Rural Development-Exploring the concept of Fair trade
This personal view post is an aim to explore the concept of Fair trade, and how it can be used as a comparative advantage in a community to boost its market.
What is fair trade?
According to the Fair Trade International, Fair trade can be understood as:
“… An alternative approach to conventional trade and is based on a partnership between producers and consumers. Fair trade offers producers a better deal and improved terms of trade…Fair trade offers consumers a powerful way to reduce poverty through their everyday shopping.”
Although helpful, this definition may result in misconceptions of what really is Fair Trade.
First of all, Fair trade is not a brand and should not be seen as one. It is a result of a movement that relies on complex networks that fight an unfair trade system and dismantles the debt mechanism that has its impacts in the way trade works. It is a way to push markets to behave competitively, if we take in to account that cheap commodities result from political mechanisms of debt and that the real competition occurs between governments to favor big corporations or jobs for its impoverished people.
Also, Fair Trade does not mean being organic. Fair trade is concerned about obtaining a product’s fair price and not a product that is a result from pesticide-free crops. In fact, an organic product might have been a result of crops where human rights are not respected. The two types of certifications might coincide in the same product or not.
So, in few words we can say that Fair trade is about being competitively fair.
Fair trade is a comparative advantage for a community
As a way to develop my idea, I must first define the concept of comparative advantage. The concept as its roots in David Ricardo’s theory that each country in as the capacity to produce a product better than other countries due to its marginal and opportunity cost
If we consider the actual market and the increased concerned by society about the environment and human rights worldwide, communities who are capable to implement cooperatives or associations of small producers and that are able to produce export goods that fit in these concerns have a comparative advantage.
A comparative advantage depends on where you stand. From the perspective of a small farm producer’s community, I believe that the high demand for certified products in our actual supermarkets can make their production more profitable. This new consuming passion can protect communities from their countries policies of producing a single export crop for the conventional markets. For example, if the price of conventional cocoa goes down, those who produce fair trade certified cocoa will be playing in a different market where the high demand will make the price more stable.
Boosting the Fair trade market
When boosting the fair trade market we need to think about two main groups: consumers and producers.
Awareness is the main tool to work with them. From the consumers’ perspective it is true that those more likely to buy Fair trade products are people concerned about environment and human rights. Movements that make people aware in importer countries should be taken place with the use of stronger campaigns. It is necessary to keep our citizens pushing big retailers to sell more fair trade products or raise their product’s standards.
However, dramatic changes afoot will require a sales tax reduction on fair trade products as a way to contradict somehow the unfair agricultural subsidies practiced by Europe, USA, Canada and Australia.
From the producers’ perspective, it is necessary to convince the value of fair trading through demonstrating the real difference between fair and conventional trade and that this alternative benefits them. Also, these communities should establish their own fair trade principles apart from those established by Fair Trade organizations.
They also should incorporate organic production methods. This would make them reach the organic market and promote their products as healthier.
To Conclude, Fair trade is still a market where much must be developed and where its message of trust should be kept.
If you want to check more information about this topic:
Fair trade International- http://www.fairtrade.net/
Faire trade federation- http://www.fairtradefederation.org/
Comments Off on Rural Development-Exploring the concept of Fair trade /
04 Feb 2013
por
Pedro Vicente
IMSD /
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