FAIR TRADE

The Criticisms of 'Fair Trade' in Recent Decades

Table of Contents

Introduction3

Discussion & Analyses3

Conclusions8

The Criticisms of 'Fair Trade' in Recent Decades

Introduction

Fair trade is the most important and fastest-growing market mechanism for the improvement of living conditions of producers in developing countries. This is done by small-scale farmers in the Global South are offered fair trade relations, such as a guaranteed minimum price above the world market level and support for the development (Fair Trade USA, 2011). This discussion will elaborate on some of the criticisms which have been made of Fair Trade in recent decades, such as the mainstreaming debate. In order to do so adequately, the discussion will analyze the extent to which these criticisms are justified.

The success of Fair Trade is emphasized again and again by different people and institutions, ranging from advocates of fair trade in the North and producers in the South to such prominent advocates of trade liberalization, such as the G8 Forum and the European Commission. The general feeling of euphoria, which runs through these comments, is, characteristically expressed by one of the pioneers of the movement for Fair Trade, Carol Wills, at a conference of the European Parliament in June 2005: Fair trade works! It works for the poor, and it works for consumers. It works as a business model, it works for sustainable development and it works to protect the environment (Gilkatho, 2012).

Discussion & Analyses

The advantage is that the producer is better paid and therefore can live work. The downside is the marketing side of things: there is an effect of fashion that creates a craze for these products, the chain of distribution benefits (Griffiths, 2011). The consumer is willing to pay more for a product in a humanitarian gesture to better pay the producer. Only the producer receives a share of the extra cost. All actors in the supply chain to fill their pockets. Critics of the approach are seen in the massive Intervention in the balancing function of the significant market side effect (Mohan, 2010). Fair trade promotes by paying an inflated prices and overproduction which in turn fall to the world market prices leads and even faster destruction of forestlands. The Fair Trade system is also prone to corruption.

Followers of free-market fundamentalism argue that farmers themselves are to blame, because too many of them grown coffee (Opal & Nicholls, 2005). They should either switch to other crops or to grow coffee in addition to something else or to have an additional source of earning (or use the diversification strategy), or completely abandon agriculture. The problem is that the shrub planted their first fruit only after 4 years and results in an average by about the 15th Coffee prices are not stable, so we cannot estimate when farming is profitable, and when not to (Raynolds, Murray & Wilkinson, 2007). Arabica is grown in mountainous regions, where it is difficult to have something different. Farmers generally live in areas without schools. Their children, who with a small work on plantations (and it's ...