Fair Trade - Essay Example

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In fact, the United Kingdom uses more than 1.3 billion pounds on fair trade marked products. A 2011 study done by Hainmueller, Hiscox and Sequeira in the USA found out that the demand of fair trade badged…
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Fair Trade
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Download file to see previous pages The minimum price is set such that it can never be below the current market price or level. Despite fair trade gaining momentum and increasing in the United Kingdom and the world over, the fair trade concept is generally unfair.
Proponents of fair trade argue that the scheme is meant to help farmers to meet the average costs of production in developing nations. Through the fair trade scheme, farmers and workers are accorded better financing, premiums and a basic set price which is intended to cushion farmers when the world market price falls. All these factors lead to better financial stability for the producers. However, the concept of financial stability of fair trade farmers is very weak (Mohan, 2010). Farmers have to pay certification fees, application fees and renewal certification charges and in the end, these costs are too great for the farmers. A 2009 study undertaken by Saenz-Segura and Zuniga-Arias’ found out that the costs associated with fair trade consume more than a third of fair trade premiums received by farmers. As such, fair trade does not have a significant financial impact on the farmers or producers (Raluca, Giovannucci & Nunn, 2014). Additionally, the financial stability promised by fair trade is often non-existent. Despite the fact that the minimum set price offers farmers some assurance, they are not assured of selling their products as fair trade. Therefore, farmers have to endure financial uncertainty just like all other farmers. Also, according to Sidwell (2008), only a fraction (10%) of the premiums reaches the farmer or worker.
Fair trade is meant to improve the lives of farmers in developing countries. Thus, proponents state that fair trade helps to end poverty in poor countries. On the contrary, fair trade encourages and promotes poverty. A lot of farmers who have benefited from the fair trade scheme reside in Mexico, ...Download file to see next pagesRead More
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