The Benefits of Fair Trade - Essay Example

THE BENEFITS OF FAIR TRADE     By Location Benefits of fair trade Introduction Fair trade is often describedas some sort of trading partnership that is rooted in dialogue, transparency and more interestingly respect that attempts to bring forth unity or rather togetherness in international trade (Decarlo 2007, p.5).It dates as far back as after the second world war but more precisely at the time when the Bretton Woods Institution (World Bank and International Monetary Fund) and the General Agreement on Tariffs and Trade were being created (Jaffee 2007, p.12).International trade has been perceived as unfair for the longest time due to its adverse impact on human beings and the environment (Jaffee 2007, p. 11).The impact of this unfair trade on humans is reflected for instance through the displacement of subsistence farmers, great and prolonged hunger periods due to the conversion of land for crop exportation and cheap agricultural imports that undermine the existence of small producers. It is for this reason that fair trade exists so as to make an attempt to curb this outright structural injustice; therefore, fair trade does a great job at defending its workers and producers for example by ensuring that they are given desirable and fit working conditions. Considering how unjust and unfair international trade seems to be, fair trade advocates for necessary changes in the rules and regulations that are meant to govern the international trade just to guarantee the well-being of the producers and workers. It is only appropriate to say that justice is the main founding block of fair trade as it operates as some sort of social justice system that attempts to alter any existing unjust terms of trade that often oppress the small- scale producers. Fair trade sees to it that justice is upheld by having the largest share of the consumer’s purchase price directly returned to the farmers (Jaffee 2007, p. 1). Fair trade is centered on more humanitarian aspects other than real economic factors. It emphasizes on features that reflect get concern for the person, what psychologists would term as a person-centred kind of approach. For instance, other than focusing on prices it pays attention to equitable payment for the producers and workers, long-term relationships, advance credit, democratic organization by small farmers and environmental benefits. Fair trade can hence be said to focus on inserting noneconomic values like morality, integrity, respect, decency, sustainability, security and even communal living into every other day market transactions (Jaffee 2007, p.24).This is the aspect that appears impractical and somewhat unattainable when one hears of fair trade, however this trade has continued to grow showing an upsurge in product sales in the market. All the same, irrespective of how the depiction given concerning fair trade appears appealing; it does face some serious challenges from time to time. Fair trade has been doubted to make any economic sense (Dragusanu, Giovannucci& Nunn 2014, p.217). Its growing process has not been all easy considering it has had to fight its way through powerful mainstream market players who are established on and strictly apply and adhere to the principles and actual concepts of economics such as proper risk aversion after risk calculation, the application of average-cost pricing so as to ensure the firm gets a fair rate of returns on the investment previously invested, this is actualized by increasing output among others. All of these concepts though somewhat ironical do contradict the overall goal and purpose of fair trade which is social justice. Justification Given the above description of what fair trade is known to be, I completely and with one accord dispute and do not agree whatsoever with the notion that fair trade has no significant benefits. Fair trade is an area that seems to attract diverse interpretations and manifestations from different individuals. This only reveals that people have not really internalized what it really is about; thus it is of essence that people understand and accurately analyze fair trade as it is a crucial part of the solution towards fighting and eradicating poverty and marginalization. Poverty is an issue that is widespread even in emerging economies such as Japan, it thrives economically in the global realm but its vast population suffers greatly from adverse poverty. This then causes me to wonder how important it is to prosper economically while the larger population are suffering, some going without meals. The gap between the rich and the poor continues to widen as the producers in small-scale settings continue to suffer at the hands of importers, brokers and agents. According to the United Nations findings, every individual requires a minimum of 4 $ in a day to live a basic and decent life (Decarlo 2007, p.6). Realistically speaking though, this is not the case all over the world as of the estimated 6.5 billion people in the world; 4 billion are unable to live a decent life. As fair trade pursues social justice it attempts to deal with such discrepancies in the human race. Therefore, challenges notwithstanding, fair trade seems to bring more transformation not just economically but also from an individual level. Principles of Fair trade It is founded on various principles that further bring out the benefits it has; the principles will clearly bring out the tangible idea concerning fair trade. To start with, fair trade advocates for price floors which are prices that cover the cost of production, cover the cost of family provision and cover the cost for farm improvements (Nicholls & Opal 2005, p.6).This prices are often set fairly after evaluating the existing economic conditions and dialogue between the buyers and producers is conducted and an agreement is reached. This price floors are normally for the purpose of ensuring that regardless of what happens at the market place such as low consumer intake; the producers have a living wage from their work. An amount of money that they can manage with so as to keep them grounded. This shows that fair trade indeed can make a significant contribution to improving the lives of producers and workers. Fair trade can further contribute to the development of a nation through the creation of the capacity to build factories, schools and hospitals (Johanson 2010, p.28).Development as a principle of fair trade is founded on the social premium that is often availed to the producers. The premium is usually 10 percent or more of the cost price of goods, the producers’ form co-operatives under which they collectively invest in or implement larger projects like setting up of schools. The producers hence are empowered to come out of poverty through trade and not aid in terms of loans and financial assistance form elsewhere. This further shows that fair trade pursues development even in the larger community for instance, through the construction of health-centers and other essential facilities. In fair trade, the principle of direct purchasing from producers lessens the level of oppression and marginalization that peasant producers would otherwise face. Fair trade aims at giving disadvantaged producers an opportunity to access the market under beneficial rather than exploitative terms (Nicholls & Opal 2005, p.6).This then allows producers to expand their businesses through international trade as they escape the reach of intermediaries like brokers, agents or exporters who may have ulterior motives. At the end of the day this ensures that the day producers access the final price of the goods. This keeps poverty at bay and other societal ills like corruption are also curbed. Fair trade also advocates for co-operative dealings wherein the buyer- producer relationship is built on mutual respect. The consumer hence is assured of attaining value as products will be of good quality and the supply will be consistent so as to meet demand in the market. Respect is important in economic ventures and businesses as it brings in a sense of appreciation, once the producer feels important then they work hard to equal the feeling or even far beyond. This puts extra costs (appraisal costs or price of non-conformance) at bay that would have otherwise been incurred if a producer slacks at their job; ultimately reducing the cost of production. This is quite a highlight of fair trade, toxic relationships are a hazard to business, economic or organizational success across the board. Conclusion Fair trade promotes mainstream production and trade routes through product certification and labeling of products made under fair trade conditions (Hutchens 2009, p.4).In completion, practicing fair trade translates into ample good such as: securing of just prices, reduction of poverty levels, achievement of sustainable farming, enhancement of food security and even further the empowerment of people who would otherwise give up on life. It is evident that fair trade endeavors to combat poverty in all ways by avoiding mere activist- led advocacy as it first started out to being more of a consumer-driven phenomenon based on the growth of ethical consumption more generally. Essentially, fair trade aims at shifting the focus of the world’s economy from currency to community, it is important. In no way can fair trade be disregarded it does play a huge role in economic and personal advancement. Bibliography Decarlo, J 2007 Fair trade, Oneworld Publications, England. Dragusanu, R., Giovannucci, D & Nunn, N 2014, ‘The Economics of fair trade’, the Journal of Economic perspectives, vol. 28, no. 3, pp. 217- 236. Hutchens, A 2009 Changing Big Business: the Globalisation of the fair trade movement, Edward Elgar Publishing Limited, United Kingdom. Jaffee, D 2007 Brewing Justice: fair trade coffee, sustainability and survival, University of California Press, Los Angeles. Johanson, P 2010 making good choices about fair trade, Rosen Publishing Group, New York. Nicholls, A & Opal, C 2005 Fair trade: market- driven ethical consumption, Sage Publications, London. Pederson, A 2014, ‘Viewpoint: Fair Trade and Human Rights in the End-to-End Supply Chain’, Supply Chain Management Review, Vol. 18, no.6, pp. 44- 48. Read More