Fair Trade Provides No Significant Benefits - Article Example

Fair Trade Provides No Significant Benefits Fair trade is a labelling initiative that mainly aims at improving individuals lives especially the poor in the developing countries by providing better terms to producers (Dragusanu, Giovannucci and Nunn 2014, p.217). It is “a trading partnership that is based on dialogue, respect and transparency, and it seeks greater equity in international trade” (Gould 2003, p.342). Indeed, fair trade promotes sustainable living standards for producers and workers and protects the environment accordingly. Normally, fair trade connects producers and consumers in more equitable, meaningful and sustainable ways, that is, it shortens the distance between producers and consumers (Bezençon 2009, p.66). It aims at using market-based strategies to mobilize consumer awareness to help marginalized producers acquire a position of greater economic security. That is, it intends to enable sustainable development by establishing a trade model that ensures equality and is beneficial to every stakeholder in the society and the environment. Fair trade concentrates more on the exports from Third World countries to industrialized countries. Advocates for fair trade believe that fair trade has significant benefits to the farmers, consumers and the environment whereas the critics of fair trade argue that this scheme has many disadvantages than benefits. This paper presents an argument seeks to establish and ascertain that fair trade provides no significant benefits. Fair trade requirements are damaging since they are a reflection of the biased views of Western patrons as opposed to the genuine desires of poor farmers. Specifically, it is not necessarily the benefits that accrue to the poor farmers that indicate what the first-class clients want to pay but the payments are made based on what Western clients consider being good for unfortunate producers (Mohan 2010, p.65). For instance, the certified fair trade limits casual labour and prohibits child labour, but I most cases, many poor families send their children to work in order to assist in providing a basic income for the family. In this case, prohibiting child labour may be damaging especial for the poor families. According to the fair trade foundation, the social premium ensures that children are able to go to schools instead of working. However, this does not change the damage caused by child labour prohibition on poor families. Opponents of fair trade believe that it would be better if such problems are managed by poor families themselves and not by the impositions of Western consumers. Moreover, fair trade is exclusive and damages other suppliers; moreover, it does not tend to assist the poorest producers, the demand for whose product may actually fall because of Fair Trade. With the complex entry requirements and increased completion in fair trade markets, the critics question fair trade’s capability to target marginalized producers (Mohan 2010, p.62). Agreeably, procedures like the requirement to join or establish a successful cooperative especially in case of coffee and cocoa producers imply that fair trade needs significant scheme and basic capacities which prevent some producers from participating, for instance, entering the fair trade coffee market presents major challenges for some producers especially those with limited resources. In addition, challengers of fair trade argue that it is unethical in that consumers accept paying more for fair trade products in the belief that by doing so, they are helping the very poor. Fair trade claims that the money is paid directly to the producers while in real sense, these producers rarely receive any reasonable part of the price premium (Pederson 2014, p.47). Notably, this money is diverted from the very poor producers to businesses in rich countries, moderately poor farmers, and to employees of cooperatives and as a result, there is an increase in death and destitution among the poorest farmers. Therefore, there is no doubt that the poor farmers receive the extra money paid by consumers on their products and this indicates how fair trade harms non-fair trade farmers. Undeniably, fair trade does not necessarily provide significant benefits especially to the poor producers because little or no extra money paid reaches the developing country and the poor farmers. This happens because the Fair Trade Foundation does not check the total of money charged by the retailers for the fair trade goods as well as the money that the producers get. In addition, this foundation does not observe the amount of additional money paid to the exporting organizations reaches the producer, and this way, the poor farmers remain being the victims and poorer because of fair trade. Further, fair trade depends too much on cooperatives and it has been criticized for insisting on producers, especially coffee and cocoa producers, to join a cooperative in order to be allowed to supply the fair trade market (Mohan 2010, p.66). Indeed, this discriminates against the producers who satisfy other standards but are not willing to join a cooperative. Moreover, this also implies side lining the majority of farm workers who are working in corporate organizations. Arguably, there are no clear lines of accountability in these cooperatives, for example, a cooperative can get a higher price for its produce but pay lower price to the members. In addition, fair trade is not beneficial to all as it ensures a minimum price to cooperatives of producers but not to individual producers. Critics also argue that fair trade helps the rich rather that the poorest farmers given that it is the rich and rich countries who benefit from it while the poor and the developing countries do not even receive a meaningful portion of the price premiums. They claim that fair trade is only beneficial and profitable for traders in rich countries as opposed to the producers in poor countries. Fair trade aims at richer farmers in that, joining fair trade comes with complex requirements and this means that the farmers must be skilful and well capitalized, and these for sure are far from the poorest farmers. Notably, most fair trade suppliers are in the higher or middle-income developing countries and only few come from the poorest countries. Therefore, it is not true that fair trade provides significant benefits especially to the poor producers. In addition, fair trade harms other farmers, non-fair trade farmers in particular; ideally, fair trade asserts that its farmers receive higher prices for their produce and are given appropriate training and advice on better techniques leading to increased output sold on the global market. However, economists claim that in most cases, many fair trade farmers get higher price and other get substantially lower prices. They argue further that when the global market price collapses, it is the non-fair trade farmers, especially the poorest farmers, who are forced to stop producing. In addition, fair trade also harms other farmers by diverting aid from other farms. For example, the cooperatives that join fair trade attract additional support from other organizations and international doors, and this implies that the resources are extracted from other poorer producers. On the contrary, advocates for fair trade are more convinced that fair trade provides significant benefits to various stakeholders. These individuals believe that fair trade provides tangible benefits to small-scale farmers and workers, communities, consumers and the environment. Firstly, fair trade benefits small-scale farmers and workers by increasing their annual incomes. Fair trade certification enables these farmers and workers to be economically independent and it improves their living standards at the same time. It also allows producers to live decently, acquire necessary skills, and obtain access to credit among others (Hulm 2006, p.17). Fair trade proponents claim that with the fixed price, farmers are able to invest more and so they are motivated to produce higher grade and quality products (Wilson 2006, p.27). Moreover, fair trade premiums allow farmers to better their communities by providing improved access to low interest loans, improved role in the trade of their produce, and technical training and skill diversification for societal members among others. Fair trade profits assist in building schools, healthcare centre, and communication systems among others. It also helps in developing technical training and credit programs, and all these improvements increase the living standards of individuals and the community at large. In addition, fair trade benefits consumers by giving them the option of purchasing goods according to their principles and values, assuring then the ethical source of their food, and lastly empowering them to be part of those solving problems in the global trade. Nevertheless, fair trade benefits the environment by rewarding and encourages farming and production practices that are environmentally sustainable (Fergus and Gray 2014, p.362). Small-scale farmers are encouraged to use organic agricultural techniques. Fair trade also encourages farmers to avoid using harmful pesticides and herbicides. In conclusion, fair trade is an initiative meant to improve the living standards of the poor producers in the developing countries since it provides better terms to producers and promotes sustainable living standards for both farmers and workers. More so, fair trade plays a leading role in shortening the distance between the farmers and consumers and connects them in a more reasonable and sustainable ways. Critics of fair trade claims that this system does not provide significant benefits as its requirements are damaging, it is exclusive and harms other suppliers, it is unethical, relies too much on cooperatives, it is meant to help the rich rather than the poorest farmers, and lastly it harms other non-fair trade farmers. Therefore, they strongly disagree with the proponents of fair trade who believe that it bring more benefits to the farmers, consumers, the environment and the community at large. References Bezençon, V., 2009. Producers and the Fair Trade Distribution Systems: What Are the Benefits and Problems?, Sustainable Development, 19(1), 60–70. Dragusanu, R., Giovannucci, D., and Nunn, N., 2014. The Economics of Fair Trade. Journal of Economic Perspectives, 28 (3), pp. 217-236. Fergus, Andrew H., and Gray Adina, 2014, Fair Trade Awareness and Engagement: A Coffee Farmer’s Perspective, Business and Society Review, 119:3, 359–384. Gould, N.J., 2003. Fair Trade and the Consumer Interest: A Personal Account, International Journal of Consumer Studies, 27(4), pp.341–345. Hulm, P 2006, Fair Trade, International Trade Forum, 2, pp. 15-19. Mohan, S., 2010, Fair Trade Without the Froth: A Dispassionate Economic Analysis of Fair Trade [online]. London: Institute of Economic Affairs, pp. 7-135. Pederson, A., 2014. Viewpoint: Fair Trade and Human Rights in the End-to-End Supply Chain, Supply Chain Management Review, 18 (6), pp. 44-48. Wilson, T., 2006. Macchiato Myths: The Dubious Benefits of Fair Trade Coffee [online]. Institute of Public Affairs Review: A Quarterly Review of Politics and Public Affairs, Vol. 58, No. 2, 24-27. Read More