Many groups are always talking about the advantages but only a few out there who actually admit that there are also disadvantages of fair trade. Their claims actually have merit given that it is rare for something to have purely positive effects and no negative ones.
Fair Trade ProductsFair Indigo Organic Pima Cotton Long-sleeve Scoopneck Tee
Though many developing countries are continuing to sell their products on the market most of them continue to be sold as specialized products. Despite their best efforts, only a few have managed to reach the mainstream distribution channels. An example is soap being sold through companies that sell fair trade product is clearly more environment friendly and would benefit not only consumers but also those who manufacture them. However these kinds of soaps remain to be sold in specialty shops and not much in commercial stores.
One solution suggested to counter this disadvantages is to offer online shopping. This is a good idea considering that the products are come from developing countries. The problem is that the price will likely go up due to shipping fees and may not be affordable to the average consumer who just wants to buy one or two bars of soap.
Tariffs are a Disadvantage of Fair Trade
Tariffs or the tax put on exports and imports is another one of the disadvantages of fair trade. In most countries, the tariff for non-processed good remains lower than processed ones. What this means that instead of exporting roasted coffee for instance, a farmer may opt to simply export coffee beans in order to remain profitable. This choice however brings to light two issues. First the beans will be processed by another company which means it has lost its fair trade capability. Second because it will be more profitable to export raw materials or non-processed goods, developing countries may become hesitant to put up facilities needed for processing. Not only do they lose to multinational companies but they also encumber their possible development.
Fair Trade Certification
Another issue is on the use of the certification. An example is when a farmer decide to export the coffee beans. The company that buys the beans can have the Fair Trade certification on its final product, but it is the one that enjoys all the benefits derived from it. Companies using the certification also tend to confuse consumers as to where the products actually comes from. One can argue that this is unfair but it is hard to find a legal way to stop it.
Disadvantages of Fair Trade has a long way to go
The world still has a very long way to go if we are to fully maximize what fair trade is all about. Despite the disadvantages of fair trade, it is important to keep in mind that there will always be ways to solve these disadvantages.
In order for a product to be considered as belonging by the fair trade definition, it has to have what is called a fair trade certification. If fair trade clothing and products have this certification then it tells consumers that the seller is committed to the concept of fairtrade. It also makes the consumers trust the product more and also increases the likelihood of the conscious consumer to purchase the items. There is no need therefore for consumers to have to do research regarding the product because they know that they can put trust in the act because of the Fair Trade Certification.
Fair Trade Certification
Aside from giving consumers trust, a certification allows products to be differentiated from others. This in turn gives them the much needed competitive advantage over other commercial products in the market. Competitive advantage because it gives everyone involved their own brand, so to speak. This means that from the producers and workers down to the wholesalers and the retailers, everyone gets to enjoy the benefits. Without this label, these groups would have to contend with multinational companies who spend a large amount of money just to create a brand that consumers will identify and buy.
Labelling or branding further helps in creating standards for the different products. Think of it as an ISO Certification but instead of companies it is put into products. One good thing about certification is that it is not rigid like the others. The standards set are flexible and can be changed when the need arises. Thus if there are changes in the market, the standards are revised in order to keep it updated and in line with the latest trends in fair trade.
There is no one specific group or agency that hands out a fair trade certification. In the U.S., certification is given out by the group TransFair USA. Fair Trade organizations like TransFair USA is in fact the one in charge of certifying products in the North America region. The group certifies products such as chocolate, tea, coffee and other agricultural goods. The group even certifies processed food like canned juice, energy drinks, chocolate and ice cream, among others.
In Europe, the task of certifying products is done by FLO-CERT GmbH. Working hand in hand with FLO International the certifying group gives out certification to Fair Trade products in more than seventy nations worldwide.
Technology and fair trade at first glance seems to be on opposite poles. Presently it has been largely associated with handicrafts, agricultural products and food items. There is, however, an industry that is just ripe for inclusion in this movement, this is the field of electronics.
Can Technology and Fair Trade Happen?
Electronic items like microchips are by nature artificial materials, meaning they are made using a combination of other raw materials. People often relate electronics with gadgets like cellular phones, laptops and many others.
Few people know that the components for the gadgets they buy are in reality being manufactured in developing countries. In some cases even the assembly of the gadgets is done in the same countries. People who do this work are exposed to an environment that is not only stressful but even unhealthy. To add insult to injury the wages the workers receive are relatively low compared to the prices the gadgets are being sold.
By inculcating the concept of fair trade the electronics sector will not only benefit the companies in it but also the workers. Consider the fact that to make one electronic gadget, say a cell phone, a lot of companies are involved in the manufacturing process, from the LCD screen to the casing of the phone. If a company were to have this certification then it implies that everyone involved must also have certification. The result is a gadget that carries this certification, means that consumers will put their trust on the product and are more likely to buy it. This increases the profits of the company as well as the earnings of the workers. This is but one example of how technology and fair trade can work hand-in-hand.
A Competitive Advantage
Another advantage of having this certification is that this will differentiate the company from its competitors giving them a competitive advantage. Electronic companies nowadays are doing their best to tell consumers that their products are “Eco-friendly” or “environment-friendly.” What better way to boost that claim than by having a fair trade certification?
Don’t Limit Fair Trade Products
With the fast pace in the improvement of technology, people will have to decide sooner or later that indeed electronics can be part of the movement. Fair trade products need not be limited to agricultural or handicrafts, technology and fair trade is the next step and is waiting just around the corner..
When Paballo was eleven years old in Grade 5 at school, his mother became mentally ill and had to give up her work in a bookshop. As a result, Paballo became very dependent on his father. In his second year at high school when he was fifteen, he was devastated when his father died. As there was now no means of raising the fees required for his schooling, Paballo dropped out of school.
How Fair Trade changed Paballos’ life
Three years later, a past school principal of his paid the fees to enable him to go back to school. It was at this time that the Christian Revival Church through the outreach ministry arm of the church called ‘Love in Action Lesotho’ and one of the projects under this umbrella ‘Jewels of Hope’ (JoH) became aware of his situation and he was invited to join the first group of JoH in 2005. With the financial assistance that he was given he was able to finish his high schooling and went on to college to study home economics. He also learnt the skills of Jewellery making.
Fair Trade Skills
During his schooling he worked in making Fair Trade jewellery in Lesotho. Paballo was mentored and taught many skills. He learnt a variety of jobs including renovating, and showed how to maintain,
his house. At the age of twenty-one, Paballo was still sleeping in the same room as his mentally ill mother – two other rooms in the house where un-liveable. Paballo was also taught how to repair and restore these two rooms. He now has a bedroom of his own and is able to rent out the other room to bring in some income.
After completing the three-year ‘Jewels of Hope’ (JoH) Fair Trade Jewellery program, he became a trainer and worked with a group of five children to disciple and mentor them as well as teaching them how to make jewellery. He has gone on to be a teacher’s aide at the American International School in Maseru, the capital city of Lesotho. Life would have been very different for Paballo if he had not had the opportunity to learn many skills including making Fair trade jewellery.
‘Jewels of Hope’ (JoH) is an organization started to teach orphans and vulnerable children how to make Fair Trade jewellery as a source of income. It was started under ‘Love in Action Lesotho’ (LiAL) in Lesotho, Africa.
Fair Trade Jewellery made by orphans and vulnerable children
By supporting Jewels of Hope you enable children to receive:
- Basic income to buy food, shoes & clothes
- The means to attend school
- Access to care, mentorship and personal development
- Finance to purchase materials to make more products
- A sense of pride and purpose
The Jewels of Hope Fair Trade Jewellery Online Store
After the death of his mother when he was six years old, Daniel went to live with an uncle. When he was in Grade 3 at school, he went into the mountains to live with his father but as he was required to herd the cows every second day, he only went to school on alternate days. After his father died when he was in Grade 6, so Daniel returned to live with his uncle again. Unfortunately, his uncle became blind and died, so the following year, when Daniel was in Grade 7, he went to live with his grandmother.
Daniel’s aunt had recently become involved as a trainer in a project called ‘Jewels of Hope’ (JoH) that had been started under ‘Love in Action Lesotho’ (LiAL), so Daniel was taken into the program in 2006. When Graeme became a trainer in May of 2008, he began to disciple and mentor Daniel (second from the left) as well as teach him how to make jewellery. With the help of LiAL and JoH, he was able to finish his high schooling and is now in his third year at college doing a course in Business Management. To raise money for transport and other necessities, he has been raising chickens, putting in to practice the business principles that he learned at JoH. He ultimately hopes that he will be able to become an accountant in the future.
In 2009, Daniel (left) became a trainer in the JoH program and now successfully leads a group of five children seeking to disciple and mentor them as well as teach them how to make jewellery.
Benefits of Fair Trade
In May of 2014, Daniel (left) was one of eight graduates from the LiAL project to be trained in the making of paper beads. The organization ‘Jewels of Hope’ based in Johannesburg will buy the beads and use them in their Fairtrade jewellery designs. This gives these young people a means of earning an income to assist them as they continue their studies. This is just one of many examples where buying Fair Trade products makes a difference to a children and a community.
Buying Fair Trade products is more important than ever to keep communities growing and sustaining the people who live there. There is a lot of competition for consumer dollars right now. Many people are watching the bottom line very carefully and trying to get the best possible deal on items they need to buy. There are plenty of cheap options for goods and discount stores that specialize in low prices by buying vast quantities of goods at discounted prices from overseas factories and shops. But price shouldn’t be the only factor that you consider when you are deciding what to purchase. Spending a few extra dollars on a product isn’t going to make a huge difference to your budget in the long run. But those few dollars will make a huge difference to a crafts person in a developing community. Paying a few extra dollars is also the way that you can tell those big chain stores that you don’t want to buy goods made in dangerous factories by workers who are being exploited.
Your money is your voice in the global consumer marketplace. When you spend a little more and buy certified Fair Trade clothing and products you are getting a higher quality product and you are directly contributing to the community where the artisan lives. Even though you pay a slightly higher price for the item than you would pay at a discount store the impact that your dollars have is enormous and can be life changing for small businesses and artisans in developing countries.
How your dollars support community growth when you buy Fair Trade Products:
Empowers artisans and cooperatives:
When you pay the people who make the items that you buy a fair price you are directly contributing to their survival and development. With the profit from Fair Trade sales artisans and cooperative members can feed their families, provide clean drinking water and medicine to their children, and build safe homes. The few extra dollars that you pay for a Fair Trade product can mean the difference between surviving and thriving for a craftsman in a developing community.
Fair Trade educates communities:
As part of the Fair Trade agreement mentors and teachers will work with Fair trade suppliers to teach them how to successfully run a small business. They will also learn basic skills that they might never have learned like reading, math, and language skills to make them more successful. What they learn they will teach their kids and their employees, increasing the chances that they will also be able to run successful businesses and help themselves and the community thrive.
Fair Trade provides schools and medical care:
When a Fairtrade business is making a profit the money they earn will be invested directly back into the local economy. That extra money will allow communities to build community health clinics, public schools, and food banks that will support the people in the community. Children will have access to medical care and an education as well as having the chance to learn how to run a business. When a community has an influx of money they can also fund civic projects like low income housing and facilities to provide clean water and sanitation. Buying Fair Trade products gives you the chance to invest directly in a developing community and have a real impact on the people that live there.
Easier access to loans and financing:
Small businesses in developing countries that operate as part of the Fair Trade network often have access to micro-loans and other financing to help them get started that they wouldn’t qualify for otherwise. Businesses mentors give them knowledge as well as loaned money to help them find suppliers, get equipment and machinery or animals or seeds to get started making items to sell. Having access to that financing means that small companies can employ local members of the community and help to raise the standard of the living in the community.
So stop looking just the price of an item and look at the total cost of the item overall. Buying Fair Trade products may cost you a little extra money but it will also give you the chance to make a direct impact on a developing community.
Are you confused about what exactly is Fair Trade and what it means? You’re not alone, a lot of people don’t know much about it except that it is supposed to be good for buyers and companies. The movement started by socially conscious consumers concerned about Fair Trade goods who wanted to use their money as a tool to help small businesses and kickstart financial development in underdeveloped countries. Today there are four international organizations that oversee and certify businesses as Fairtrade, and promote the growth of the businesses. Fair Trade International is the largest of the certification agencies and helps millions of small farmers and craftsmen in more than 70 countries earn money and support community growth.
What Fair Trade Means for Workers
Any company that wants to be certified as a Fair Trade company must pay workers a living wage for the area that the business is located in. Workers must have the right to form unions if they feel that it is necessary and they must be allowed to collectively bargain. Also any business that wants to have the benefits of Fair Trade Certification has to give workers safe and healthy working conditions, set amounts of time off, and the opportunity for education and other advancement. Companies that want to stay certified have to be examined every two to three years and if they are continuing to follow the dictates of Fair trade International they can remain certified.
That means that works at these companies have money to feed their families, send their children to school, and get medical care. The opportunity to earn a decent wage is life changing for many people in developing countries. Women especially benefit from the work, often women in developing countries do not have a lot of freedom or choice. Being able to earn a fair salary means that they can become independent and live better lives. Many craft cooperatives and other Fairtrade businesses are run by women out of their homes.
What Fair Trade Means for Business Owners
Small business owners or cooperative leaders can benefit from Fair Trade Act as much as their workers. The businesses average higher sales than larger companies that make comparable products. The business owners get access to advice, promotion, and financing from Fairtrade friendly companies and banks. They also get workers who are happy to come to work and do great work. Helping people while putting out great products is the goal of most the businesses. Working with an international organization gives them the chance to get their products to consumers all over the world and become successful in an ethical and sustainable way.
What Fair Trade Means for Communities
It doesn’t just benefit workers and business owners, it also benefits communities. Consumers pay higher prices to buy Fairtrade goods. There are two premiums built into the prices. One is so that the company can afford to pay the workers who produce the items a living wage. The other is so that the company can invest back in the community. That money that farmers, crafters, and artisans sink back into the community goes to build schools, hospitals, and to provide services that community needs. Some of the projects that are able to be funded through local businesses include building wells and developing clean water systems, developing irrigation systems, and planting community gardens to provide food.
Also the fair wages paid to the workers in the small businesses and cooperatives allow them to purchase more items from local vendors. That increases the prosperity of the entire community. Being able to depend on a good salary means that workers can buy homes, cars and other durable items.
Look Past Higher Price Tags on Fair Trade Products
It’s important for consumers to look past the higher price tag on Fairtrade products and see all the benefits that they bring. When you are buying items that you need and want take a moment to weigh the cost of the item against all the good things that come from them. Consumers who have the ability to pay a few extra dollars for items can improve the lives of a lot of people just by buying Fair Trade clothing and Products.
Fair Trade products are part of a program started by people who wanted to use their purchasing power to ensure that small farmers, crafters and artisans had the chance to compete with bigger corporations and make a fair wage doing it. Any small company that wants to operate under the Fairtrade umbrella needs to follow certain rules and regulations and get certified. The certification needs to be renewed every couple of years.
That oversight makes sure that companies don’t just follow the rules in order to get certified and then change their business practices. The program is largely viewed as being good for consumers and good for small businesses. But, some people say that the disadvantages of Fair Trade outweigh the advantages. Take a look at some of the disadvantages and decide for yourself if purchasing these products is something that is right for you.
Buying Fair Trade Products Cost More
It is true that consumers usually pay a little more for products that have Fair Trade Certification. Any products that are ethically produced from produce to shoes are going to cost more than similar products that are sold at big stores. But, price is not the bottom line for socially conscious consumers. Typically Fairtrade items are no more than a few dollars more expensive than the alternatives. Those few dollars might equal skipping a cup of coffee-shop coffee or waiting an extra week to buy a new sweater that you want. But to the artists, crafters, farmers and small business owners whose products you are buying those few dollars have a huge impact. Those extra dollars mean that a child can go to school, or a woman who is trapped in an unsafe situation can finally file for divorce and support herself. Those dollars eliminate food insecurity for families and provide clean water for communities.
Fair Trade Certification is Expensive
Another disadvantage that is often mentioned is that getting Fair Trade certification is expensive for the individuals and small businesses that the program wants to help. The initial process of getting certified can be expensive. But the benefit to the business is enormous. Being a certified business can increase sales by 15% or more for most businesses. There are expenses to running any business and paying for the certification necessary to be part of the program is a business expense that provides a great return. Businesses also need to renew their Fair Trade certification every couple of years which does cost a bit, although it costs less than the initial certification. Being re-certified every few years is important because it ensures that the business if following the protocols of the program. Because of the added marketability that the certification brings the cost is not a hindrance to most businesses.
Does it make a difference which Fair Trade Product I buy?
This disadvantage of Fair Trade is one that consumers who aren’t really familiar with the program often raise. They think that it really doesn’t make a difference if you buy these products or not so people should just buy the cheapest product. To a large corporation it’s true that a single purchase won’t make a difference. But to a small independent business that purchase does matter. Every dollar earned can make a dramatic difference for a family owned business or artist cooperative. It might seem like buying these products isn’t really an important choice to make because you don’t see the impact but dig a little deeper into how Fair Trade works and you will be amazed at the difference your purchase can make.
There are possible disadvantages of Fair Trade and there are many advantages. Yet there are still companies that dislike the implementation. For instance companies involved in selling coffee have been traditionally dominated by four major coffee producing companies. These companies claim that the reason why coffee farmers continue to suffer is because of fair trade. They argue that the movement has allowed many farmers to enter the business of growing coffee. Thus, according to them, this has lead to the overproduction of coffee and ultimately to lower prices. They further argue that because fairtrade sets a minimum price, high-cost producers are prevented from exiting the market. Without the minimum price, some producers would likely go out of business ensuring that the supply of coffee goes down and thereby increasing the price.
Negatives of Fair Trade
The real problem lies not in why they complain about the implementation of it but in how they have managed to circumvent some of the rules and thus threatening to discredit the whole movement entirely. What these coffee companies did was to have their own ethical branding of their respective products. Thus consumers are unable to distinguish which are fairtrade coffees and which are not due to the saturation.
Fair Trade Organizations
Some fairtrade organizations are developing a unique certification mark. This ensures that the minimum price remains at $1.25 per pound and that the premium is still investment for social services. Still the organizations admit that ethical labeling has somewhat decreased the effectiveness of certification logo. The certification has been, for a long time, one of the advantages over multinational corporations. But because of the ethical labeling this same uniqueness has been undermined. Thus by having their own implementation, they have managed to deceive consumers.
One company for example has the Fair Trade FLO label on their products simply because it buys its coffee from producers that carry the product certification. Another company has also managed to get a certification despite the fact that its ability to mass produce coffee has been one of the reasons why small coffee farmers are facing problems.
Multinational companies will always try to do what they can to gain the much needed competitive advantage. It is up to organizations to ensure that the implementation of fairtrade corrects this error.
What do you think? I’d love to hear your thoughts on this interesting topic of the Disadvantages of Fair Trade.
The Fair Trade movement of started over sixty years ago with the founding of Ten Thousand Villages. The organization was the brainchild of Edna Ruth Byler, an American businesswoman who was struck by the poverty that she witnessed when she was on a trip to Puerto Rico. She believed that artisans in developing countries could have sustainable economic opportunities if they were provided them with a viable marketplace to sell their goods and products to consumers in other rich countries. So Byler began the movement which is a billion dollar industry, supporting millions of people worldwide providing better economic, working and health conditions. A truly remarkable woman, a woman who had a vision and mission to make a difference in the world. And that she has done!
Buying Fair Trade ProductsNovacas Reggie Vegan Oxfords
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There are many companies around the world market who support artisans like Ten Thousand Villages that builds long term buying relationships with artisans who then receive a fair price for their work, have better working conditions according to the International Fair trade act and then the consumers have access to clothing, gifts, shoes, products, accessories and home décor from around the world. https://www.tenthousandvillages.com
Where are you buying Fair Trade products from?
There are so many wonderful businesses supporting these artisans around the world, but I’d love to hear where you are buying Fair trade clothing, shoes and products from?