, sustainability in the local areas, and justified as well as effective terms of trade for small scale farmers and workers in the third world countries. Fairtrade gets in the position to address the different injustices evident in the convectional trade by giving the companies a condition of paying prices that are at par with the respective prices at the market (Arnould, Plastina and Ball, 2009). The convectional prices usually discriminates the economically unable and weak farmers, hence Fairtrade comes in to assist them upgrade on their position as well as upgrading their living standards. Fairtrade can as well get said as all the activities involved in the process of giving aid to the upcoming communities of farmers and workers. They get enabled to gain a lot of control over their future as well as taking good care of their surrounding in which the stay and undertake their economic activities in. Aims, Goals and Objectives of Fairtrade As discussed above, Fairtrade achieves better trade prices, decent work conditions as well as fair terms of trade for small scale farmers and workers. Agreements have gotten reached upon with some of these achievements of Fairtrade by consideration on a number of the factors that it has underline to aim at achieve, as well as its underlying objectives. They include the following: 1. Better Price i) Fairtrade Mark. Fairtrade has sought to improve the lives of small scale farmers by attaching their logo or rather trade mark to the products produced by this particular farmers and works in their plantation farms. The agricultural produces get shelved, while others for display, in different outlets, supermarkets among other retailing and wholesaling outlets. The logo inform different consumers or rather buyers that when they purchase these products, they play a role of improving the lives of small scale farmers and workers, as well as protecting the rights of works, and their communities, and environmental protection. By undertaking this strategy, these particular agricultural produce get bought as their demand increases, benefiting the small-scale farmers and workers who form the highest proportion of the marginalized groups (Lamb, 2008). Therefore, they find themselves in different positions for improving their livelihoods as well as attain their different potentials. ii) Certification of small-scale farmer’s organizations. Certification of small scale farmer’s organization by Fairtrade gets only undertaken for particular agricultural produce including coffee, cocoa, cotton, and rice. The small-scale farmers get integrated into democratic organizations, and get offered with income stability which allows them to undertake future planning. The certified farmers enjoys minimum price requirement set by Fairtrade hence avoid the impacts of exploitation by different market mechanisms such as monopoly and monopolistic market competition. The minimum price requirement increases the income security of these farmers and hence minimizing their vulnerability to poverty (Ronchi, 2006). iii) Fairtrade Premiums. In this case, the premium refers to the extra revenue earned by farmers and workers above the set Fairtrade minimum price. They make an agreement on how the different kinds of investments that these premiums can get ventured in. They may include social, environmental among other economic developmental incentives that are likely to result in the improvements of their business their society at large. These may include undertaking investments in education, transport, healthcare and better business machinery among others. In addition, the increase revenue generation through Fairtrade Premiums can get channeled in improving better farming, stabilizing cooperatives, investing in communal assets and helping the community to formulate future plans (Santacoloma, Suárez and Riveros, 2007). iv) Fairtrade Minimum Price. In each and every good produced under Fairtrade, they have a minimum price set aside to take care of the cost of undertaking sustainable production for the particular product in the specified locality. The producers get the opportunity to receive the market price in a situation where the set minimum size by Fairtrade is less than a particular product’s market price. This strategy protects workers and farmers from the various price fluctuations for those products they cultivate for a living. Through this price protection mechanism, farmers get a stable income generation and can undertake future planning. 2. Working Conditions i) Protection of workers’ rights. According to Grigson (2008), Fairtrade comes in and certifies certain agricultural products such as bananas, teas and flowers, since they absorb a number of laborers on estates. Since the productions undertaken in these plantations are large scale, the Fairtrade comes in to protect the workers’ primary rights. Among these rights include; their rights to safety and health, freedom of association, as well as bargaining that gets done collectively. The aim of these is to do away with workers’ discrimination, preventing bonded and other cases of child labor. ii) Good wages for workers. In these large plantations, Fairtrade ensures that the workers get paid wages that are progressive towards in the directions of the set living wage benchmarks. They demand for decent work condition and conducive working environment for the workers and strong workers’ rights in general (BERNDT, 2007). 3. Terms of Trade i) Giving fifty percent shares to the producers. According to Berndt (2007), half of the shares of Fairtrade get owned by producers who stand in for the farmers workers unions. The other remaining 50% get owned by various stakeholders who are interested in the organization’s investments. The producers have the freedom of expression and equal voice hence the ability to contribute in all the stages of decision making. They get allowed to come in and make decisions on different matters pertaining resources usage, setting of prices, premiums and the required standards. ii) Fairtrade Town. This is whereby the different campaigns are carried out, together with the local community, by the organization with the prime purpose of creating and boosting awareness and comprehension of the trade issues. In these awareness rallies, the different consumers get sensitized of the importance they impact in the lives of various farmers and workers by purchasing these farm products. Those communities and institutions who declare themselves as a Fairtrade Town, they have to continue campaigning as well as increasing in awareness creation. iii) Fairtrade International. It is also known as Fairtrade Labeling Organizational International, and it get comprised of all the other global partner organizations of Fairtrade Foundation. According to Das (2009), this particular global organization plays a major role of coming up with products that get set with Fairtrade standardizations. It plays a role of supporting small scale famers and workers, both in small and large plantations, as well as undertaking global certification and the different auditing mechanisms. Through the process of developing and reviewing of the globally set Fairtrade stand, the farmers and workers find the best opportunity to outdo other competitors in the harsh global market climate. This means that the farmers and workers in these particular small-scale plantations under Fairtrade will maximize their sales and hence realizing high levels of revenue. iv) Fairtrade Certified Producer Group. This refers to an association of farmers or other agricultural corporations that rely on hired workers who specialize in the production of a single or more commodities that have undergone certification to meet the Fairtrade standards. If they get certified and their approval made, they get included in the Fairtrade registry and various companies can purchase them. Therefore the producers in these groups, get the opportunity to sell all their entire agricultural products under Fairtrade terms (Das, 2009). They finally find themselves receiving streams of income which they can use to upgrade their living standards and conditions. Conclusion The assumptions that have always gotten made that the different forces of demand and supply will bring market equilibrium have instead led to market failure. The different capitalists in the agribusiness sectors, cultivating large plantations tend to eliminate the small scale farmers from the market, so that they can enjoy monopoly power. Fairtrade have therefore come in for the purpose of protecting the infant farmers. The Fairtrade Organization has stabilized prices for the small-scale producers through Fairtrade trademark, certification of small-scale farmer’s organizations, Fairtrade premiums and minimum price. It has created good working conditions for workers in the large agricultural plantations through protection of worker’s rights and fighting for good wages for these workers. It has further established fair terms of trade for farmers and workers through Fairtrade town, giving 50% shares to producers, Fairtrade certified producer group and Fairtrade international. These farmers and workers have therefore found themselves in different positions for survival in the market as well as bettering up their lives. Bibliography Arnould, E., 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), pp.186-201. BERNDT, C. E. H. (2007). Does Fair Trade coffee help the poor? Evidence from Costa Rica and Guatemala. George Mason University Global Prosperity Project. Mercatus Center: Arlington.  Das, R. (2009). Compromising social justice in fairtrade?. The Hague: Institute of Social Studies. Grigson, S. (2008). The Fairtrade everyday cookbook. London: Dorling Kindersley. Lamb, H. (2008). Fighting the banana wars and other fairtrade battles. London: Rider. Ronchi, L. (2006). "Fairtrade" and market failures in agricultural commodity markets. Washington, D.C.: World Bank, Africa Region, Environmentally and Socially Sustainable Development Network. Santacoloma, P., Suárez, R. and Riveros, H. (2007). Strengthening agribusiness linkages with small-scale farmers. Rome: Food and Agriculture Organization of the United Nations. Valiente-Riedl, E. (n.d.). Is fairtrade fair?. Read More