Some things to think
about
What is meant by the
term Fair Trade?
How does Fair Trade
benefit farmers?
What are the
disadvantages to Fair
Trade?
The FAIRTRADE Mark is the only
independent consumer guarantee of a fair
deal for producers in the developing world.
Fair Trade is where
producers are paid a price
for their product that
covers the cost of
production- despite changes
in the price at market.
Fair Trade products are
often more expensive
because an additional 20%
is charged to consumers,
called a social premium,
this is invested in the
local communities producing
the products.
How do LEDC producers benefit...
•
Farmers receive a fair and stable price for their products.
•
Sell direct to the global buyers, cuts out local markets, maximising profits.
•
Partial pre-payment allows more effective long-term financial planning.
•
Producers have the opportunity to improve their lives through a social
premium.
•
Through co-operatives producers have greater collective bargaining with
purchasers and supplies.
•
Helps diversify into new markets and products, from ones where there is
overproduction, via cheap credit.
•
Help and advice with farming practices, thereby maximising yields.
How do MEDCs benefit...
• Consumers know they are purchasing a product which is ethical,
no child labour, organic, fair price, from co-operatives that are
democratically run.
• Consumers can directly trace their purchase.
• Consumers can have a direct influence on the quality of life of
LEDC producers through the goods they purchase.
• LEDC producers have more income to purchase MEDC processed
goods (?).
Potential Drawbacks....
• Niche market, therefore has a limited impact.
• It continues to support areas where there is overproduction.
• Critics suggest it encourages further overproduction by non-fair
trade producers, therefore lowering prices further.
• It doesn’t encourage the development of secondary processing,
which would generate higher prices.
• Market share drops during economic difficulties.
• It doesn’t solve the unfair trading practices which limit the
development of LEDCs.