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Fair trade is a social movement whose stated goal is to help producers in developing countries achieve better trading conditions. Members of the movement advocate the payment of higher prices to exporters, as well as improved social and environmental standards. IMO, Make Trade Fair and Eco-Social. The fair trade movement is popular in the UK, where there are 500 Fairtrade towns, 118 universities, over 6,000 churches, and over 4,000 UK schools registered in the Fairtrade Schools Scheme. Some criticisms have been raised about fair trade systems. One 2015 study in a journal published by the MIT Press concluded that producer benefits were close to zero because there was an oversupply of certification, and only a fraction of produce classified as fair trade was actually sold on fair trade markets, just enough to recoup the costs of certification. There are a large number of fair trade and ethical marketing organizations employing different marketing strategies.
The marketing system for fair trade and non-fair trade coffee is identical in the consuming countries, using mostly the same importing, packing, distributing and retailing firms. Some independent brands operate a “virtual company”, paying importers, packers and distributors and advertising agencies to handle their brand, for cost reasons. To become certified fair trade producers, the primary cooperative and its member farmers must operate to certain political standards, imposed from Europe. FLO-CERT, the for-profit side, handles producer certification, inspecting and certifying producer organizations in more than 50 countries in Africa, Asia, and Latin America. There remain many fair trade organizations that adhere more or less to the original objectives of fair trade, and that market products through alternative channels where possible, and market through specialist fair trade shops, but they have a small proportion of the total market. Fair trade is benefiting farmers in developing countries, whether that be considerably or just a little.
The nature of fair trade makes it a global phenomenon, therefore, there are diverse motives for understanding group formation related to fair trade. The social transformation caused by the fair trade movement also varies around the world. Teaching organic soil testing in Nicaragua. Three young Nicaraguan women demonstrate to visiting US buyers and consumers the use of organic soil testing methods. One is a manager, one is in charge of the wet mill, and one is his group’s treasurer. Many farmers around the world are unaware of fair trade practices that they could be implementing to earn a higher wage.
Some producers also profit from the indirect benefits of fair trade practices. Fair trade cooperatives create a space of solidarity and promote an entrepreneurial spirit among growers. When growers feel like they have control over their own lives within the network of their cooperative, it can be very empowering. Operating a profitable business allows growers to think about their future, rather than worrying about how they are going to survive in poverty. As far as farmers’ satisfaction with the fair trade system, the growers want consumers to know that fair trade has provided important support to their families and their cooperative.
Overall, farmers are satisfied with the current fair trade system, but some farmers, such as the Mazaronquiari group from CAC Pangoa, desire yet a higher price for their products in order to live a higher quality of life. A component of trade is the social premium that buyers of fair trade goods pay to the producers or producer-groups of such goods. An important factor of the fair trade social premium is that the producers or producer-groups decide where and how it is spent. These premiums usually go towards socioeconomic development, wherever the producers or producer-groups see fit. Producers and producer-groups spend this social premium to support socioeconomic development in a variety of ways. One common way to spend the social premium of fair trade is to privately invest in public goods that infrastructure and the government are lacking in.
These public goods include environment initiatives, public schools, and water projects. At some point, all producer-groups re-invest their social premium back into their farms and businesses. Farmers’ organisations that use their social premium for public goods often finance educational scholarships. For example, Costa Rican coffee co-operative, Coocafé, has supported hundreds of children and youth at school and university through the financing of scholarships from funding from their fair trade social premium. In terms of education, the social premium can be used to build and furnish schools too. Most of the fair trade import organizations are members of, or certified by one of several national or international federations.
These federations coordinate, promote, and facilitate the work of fair trade organizations. 1997, is an association of three producer networks and twenty national labeling initiatives that develop Fairtrade standards, license buyers, label usage and market the Fair trade Certification Mark in consuming countries. Fair Trade USA is an independent, nonprofit organization that sets standards, certifies, and labels products that promote sustainable livelihoods for farmers and workers and protect the environment. Founded in 1998, Fair Trade USA currently partners with around 800 brands, as well as 1.
3 million farmers and workers across the globe. 1989 of fair trade producer cooperatives and associations, export marketing companies, importers, retailers, national, and regional fair trade networks and fair trade support organizations. 1994, is the umbrella network of 15 national worldshop associations in 13 different countries all over Europe. 1990, is a network of European alternative trading organizations which import products from some 400 economically disadvantaged producer groups in Africa, Asia, and Latin America.
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In 1998, the first four federations listed above joined together as FINE, an informal association whose goal is to harmonize fair trade standards and guidelines, increase the quality and efficiency of fair trade monitoring systems, and advocate fair trade politically. 1994, is an association of Canadian and American fair trade wholesalers, importers, and retailers. The organization links its members to fair trade producer groups while acting as a clearinghouse for information on fair trade and providing resources and networking opportunities to its members. Student groups have also been increasingly active in the past years promoting fair trade products. The current fair trade movement was shaped in Europe in the 1960s.
Fair trade during that period was often seen as a political gesture against neo-imperialism: radical student movements began targeting multinational corporations and concerns that traditional business models were fundamentally flawed started to emerge. British NGO Oxfam launched “Helping-by-Selling”, a program which sold imported handicrafts in Oxfam stores in the UK and from mail-order catalogues. By 1968, the oversized newsprint publication, the Whole Earth Catalog, was connecting thousands of specialized merchants, artisans, and scientists directly with consumers who were interested in supporting independent producers, with the goal of bypassing corporate retail and department stores. In 1969, the first worldshop opened its doors in the Netherlands. The initiative aimed at bringing the principles of fair trade to the retail sector by selling almost exclusively goods produced under fair trade terms in “underdeveloped regions”. Throughout the 1960s and 1970s, important segments of the fair trade movement worked to find markets for products from countries that were excluded from the mainstream trading channels for political reasons.
In the early 1980s, Alternative Trading Organizations faced major challenges: the novelty of some fair trade products began to wear off, demand reached a plateau, and some handicrafts began to look “tired and old fashioned” in the marketplace. The decline of segments of the handicrafts market forced fair trade supporters to rethink their business model and their goals. In the subsequent years, fair trade agricultural commodities played an important role in the growth of many ATOs: successful on the market, they offered a much-needed, renewable source of income for producers and provided Alternative Trading Organizations a complement to the handicrafts market. The first fair trade agricultural products were tea and coffee, quickly followed by: dried fruits, cocoa, sugar, fruit juices, rice, spices and nuts. Sales of fair trade products only really took off with the arrival of the first Fairtrade certification initiatives. Although buoyed by ever growing sales, fair trade had been generally contained to relatively small worldshops scattered across Europe and to a lesser extent, North America.
Some felt that these shops were too disconnected from the rhythm and the lifestyle of contemporary developed societies. A solution was found in 1988, when the first Fairtrade certification initiative, Max Havelaar, was created in the Netherlands under the initiative of Nico Roozen, Frans Van Der Hoff, and Dutch development NGO Solidaridad. The concept caught on: in the ensuing years, similar non-profit Fairtrade labelling organizations were set up in other European countries and North America. In 2002, FLO launched for the first time an International Fairtrade Certification Mark. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, facilitate cross border trade, and simplify procedures for both producers and importers. With the rise of ethical labeling, consumers are able to take moral responsibility for their economic decisions and actions.
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This supports the notion of fair trade practices as “moral economies. The presence of labeling give consumers the feeling of “doing the right thing” with a simple purchase. These labeling practices place the burden of getting certification on the producers in the Global South, furthering inequality between the Global North and the Global South. The process of securing certification is excessively burdensome and expensive. Northern consumers are able to just make a simple choice without these burdens and expenses. Consumers of fair trade products usually make the intentional choice to purchase rair trade goods based on attitude, moral norms, perceived behavioral control, and social norms. It is useful to include of measure of moral norms to improve the predictive power of intentions to buy fair trade over the basic predictors, like attitude and perceived behavioral control.
University students have significantly increased their consumption of fair trade products over the last several decades. Women college students have a more favorable attitude than men toward buying fair trade products and they feel more morally obligated to do so. Women are also reported to have stronger intentions to buy fair trade products. Producers organize and strive for fair trade certification for several reasons, either through religious ties, wants for social justice, wants for autonomy, political liberalization, or simply because they want to be paid more for their labor efforts and products. Fairtrade certification purports to guarantee not only fair prices, but also the principles of ethical purchasing. The Fairtrade certification system covers a growing range of products, including bananas, honey, coffee, oranges, Cocoa bean, cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea, and wine.
Companies offering products that meet the Fairtrade standards may apply for licences to use one of the Fairtrade Certification Marks for those products. Cafedirect coffee shop on Regent Street in central London. Fair Trade movement, aiming “to contribute to the alleviation of poverty in developing regions of the world by establishing a system of trade that allows marginalized producers in developing regions to gain access to developed markets”. Alternative trading organizations are often, but not always, based in political and religious groups, though their secular purpose precludes sectarian identification and evangelical activity. The concept of a Fair Trade school or Fair Trade university emerged from the United Kingdom, where the Fairtrade Foundation now maintains a list of colleges and schools that comply with the needed requirements to be labeled such a university. In order to be considered a Fair Trade University, a school or university must have established a Fairtrade School Steering Group.
A Fair Trade University is one that develops all aspects of Fair Trade practices in their coursework. In 2007, the Director of the Environmental Studies program at the University of Wisconsin-Oshkosh, David Barnhill, started a push to become the first Fair Trade University. This push received positive reactions from faculty and students. The University of Wisconsin- Oshkosh also offers many courses in many different disciplines that implement fair trade learning. In the spring of 2010, the University of California, San Diego became the second Fair Trade University in the United States.
Fair Trade Universities have been successful because they are a “feel good” movement. The movement also has an established history, making it a true movement rather just a fad. Thirdly, Fair Trade Universities are effective because they raise awareness about an issue and offer a solution. The solution is an easy one for college students to handle, just paying about five cents more for a cup of coffee or tea can make a real difference.
Worldshops or fair trade shops are specialized retail outlets offering and promoting fair trade products. Worldshops also typically organize various educational fair trade activities and play an active role in trade justice and other North-South political campaigns. Worldshops are often not-for-profit organizations and run by locally based volunteer networks. Worldshops’ aim is to make trade as direct and fair with the trading partners as possible. Usually, this means a producer in a developing country and consumers in industrialized countries. The worldshops’ target is to pay the producers a fair price that guarantees substinence and guarantees positive social development.
In 2002, 16,000 tons of Fairtrade coffee was purchased by consumers in 17 countries. Africa’s exports come from the places such as South Africa, Ghana, Uganda, Tanzania and Kenya. Kenya, following closely behind are Tanzania and South Africa. Studies in the early 2000s show that the income, education and health of coffee producers involved with Fair Trade in Latin America were improved, versus producers who were not participating. The Asia Fair Trade Forum aims to increase the competency of fair trade organizations in Asia so they can be more competitive in the global market. Garment factories in Asian countries including China, Burma, and Bangladesh consistently receive charges of human rights violations, including the use of child labour.
The first is the Australia and New Zealand member of FLO International, which unites Fairtrade producer and labelling initiatives across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand. 450 worldwide members, to which FTAANZ is one. Fair trade commodities are goods that have been exchanged from where they were grown or made to where they are purchased, and have been certified by a fair trade certification organization, such as Fair Trade USA or World Fair Trade Organization. Such organizations are typically overseen by Fairtrade International. Coffee is the most well-established fair trade commodity.
Most Fair Trade coffee is Coffea arabica, a type of coffee known to be grown at high altitudes. A lot of emphasis is put on the quality of the coffee when dealing in Fair Trade markets because Fair Trade markets are usually specialized markets that appeal to customers who are motivated by taste rather than price. Internationally recognized Fair Trade coffee standards have been outlined by FLO and are as follows: small producers are grouped in democratic cooperatives or groups, buyers and sellers establish long-term, stable relationships, buyers must pay the producers at least the minimum Fair Trade price or when the market price is higher, they must pay the market price, and finally, buyers must also pay a social premium of 20 cents per pound of coffee to the producers. The largest sources of fair trade coffee are Uganda and Tanzania, followed by Latin American countries such as Guatemala and Costa Rica. As of 1999, major importers of fair trade coffee included Germany, the Netherlands, Switzerland, and the United Kingdom.
South divide between fair trade consumers and producers. Starbucks began to purchase more fair trade coffee in 2001 because of charges of labor rights violations in Central American plantations. Several competitors, including Nestlé, followed suit. Unsustainable farming practices can harm plantation owners and laborers. Unsustainable practices such as using chemicals and unshaded growing are risky. Small growers who put themselves at economic risk by not having diverse farming practices could lose money and resources due to fluctuating coffee prices, pest problems, or policy shifts. Fairtrade farms have a lower standard of living than on similar farms outside the Fairtrade system.
As coffee becomes one of the most important export crops in certain regions such as northern Latin America, nature and agriculture are transformed. Increased productivity requires technological innovations, and the coffee agroecosystem has been changing rapidly. In the nineteenth century in Latin America, coffee plantations slowly began replacing sugarcane and subsistence crops. Fair trade certified commodities must adhere to sustainable agro-ecological practices, including reduction of chemical fertilizer use, prevention of erosion, and protection of forests. Coffee plantations are more likely to be fair trade certified if they use traditional farming practices with shading and without chemicals.
This protects the biodiversity of the ecosystem and ensures that the land will be usable for farming in the future and not just for short-term planting. Consumers typically have positive attitudes for products that are ethically made. These products may include promises of fair labor conditions, protection of the environment, and protection of human rights. All fair trade products must meet standards such as these. Despite positive attitudes toward ethical products including fair trade commodities, consumers often are not willing to pay the higher price associated with fair trade coffee. Many countries that export cocoa rely on cocoa as their single export crop.
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In Africa in particular, governments tax cocoa as their main source of revenue. Cocoa is a permanent crop, which means that it occupies land for long periods of time and does not need to be replanted after each harvest. Cocoa is farmed in the tropical regions of West Africa, Southeast Asia, and Latin America. In Latin America, cocoa is produced in Costa Rica, Panama, Peru, Bolivia, and Brazil. Much of the cocoa produced in Latin America is an organic and regulated by an Internal control system.
Bolivia has fair trade cooperatives that permit a fair share of money for cocoa producers. One suggestion for the reason that laborers in Africa are marginalized in world trade is because the colonial division of labor kept Africa from developing its own industries. Africa and other developing countries received low prices for their exported commodities such as cocoa, which caused poverty to abound. Fair trade seeks to establish a system of direct trade from developing countries to counteract this unfair system. The marketing of fair trade cocoa to European consumers often portrays the cocoa farmers as dependent on western purchases for their livelihood and well-being. Showing African cocoa producers in this way is problematic because it is reminiscent of the imperialistic view that Africans cannot live happily without the help of westerners. It puts the balance of power in favor of the consumers rather than the producers.
Consumers often aren’t willing to pay the extra price for fair trade cocoa because they do not know what fair trade is. Activist groups are vital in educating consumers about the unethical aspects of unfair trade and promoting demand for fairly traded commodities. Smallholding farmers not only frequently lack access to markets, they lack access to resources that lead to sustainable cocoa farming practices. Lack of sustainability can be due to pests, diseases that attack cocoa trees, lack of farming supplies, and lack of knowledge about modern farming techniques. The Harkin-Engel Protocol, also commonly known as the Cocoa Protocol, is an international agreement that was created to end some of the world’s worst forms of child labor, as well as forced labor in the cocoa industry. Public statement of the need for and terms of an action plan—The cocoa industry acknowledged the problem of forced child labor and will commit “significant resources” to address the problem.
Formation of multi-sectoral advisory groups—By 1 October 2001, an advisory group will be formed to research labor practices. By 1 December 2001, industry will form an advisory group and formulate appropriate remedies to address the worst forms of child labor. Signed joint statement on child labor to be witnessed at the ILO—By 1 December 2001, a statement must be made recognizing the need to end the worst forms of child labor and identify developmental alternatives for the children removed from labor. Memorandum of cooperation—By 1 May 2002, Establish a joint action program of research, information exchange, and action to enforce standards to eliminate the worst forms of child labor.
Establish a monitor and compliance with the standards. Establish a joint foundation—By 1 July 2002, industry will form a foundation to oversee efforts to eliminate the worst forms of child labor. It will perform field projects and be a clearinghouse on best practices. Building toward credible standards—By 1 July 2005, the industry will develop and implement industry-wide standards of public certification that cocoa has been grown without any of the worst forms of child labor. Fair trade textiles are primarily made from fair trade cotton.
By 2015, almost 75,000 cotton farmers in developing countries have obtained Fairtrade certification. The minimum price that Fair trade pays allows cotton farmers to sustain and improve their livelihoods. India, Pakistan and West Africa are the primary exporters of fair trade cotton, although many countries grow fair trade cotton. Textiles and clothing are exported from Hong Kong, Thailand, Malaysia, and Indonesia. Labour is different for textile production than for agricultural commodities because textile production takes place in a factory, not on a farm. Children provide a source of cheap labor, and child labor is prevalent in Pakistan, India, and Nepal. Fair trade cooperatives ensure fair and safe labor practices, including disallowing child labor.
However, making cotton and textiles fair trade does not always benefit laborers. Burkina Faso and Mali export the largest amount of cotton in Africa. Although many cotton plantations in these countries attained fair trade certification in the 1990s, participation in fair trade further ingrains existing power relations and inequalities that cause poverty in Africa rather than challenging them. Textiles and garments are intricate and require one individual operator, in contrast to the collective farming of coffee and cocoa beans. Textiles are not a straightforward commodity because to be fairly traded, there must be regulation in cotton cultivation, dyeing, stitching, and every other step in the process of textile production. Forced or unfair labor in textile production is not limited to developing countries. Charges of use of sweatshop labor are endemic in the United States.
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Immigrant women work long hours and receive less than minimum wage. In the United States, there is more of a stigma against child labor than forced labor in general. With increasing media scrutiny of the conditions of fishermen, particularly Southeast Asia, the lack of transparency and traceability in the seafood industry prompted new efforts. In 2014, Fair Trade USA created its Capture Fisheries Program that led to the first instance of Fair Trade fish being sold globally in 2015. Large transnational companies have begun to use fair trade commodities in their products.
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In April 2000, Starbucks began offering fair trade coffee in all of their stores. In 2005, the company promised to purchase ten million pounds of fair trade coffee over the next 18 months. Much contention surrounds the issue of fair trade products becoming a part of large companies. There have been efforts to introduce fair trade practices to the luxury goods industry, particularly for gold and diamonds.
In parallel to efforts to commoditize diamonds, some industry players have launched campaigns to introduce benefits to mining centers in the developing world. Rapaport Fair Trade was established with the goal “to provide ethical education for jewelry suppliers, buyers, first time or seasoned diamond buyers, social activists, students, and anyone interested in jewelry, trends, and ethical luxury. Brilliant Earth has committed itself to using fair-trade-certified gold. In February 2011, the United Kingdom’s Fairtrade Foundation became the first NGO to begin certifying gold under the fair trade rubric. In 1994, the European Commission prepared the “Memo on alternative trade” in which it declared its support for strengthening Fair Trade in the South and North and its intention to establish an EC Working Group on Fair Trade.
In 2000, public institutions in Europe started purchasing Fairtrade Certified coffee and tea. A proposal for an EU Action Plan”, with a specific reference to the Fair Trade movement which has “been setting the trend for a more socio-economically responsible trade. In 2005, French parliament member Antoine Herth issued the report “40 proposals to sustain the development of Fair Trade”. In 2006, Italian lawmakers started debating how to introduce a law on fair trade in Parliament.
A consultation process involving a wide range of stakeholders was launched in early October. A common definition of fair trade was most notably developed. The Dutch province of Groningen was sued in 2007 by coffee supplier Douwe Egberts for explicitly requiring its coffee suppliers to meet fair trade criteria, most notably the payment of a minimum price and a development premium to producer cooperatives. This article’s Criticism or Controversy section may compromise the article’s neutral point of view of the subject.
Sometimes the criticism is intrinsic to fair trade, sometimes efficiency depends on the broader context such as the lack of government help or volatile prices in the global market. Studies have shown a significant number of consumers were content to pay higher prices for fair trade products, in the belief that this helps the poor. The Fairtrade Foundation does not monitor how much extra retailers charge for fair trade goods, so it is rarely possible to determine how much extra is charged or how much reaches the producers, in spite of l unfair trading legislation. In four cases it has been possible to find out. The Fairtrade Foundation does not monitor how much of the extra money paid to the exporting cooperatives reaches the farmer. The cooperatives incur costs in reaching fair trade political standards, and these are incurred on all production, even if only a small amount is sold at fair trade prices.
The most successful cooperatives appear to spend a third of the extra price received on this: some less successful cooperatives spend more than they gain. Anecdotes state that farmers were paid more or less by traders than by fair trade cooperatives. Few of these anecdotes address the problems of price reporting in developing world markets, and few appreciate the complexity of the different price packages which may or may not include credit, harvesting, transport, processing, etc. A 2015 study concluded that the low barriers to entry in a competitive market such as coffee undermines any effort to give higher benefits to producers through fair trade. They used data from Central America, to establish that the producer benefits were close to zero.
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This is because there is an oversupply of certification, and only a fraction of produce classified as fair trade is actually sold on fair trade markets, just enough to recoup the costs of certification. Critics argue that fair trade harms all non-Fairtrade farmers. Fair trade claims that its farmers are paid higher prices and are given special advice on increasing yields and quality. Philip Booth says that the selling techniques used by some sellers and some supporters of fair trade are bullying, misleading, and unethical. There are problems with the use of boycott campaigns and other pressure to force sellers to stock a product they think ethically suspect.
They may make transparent corporate vulnerabilities that activists can exploit. Or they may encourage ordinary people to get involved with broader projects of social change. There are complaints that the standards are inappropriate and may harm producers, sometimes making them work several months more for little return. Adherence to fair trade standards by producers has been poor, and enforcement of standards by Fairtrade is weak.
Segments of the trade justice movement have also criticized fair trade in the past years for allegedly focusing too much on individual small producer groups while stopping short of advocating immediate trade policy changes that would have a larger effect on disadvantaged producers’ lives. There have been largely political criticisms of fair trade from the left and the right. Some believe the fair trade system is not radical enough. Fair Trade from the Ground Up. Proceedings of the Third Scientific Conference of the International Society of Organic Agriculture Research, Namyangju, Korea, pp. Fair Trade and Free Entry: Can a Disequilibrium Market Serve as a Development Tool?