Fair Trade

1
Fair Trade

• Better deal for third-world producers.
• Better quality for consumers.

2
Introduction

• 90 of worlds cocoa in small farms
• Most of the farmers have never tasted a single
  chocolate bar in their lives!

3
Failure of international trade poverty cycle

• Low market prices for cocoa beans...
• Leads to a lack of resources for farmers...
• Leads to cocoa farmers building debt...
• Leads to continued poor quality of cocoa...
• Leads to country's inability to remain
  competitive...

4
Large companies dont help much

• Farmers are forced to sell their goods for very
  low prices
• They have no choice
• Leads to bribery and organized crime
• Grey economics, drug dealing, mafia
• Invisible hand doesnt work in states without
  developed democracy

5
International relieves

• Relieves help only temporarily
• Farmers in Kenya pray for huge harvest in
  Canada.
• Aids encourage farmers not to work but wait for
  subsidies
• To give money or food wont establish sustainable
  development

6
How to break the cycle?

• Fair Trade is general term for an idea of ethical
  and rational business
• Fair Trade cleans up relationships between
  producer and consumer
• Fair Trade is no charity it just provides
  producers with appropriate wages
• Fair Trade means top quality food and goods from
  known sources

7
Fair Trade

• Everyone can contribute to improve living
  conditions of actual producers
• Environment impact
• Fair trade is ecological
• Fair trade eatables are BIO products
• No slaves, no children forced to work

8
Fair trade labeling history

• In 1964 Oxfam in Great Britain created the first
  Fair Trade Organization. Parallel initiatives
  were taking place in the Netherlands
• 1967 the importing organization, Fair Trade
  Organisatie, was established
• In 1988 from initiative of Mexican coffee
  farmers, first Fair Trade labeling company started

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How does Fair Trade work
Consumer
Producer
Distributor
Co-op
Labeling company
10
Global view
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Fair trade goods

• A range of fair trade products, including crafts,
  fashions, foods (such as chocolate, honey,
  bananas and other fruit), beverages (tea, coffee,
  fruit juice), paper and cards are available.
  Products are sold through an extensive network of
  small retailers and many big supermarkets have a
  token few products available for purchase.
  Mail-order companies exist all over the world,
  from small specialist grocers to new on-line
  suppliers. You can also check out the legendary
  Starbucks for a token sample of fair trade
  coffee.
• BBC News

12
Economic view

• Every business transaction is a challenge to see
  that both parties come out fairly.
• Adam Smith, The Theory of Moral Sentiments (1759)

13
Free trade vs. Fair trade ?

• Economic evolution of Fair trade
• From missionary to market with agriculture
  products

14
Free trade and market failure

• Is international trade with agriculture product
  really free?
• What about price of goods on this market?
• Comparation of situation in agriculture between
  developing coutries and those developed (
  especially EU, USA or Japan)

15
Fair Trade medicine

• Economic principles of Fair Trade.
• Cost of Fair Traded goods and its prices.
• Influence of existence Fair Trade organizations
  on world market.
• Fair Trade in compare with environmental
  approach.(?)

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Questions and problems with Fair Trade

• Is Fair Trade really fair?
• Problems with certifications

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Conclusion

• Is it possible that Fair Trade could improve the
  world free market?

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Some interesting facts

• In Kenya capital town Nairobi supermarkets is
  available an Irish butter for lower price, then
  their own.
• The subsidies for one cow in EU are equal to two
  year wages of average agrarian in countries of
  Third world.
• From 1,75 Pounds paid for cappuccino in London
  café, the farmer in Columbia get about 0,05 Pound.

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Real numbers

• Fair traded goods participate on world export
  with 0,01- 0,03 (resources are different (?))
• Fair Trade has direct influence on lives of more
  than 5 mil. people in developing countries.

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Fair Trade organisations
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Top5 Fair Trade importers
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Shares of market
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Shares of market
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What is Fair Trade about?

• According to the 2005 FTF Trends Report,
  alternative traders who are members of the Fair
  Trade Federation commit to advancing the
  following
• Opportunities for economically disadvantaged
  producers.
• Gender equity.
• Transparency and accountability.
• Capacity building.
• Payment of a fair price.
• Healthy working conditions.
• Environmental sustainability.
• Promotion of Fair Trade principles.
• www.fairtraderesources.org

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Controversy

• Some large companies might try to get ethical
  credit being part of FT labels
• Nestlés Partner Blend coffee has obtained FT
  label despite the fact that other product from
  Nestlé exploit farmers

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So why should I care?

• You are paying the exact market price for what
  you get including proper reward for the
  producer
• It is ecologically correct
• You know what you buy
• Fair Trade is yummie ?

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What difference does it make if I buy Fair Trade?

• In small amount small difference
• Small amount every day big difference
• The best thing about Fair Trade is that it is
  very natural. You eat every day, you drink tee or
  coffee and youre helping!
• Small amount every day in the whole company
  enormous impact

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Future of Fair Trade

• Fair trade is not a charity
• Fair trade merely gives people what belongs to
  them
• By not buying Fair Trade coffee you participate
  on crime youre murdering.
• In EU, Fair Trade becomes more and more popular
• Coffee shops, markets and restaurants start to
  offer Fair Trade goods
• Whole companies, churches, schools order Fair
  Trade labeled

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Challenges

• Fair Trade model obviously works, yet it is not
  widely used.
• Lack of consensus even among Fair Trade advocates
• Identifying and motivating consumers.
• Addressing consumer misperceptions and
  resistances.
• Keeping a focus on crafts.
• Determining a fair wage.
• Reconciling mission-based Fair Trade with
  mainstream distribution.
• Developing parallel certification processes.
• Minimizing unintended political and economic
  results.
• Overcoming staffing and funding limitations
• www.fairtraderesources.org

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World Fair Trade Day

• May 13th International Fair Trade Day

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Links for further reading

• www.fairtrade.cz
• www.fairtraderesources.org
• www.jedensvet.org
• en.wikipedia.org/wiki/Fair_Trade
• Thank you, have a fair day