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Economics of Development : Fair Trade Essay

The increase on healthcare, financial stability and education are all driving forces for the purchasing of Fair Trade products, especially as the consumer relies less on the middleman and more on the direct financial advantage of the purchase. With the USA currently containing 35,000 Fair Trade retailers, it is no surprise that the sales of Fair Trade have increased by 20% since 2000. This has benefited an estimated 1. 3 million people.

Doran also highlights the problems faced by Fair Trade consumers and retailers, with competition from cheaper, non-Fair Trade retailers; Fair Trade relies on the consumers valuing ethical trade above cost. Doran explores the idea of a shift in vales from self-centric consumption to value centric, meaning that people are generally more likely to purchase what will benefit others over what will benefit homeless. Overall, Doorman’s claims and evidence suggest that Fair Trade does support development and will continue to, so long as the consumers continue to value the ethics of Fair Trade.

As people become better educated on Fair Trade and its benefits, the prosperity of Fair Trade will grow. Paul Standard outlines the growth of Fair Trade in his article ‘Development through Fair Trade: Candor or Deception? , he

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states that between 2002 and 2007 worldwide coffee consumption only increased by 10. 7%, but Fair Trade coffee sales increased by 297% in the same period, showing huge increase in consumers choosing to buy Fair Trade coffee.

Large companies recognized the demand for Fair Trade produce over non Fair Trade produce and Ben and Jerry and Cutbacks are Just two of the large, multi-national corporations who have vowed to use either wholly or largely Fair Trade products by the end of 2013. However, the main focus of Starboard’s article is based around the vagueness of the Fair Trade data, a lack of accurate, in depth data in the poorest regions where Fair Trade operates.

It has been suggested that a ‘privileged few’ producers reap the most Reginald’ producers are left with less recognition and this is supported by the claims that countries such as Mexico gain more Fair Trade activity as they are fairly developed, as opposed to the hugely under developed countries such as Ethiopia. This can be substantiated with the evidence that 23% of Fair Trade coffee is produced in Mexico alone, generating a national income of $700 million due to the 51 Fair Trade producers located in Mexico. Ethiopia by comparison has only 4 producers. Standard also claims that Fair Trade “targets countries with poor labor rights and underdeveloped legal structures. A bold claim that suggests that the ethics of Fair Trade may not be as they seem, or else why would they target countries where they will be less constrained. Standard makes claims that challenge the ethics of Fair Trade, but also recognizes the importance of Fair Trade as a means of economic growth. I conducted my own survey on the benefits of Fair Trade, focusing on the idea of who buys Fair Trade and why. I received 67 responses and the breakdown of my results was that 83. % of the respondents were aged between 18-21 and 68% were female. This gives some indication of the demographic that I will e discussing in my analysis. 61. 4% of the total respondents said that they buy Fair Trade, but only rarely, 13. 6% said they purchase Fair Trade products often and 25% said that they never buy Fair Trade products. I included a feedback response box, to allow those who said they did purchase Fair Trade products to state whether or not they purchased them specifically because they are produced fairly or for other reasons.

The answers I received included 31 people who buy specifically due to the fact it is Fair Trade, few respondents said that they would only buy Fair Trade is it as the last remaining item of a product they wanted, if it was a cheaper alternative to their usual or if it was on offer which suggests that cost is a determining factor in the purchase of Fair Trade. 3 people specifically mentioned that they feel Fair Trade products are better quality, which suggests that money is not always a bigger factor than cost; I also explicitly asked whether or not the cost of Fair Trade products affected peoples buying habits and 65. % stated that it is a deterrent. A lot of answers included the mention that buying Fair Trade made them feel better as they let they were benefiting poorer people or because they felt guilty choosing a non- Fair-Trade alternative. In my final question, I asked whether or not, to people’s knowledge, Fair Trade is a positive organization and an overwhelming majority of 94% of people stated that Fair Trade was definitely a beneficial institution. If I were to re do this questionnaire I would ask these people who said why they believed that and those who answered no, what they thought could be improved.

Since 1992 and the start of Fair Trade, trends have begun to emerge in the development of countries that are assisted by Fair Trade. When looking at the statistics of literacy and education rates, income and agriculture it is clear that countries such as Ethiopia, Latin America and the Caribbean have changed in the last ten years or so. Latin America currently has literacy rates of 92% in adults and 97% in children, making it one of the most literate countries in the world, rising from 86% in adults and 93% in children from 1990. UNESCO) Despite this being a positive change that can potentially be accredited to the work of Fair Trade, many other Nags work in Latin America to women and “Foundation Lavaliere” who aim to improve livelihood and wellbeing of he Latin American youth. (http://scones. Org/content/documents/LACK. PDF) 2,000 4,000 6,000 8,000 1992 Years GAP per capita As you can see I have taken secondary quantitative data from the World Bank in order to demonstrate the growth in GAP per capita in Mexico.

This graph is limited as the data shown only begins in 2004, after Fair Trade had already got started, but the progression shows a steady increase. Further research shows that between 1992 and 2004 the GAP per capita continued this trend of steady increase. I created this graph myself with data I collected from the UN Data website and the increasing trend evidently began in 1992, with a slight dip in 1995. This data goes some way to substantiating the point that Fair Trade has benefited development, but how much can be accredited to Fair Trade alone?

Agriculture plays a huge part in Fair Trade production, and this can be seen in countries such as Brazil, where 34% of Fair Trade Coffee is produced, and where 31% of the world’s coffee exports come from. An average of 2 million tones of coffee is produced in Brazil every year. Ethiopia is a country that produces less coffee, a percentage of only 4. 5% production and 3% sports but has huge benefits to the nation itself, 15 million small holding Ethiopians, a fifth of the population; depend on coffee for their main source of income and revenue.

Agriculture plays a vital role in Ethiopians economy, with 45% of the GAP, 90% of foreign exchange earnings and 85% of the employment depending on agricultural activities. The small holders are possibly the most important when it comes to the Fair Trade values because they are not big, huge profit organizations with million dollar turnovers, but they actually are normal people who depend on the weather and natural resources to maintain their standard of living.

This becomes evident when you look at the effects of the ‘Coffee Crisis 999-2004’ where, due to over-supply, coffee exports fell from billion to 6 billion and hundreds of thousand fell into chronic poverty. Fair Trade is not the only coffee based aid programmer in Ethiopia, with the Aroma Coffee Farmers Cooperative Union (CUFF) playing a massive role in maintaining farmer’s well-being in Africans third largest coffee producing country. However, when examining secondary data you can see that despite to the increased income of coffee producers under the Fair Trade scheme (on average $1. Per pound of coffee produced, above the poverty line) healthcare has not improved for these farmers, only 30,000 women have been trained to work in 1 5,000 health posts throughout the country and live expectancy at birth is expected to decline even further from 53 years to Just 46. Additionally, malaria is still rife within the Ethiopia, with a suspected 8-10 million cases a year. This suggests that Ethiopia becomes properly developed. In conclusion, it is fair to say that the progress Fair Trade have mad has undoubtedly benefited the development of the nations it targets, but there is still a lot to do.

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