Fair Trade Movement

Fair trade movement

Over 50 percent of the world’s coffee is grown by small scale farmers in countries with poor economic conditions. Most of these farmers who are not organized into cooperatives are at the mercy of the middlemen to sell their product; capturing only two percent - four percent of the retail price of coffee. They don’t have access to markets, capital or technology. The amount of money these producers make is hardly sufficient to cover the cost of growing the coffee; therefore they are not able to provide for their families. Fair trade movement connects producers of this kind with an importer in the developed country. Let’s look at some opportunities that arise from the differences between conventional trade and fair trade, when fair trade purchasing organizations work directly with a farmer cooperative. While conventional trade is mainly focused on profit, fair trade players balance concerns for people, profit and planet.

One of the rules of fair trade is giving coffee cooperatives a fair price. A fair price means a guaranteed minimum price regardless of how low the market price of the coffee falls. This ensures farmers a living wage even when coffee market prices are too low to maintain acceptable living standards and cooperatives can invest in their communities. By purchasing coffee from fair trade certified farmers, importers establish stable long-term relationships. This allows them to understand farmer’s needs and secure a consistent flow of high quality product. At the same time, the farmers know they have a stable market and can plan for the future.

In addition, fair trade can be considered a vehicle; allowing small producers to reach new markets and expand their variety of products. For example, introduce a new type of coffee. They do it by providing advanced financing to cover a cost of production and equipment. Otherwise, the farmers would have to borrow at high rates. Take loans that they could not pay back, making their poverty...