What are the pros and cons of fair trade? Fair trade policies are designed to help poor communities and producers in developing countries enjoy better trading conditions and sustainability in a competitive global market. The fair trade movement is primarily focused on exports such as tea and coffee, sugar, handicrafts, bananas and other fruit, cotton and wine, most of which are exported from poorer countries to the more affluent countries in the developed world.
Although fair trade policies aim to help poorer nations, many critics of the system believe it is little more than a type of subsidy that damages economic growth. However, since fair trade policies were first introduced in 1990, the system has helped to protect vulnerable producers from exploitation by multinational companies and individuals only interested in making money at the expense of others’ hard work. So what are the pros and cons of fair trade and can it really equalize international trade effectively?
What are the pros of fair trade policies?
1. The introduction of fair trade policies has helped to improve the social conditions of many small growing communities in developing countries. Since 1990, many impoverished farms and plantations have enjoyed the benefits of business education, improved health and safety procedures, and a much improved standard of living for workers and their families.
2. Fair trade organizations have helped to reduce the numbers of plantations and farms in developing countries who exploit child labor to increase their profit margins and productivity levels.
3. As a result of a reduction in child labor and improvements in education and welfare policies thanks to fair trade policies, the national levels of literacy amongst the general population in poorer countries has risen.
4. When international prices fall, the fair trade producers in poorer communities are protected by a minimum price floor.
5. Small scale producers in developing countries are protected from exploitation by greedy large scale buyers trying to force the prices down to rock bottom levels.
6. Although fair trade products are often more expensive, in many cases the extra money is used to finance sustainable farming practices in poor communities.
7. Fair trade producers usually farm using organic techniques, which is good for the environment.
What are the cons of fair trade policies
1. Many popular fair trade products, for example coffee and chocolate, are usually far more expensive when they finally reach the supermarket shelves in developed countries. Critics say this is down to administration costs, but although the end user is paying more, the original producer does not benefit from the higher retail price.
2. Although fair trade policies have helped to reduce the levels of child exploitation on coffee, tea, cocoa and cotton plantations, there are still too many unscrupulous plantation owners taking advantage of fair trade policies at the expense of vulnerable child workers.
3. Fair trade producers normally operate on a very small scale, and are therefore unlikely to attract the big money operators such as large supermarket chains and wholesale food distributors.
4. The extra cost of fair trade products means big buyers are more likely to turn to factory farming producers, which is not so good for the environment.