Research project on Fair trade

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By Sander Lamme

Contents

Title page

Contents

Research question

Hypothesis

Method

General information about fair trade

Results by comparing articles

Analyses, Discussion & Conclusion

Comparison with hypothesis

Sources

Research question

I have decided to do my research project about fair trade. At the moment, fair
trade products are becoming increasingly common in supermarkets and the
products are definitely representing an important part of the market share. The
sudden increase in awareness of fair trade makes the mind wonder whether this
trade is really fair and if it should be encouraged. Therefore this projects
research question is: What is the effect of fair trade on society and is it doing
what it promises to do?

Hypothesis

In this research project I am going to find out what fair trade factually is and
why it has become so popular. This will help to answer the question what the
effect on society is. I will also research the effects of fair trade and compare if
that is what the people who bought the product expect. My hypothesis is that fair
trade makes people more aware of the subject but is perhaps not too well
regulated because of the sudden growth of products. This must be coordinated
accordingly and therefore an organisation should check if the regulations are
met. Therefore I suspect that that not all those rules are met.

Method

In this research my main source of information will be the internet and the
Fairtrade international organisation. To begin I will start to collect the general
information about Fair trade to understand what it means and how it works. The
reason for this, is that it will make me able to understand the articles which I will
compare afterwards. Out of this articles the information will be collected and
compared and a conclusion based on these sources shall be made. Finally I will
give my own opinion and see whether it has changed while working on this
research.

What is fair trade?

Fair trade means that people who produce certain goods get a fair price for their
products. This price is not determined by the international market but by the cost
it takes to grow the crops.
The very first fairtrade products were sold in the 40s and 50s in order to collect
money for people in developing countries. It was mainly practised by churches
and NGOs in Europe and the USA. The more contemporary movement of
fairtrade was developed around the sixties and it was more aimed at establishing
a good trade relation with the non-western countries. The first worldshop in the
world was opened in 1969 in Breukelen. The demand of fairtrade products was
rising and therefore certifications were needed so the buyer would be guaranteed
that it had bought a product which would help the people in the developing
countries. Another Dutch iniative was the Max Havelaar lable, the first of its kind,
named after the book which criticised the Dutch trade in nowadays Indonesia.
This label ensured that the producers were paid enough money to sustain
themselves and the environment would not be damaged as a result of that.
The organisation which regulates all the different labels for fair trade is the FLO.
The fair trade labelling organisation. In 2002 the FLO decided to make their own
label, the international fair trade certification mark. At the present, this is one of
the most acknowledge labels in the market. Therefore the research will mainly
focus on this mark and its standards.
The criteria to get this mark are determined by the size of the production
organisations. However, the main standards are that the companies have to
cover the cost of sustainable production. This price is determined by the FLO.
Additionally, a part of the money must be invested in the development of the
production. This is called the Fairtrade Premium. The companies are also obliged
to partly pay in advance when producers would ask for this. Finally, another main
criteria is that the companies should sign contracts which makes them bond to
long-term planning of sustainable production. [3]

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The international fair trade certification mark

The debate on fair trade

Because of the sudden rise in fair trade products and its sells more people are
actually questioning whether fair trade really works. That states the university of
Edinburgh at its site.[4] Therefore many more debates on this subject are
occurring. Harriet Lamb from the Fairtrade Foundation says that fair trade
ensures farmers and workers in developing countries better prices than they
would get if they would sell their products or services on the conventional trade.
She argues that the trade without the fair trade organization being involved
would make the weakest producers earning less than it costs them to grow their
crops. This could be countered by the fact that fair trade only helps a small
amount of people. Ms. Lamb does not agree as she has evidence that other
farmers can negotiate higher prices as the fair trade price becomes the
standard.[5] However this does mean that that it fixes the prices higher than the
ordinary market values, leaving other farmers unable to compete as their
products are not chosen in the first place. People in favor of Fair trade could say
that this is also the case in western countries, where farmers are subsidized
heavily, leaving other farmers no change.[4]
Philip Booth representing the Institute of Economic Affairs thinks that private
certification do far better than state regulation. However, he believes that fair
trade has become a success mainly because of the marketing skills. The research
done on fair trade is limited because of the way in which it is organized. One
organization administrates and regulates this way of the trade. It is therefore
one of the view sources, but the organization itself has undoubtedly its own
opinion about this subject and therefore the source might be bias. This combined
with the way the brand promotes itself in for example schools makes the label
look more like a company looking for profits. According to Booth the presentation
given are biased because of not showing all facts, if these facts are contradictory
to the message the presenters want to convey. Yet another way of manipulating
facts is that the FTO always replies in anecdotes and not in actual numbers. [5]
The Fair Trade Organization can partly explain this marketing. They want the
mass to get to know the Fair Trade movement and say that by turning
mainstream they can reach more producers and as a result of that, effect the
whole industry. They say that this has, unfortunately, consequences for the
traceability of the fair trade products.[4]

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Another message which is quickly forgotten, states Mr. Booth, is that there is a
certain fee involved when joining the fair trade program. Not all farmers can join
up and pay these fees collaboratively, let alone pay them for themselves.
Besides, only about 50 percent of the money which the consumer spends on top
of the price which one would pay if they buy products without the fair trade label
is actually available to invest in social projects. Other less optimistic sources are
stating that the number is much lower. There has been no clear evidence that
farmers get higher prices when they are under the regulation of Fair Trade.[5]
Another doubt which arises while studying the internals of the fair trade
movement is that there is a lack of focus on mechanization and industry in fair
trade. The movement is mainly focused on unprocessed goods and to make the
final product, the goods have to be shipped and processed in another country.
This keeps the producing nations undeveloped, while making the processing
countries richer and more developed. Critics say that this is not the way the
consumer had intended its additional money which has to be paid for fair trade
products.[4] Because fair trade is getting so complex, the farmer cooperative
have to rely on the help of other institutions to do their administrative and
financial support. This can create another barrier for the farmers to join the fair
trade label. However, some of the fair trade is now also sold relatively close to
the producers. For example in the same or neighboring country. This helps to
decrease the amount of regulations and fees.[4]
Analysis, Discussion & Conclusion
So to conclude, fair trade is a very complex subject to discuss about mainly
because of the small amount of research done and because of the many different
regulations. This is mainly the result of the FTO being almost monopolist on fair
trade. The fair trade movement is succeeding in raising awareness on the subject
but might do this unfairly. The society in the developing countries can both profit
as loose things because of fair trade. The society in the Netherlands and other
western countries are influenced by fair trade to get aware of the subject.
However, they are also influenced to buy things which might not entirely be
beneficial for the farmers in developing countries. To summarize: the debate has
not yet ended.

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Comparison with hypothesis

As I stated in the hypothesis I thought fair trade would only make people more
aware but is lacking behind in helping people in developing countries. This
appears to be partly true after I have done the research. However, the situation
is more nuanced than that. The FTO turns out to be a very big and mighty
organization with lots of influence in both the countries in which they sell, as in
their producing countries. They influence the society and culture in those
countries by giving information and making sure the countries develop. The
information is very limited and therefore it is very difficult to conclude whether
the fair trade organization is making strict enough regulation to ensure the
production of fair crops. However, I can generally state that my hypotheses is in
line with my conclusion.

Sources
[1]

http://www.fairtrade.net/fileadmin/user_upload/content/2009/resources/2012-Monitoring_report_web.pdf

[2]

http://en.wikipedia.org/wiki/File:Fairtrade.png

[3]

http://www.fairtrade.net/trade-standard.html

[4]

http://www.ed.ac.uk/about/sustainability/fairtrade/guide-to-fairtrade/debates-fair-trade?language=pl
[5]

http://www.independent.co.uk/news/world/politics/fairtrade-is-it-really-fair-7717624.html

[6]

http://www.wickedweb.co.uk/casestudies/fairtrade-foundation/

[7]

http://www.fairtradepeople.com/index.php?id=3

[8]

http://4.bp.blogspot.com/-MtPMT4HhAx8/TWcEiyB6LJI/AAAAAAAAAN8/8fWoWDxm44M/s1600/african+women+2.jpg