Essay for Population Change and Economic Development Student: Sattoriy Fayzullokh Do developing and transition countries really need Fair trade?

Essay for Population Change and Economic Development

Student: Sattoriy Fayzullokh

Do developing and transition countries really need Fair trade?

Introduction

Today, in global and modern area, we cannot image our life without an international trade. But, in some cases, unfair trades also occur in a trade. Through the paper we will discuss whether developing and transition countries need fair trade.

According to Wikipedia, Fair trade is an institutional arrangement designed to help producers in developing countries achieve better trading conditions. Members of the Fair trade movement advocate the payment of higher prices to exporters, as well as improved social and environmental standards. The movement focuses in particular on commodities, or products which are typically exported from developing countries to developed countries [1]. The goal of Fair trade is usually achieved through voluntary agreement between producers and buyer, who is ready to pay a “fair price” for a particular product. Today, the Fair trade promotes millions of farmers and manufacturers in more than 70 countries, and Fair trade products with trademark of Fair trade are sold in 120 countries [2].

Literature review

First of all, it is necessary to briefly analyze the history of the idea of fair trade before analyzing the activities of Fair trade to developing and transition countries

The first people to start using this idea were the American Mennonites (members of one of the Protestant denominations), back in the late 1940s. selling goods from poor regions in churches and at fairs. At the origins of Fair trade in Europe was Leslie Kirkley, a member, and later director of the British independent international charitable organization Oxfam. In the 1950s, he was engaged in exporting crafts from Asia and selling in specialized stores. Gradually, numerous European and American organizations in the field of charity, social development, etc. joined the Fair trade movement. In the 1980s Fair trade-movement began to take shape in a modern way. The World Fair Trade Organization (WFTO) was founded, a number of charitable organizations (German Max Havelaar, Swedish Rättvisemärkt, Finnish Reilu Kauppa, etc.) began to coordinate their actions in the field of fair trade. In 2002, a unique certification mark was introduced for all fair trade products. Nowadays, the main products labeled by the fair trade are: flowers, cane sugar, coffee, fruit juices, cotton, cocoa beans, wine, tea, rice, honey, nuts, spices, quinoa, oilseeds, bananas and other fruits [3].

The impact of Fair trade on market conditions is always regarded a quite topical. Most of researchers have learned the topic of Fair trade and given their opinion in this field. According to Obermiller C., Burke C., Talbott E., and Green G.P (2009) Fair trade has become an alternative market approach that supports the well-being of small producers, especially in developing countries. The concept of Fair trade is connected with ensuring fair prices and fair working conditions for producers and suppliers. through a Fair trade agreement or rule [4].

In accordance with Goig, (2007) Fair trade focuses on utility and creates change as well as consumer habits. The main objective of Fair trade, outlined by Goig (2007), is to guarantee a constant source of income for workers, to ensure the safety and security of work in relevant jobs, to improve equality for women and to protect the rights of minors, workers (child labor) or minorities, as well as the environment[5].

Shaw D., Hogg E. Wilson E. Shui e., and Hassan L say that in terms of food choices, the creation of an Fair trade has attracted considerable attention from label certification by Mark Fair Trade Foundation In addition, the European Fair Trade Organization, consists of 315 companies, includes 500 producers and 1.5 million farmers and workers from 40 countries. Fair trade products have been sold in over 2,700 outlets in Europe and 57,000 supermarkets. This shows that Fair trade has achieved market share and has a growth tend over the years [6].

Analysis and the results

Do developing and transition countries really need Fair trade?

The benefits of international trade are not distributed equally to everyone in the world. Small producers, whether farmers or artisans (mainly, in developing and transition countries), have limited access to market and price information. As a result, they often depend on intermediaries and receive less profit for their work. Because of these, many farmers and workers generate low wages, and they have unsafe working conditions and poor living conditions.

According to Fair trade, there are fundamental concepts that organizations and companies that claim that Fair trade must obey. The World Fair Trade Organization (WFTO) has developed 10 principles of fair trade, as you can see below. These principles are used to monitor over the market conditions of buyers and sellers [7].

1. 
   Opportunities for disadvantaged producers
   
2. 
   Transparency and accountability
   
3. 
   Fair trade principles
   
4. 
   Fair payment
   
5. 
   Ensuring no child labour and forced labour
   
6. 
   Commitment to non-discrimination, gender equity and women’s economic empowerment, and freedom of association
   
7. 
   Ensuring good working conditions
   
8. 
   Providing capacity building
   
9. 
   Promoting fair trade
   
10. 
    Respect for the environment
    

These 10 principles of Fair trade imply an improvement in the working conditions and payment of the manufacturer, a high degree of his responsibility for the quality of the goods, etc. The Fair trade also carries a powerful socio-cultural component: the prohibition of child labor, slavery, the desire for equality, the familiarity of European and American consumers with the culture and traditions of Asia, Africa, etc.

When we talk about Fair trade, we should pay attention producers and manufacturers of products of developing countries in developing and transition countries, (mainly in Asia, Africa and Latin America). Because, in Europe and other developed countries, the rights of workers and employers are guaranteed by law, there is a social insurance system and labor legislation. But, workers of many developing and transition countries face challenges with unfair trade and unfair prices for their products because of the difficult economic situation (such as monopoly). And, the rights are not really guaranteed by the state in these countries.

For instance, the prices of the goods they produce (such as coffee) have long been set naturally by various large international companies at the lowest level. And these companies are not willing to raise them. This makes it impossible for farmers to improve the quality of goods and working conditions for their workers in any way. And, their income is not enough to cover the costs. Unfortunately, these farmers have no choice and they accept low prices for their goods, otherwise they simply will not be able to sell it and will receive nothing at all.

Thus, Fair trade for many, especially small, producers becomes the only way to get a fair payment for their labor, which in fact means to get the opportunity to feed their family, send their children to school, get medical help, etc.

Also, we can see role of Fair trade the of Sugarcane in Malawi

Kasinthula Cane Growers Association (KCG) is a smallholder sugar cane project located in the inhospitable Shire River Valley District if Chikhwawa in the south of Malawi. KCG was a joint venture set up in 1996 by the Malawi Government and the Sugar Corporation of Malawi, a private company that at the time owned the nearby sugar mill. The KCG project involved converting an area of largely unproductive land to sugar cane production in order to increase the supply of raw cane to the mill and at the same time provide an income for 292 subsistence farmers who were barely able to grow enough food to eat. The project extends to a 1,150-hecatare block of land leased from the government and divided into cane fields of between 10 and 70 hectares. Although farmers are allocated individual plots of 2-3 hectares the project is run on a cooperative basis.

KCG was Fairtrade certified in 2002 and is now supplying sugar on Fairtrade terms to a growing number of companies in the UK, Europe and the US. On top of the contract price for the sugar cane, Fairtrade sales attract an additional Fairtrade Premium of $60 per tonne of sugar. KCG’s total production is now sold to Fairtrade buyers. They include companies from Belgium, Germany, Norway and the US [8].

Conclusion

Having analyzed and learned the problem we can conclude that, the Fair trade is an actively developing global movement covering more than half of the countries of the world. The Fair trade involves not only the economic, but also the socio-cultural component. It helps for large number of people: farmers and artisans from developing and transition countries. Fair trade promotes fairness in trade. From producer to consumer -that has a positive impact on our lives, the lives of others and the environment.

References

1. 
   https://en.wikipedia.org/wiki/Fair_trade
   
2. 
   For producers, with producers. Fairtrade International annual report 2011–2012. 2012. P. 12
   
3. 
   Ivan Alekseevich Tsverianashvili (2013) About world fair trade-movement and its prospects. P. 2
   
4. 
   Obermiller C., Burke C., Talbott E., and Green G.P (2009) Taste great or more fulfilling: the effect of brand responsibility advertising for fair trade coffee. pp159-176.
   
5. 
   Goig R. L(2007)Fair trade and global cognitive orientation: a focus on Spanish fair trade consumers. International Journal of consumer studies.31, pp 468-477.
   
6. 
   Shaw D., Hogg E. Wilson E. Shui e., and Hassan L (2006) Fashoion victim: the impact of fair trade concerns on clothing choice. Journal of Strategic marketing 14, 427-440
   
7. 
   https://www.fta.org.au/fair-trade-info (the official site of World Fair Trade Organisation (WFTO).
   
8. 
   Fair trade Foundation. 2011. Masauko Khembo, General Manager, Kasinthula Cane Growers (KCG), Sugar Cane Co-operative, Malawi. http://www.fairtrade.org.uk/producers