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Are consumers getting a fair deal from Fairtrade products?

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Introduction

Are consumers getting a fair deal from Fairtrade products? British shoppers have taken Fairtrade to heart and are spending more than ever on products like coffee, tea, bananas, and chocolate that are certified by the FAIRTRADE Mark to “guarantee Third World producers a better deal”. Retail sales of products carrying the Mark are estimated at over £140 million for 2004 – an increase of 51% on the previous year, and more than double the level in 2002. Consumers are buying Fairtrade products because they care about people in the world’s poorest countries who work hard to produce the goods that we enjoy, and also because they trust the FAIRTRADE Mark to ensure that producers genuinely benefit from the sale of Fairtrade products. The Fairtrade Foundation acknowledges that the integrity of the Mark, and the trust that consumers place in it, is a precious asset that must be protected at all times. The five guarantees behind the FAIRTRADE Mark are: a) A fair and stable price to farmers for their products b) The opportunity for farmers and plantation workers to improve their lives c) Greater respect for the environment d) A closer link between shoppers and producers e) A stronger position for small farmers in world markets Although a fair price is just one of these guarantees, it is often the most important one for consumers and they obviously want to see a connection between the additional income received by producers and the extra price they pay at the checkout. ...read more.

Middle

It also helps develop their skills and knowledge of the market and is always seeking out new suppliers as its business grows. This is very different from conventional business models in which companies try to buy as much as possible from a small number of suppliers in order to keep costs down. 3. The price charged by retailers for Fairtrade products depends on many different factors – it isn’t possible to define a “normal” level of gross profit • Retailers generally work on a “percentage” margin so if they pay 10% more for a product, they will aim to pass this on to their customers. However, they are also looking to get the best profit out of each unit of their shelf space and this depends on the volume of sales as well as the percentage profit – generally retailers would rather increase 1 See Standards at www.fairtrade.net 2 The period January 2000 – February 2005 volume than unit profit, say by making 10% on £1,000 of sales rather than 20% on £500; this is because more volume means more customers, and more opportunities to make additional sales. • So the margin varies across different products and across different retailers, depending on the value of sales the product generates in relation to the shelf space it occupies, and how important it is to a particular retailer’s business. ...read more.

Conclusion

The major supermarkets have all produced information leaflets and other materials to help promote the FAIRTRADE Mark, while the Co-op has even advertised Fairtrade products on television. This has been immensely valuable in raisingthe profile of Fairtrade ? but it?s also been a good strategy for the Co-op as it helps to attract more shoppers to their stores. All these different factors mean that it?s impossible for consumers to know precisely who gets what from the price they pay for products ? and this applies equally to conventional and Fairtrade products. The difference with Fairtrade is that you can be totally confident that the producers have received a price that provides a decent income and a little extra to invest in a better future for their families and communities. If you are choosing a Fairtrade product, you will of course be keen to get a reasonable price, but higher prices on Fairtrade products don?t necessarily mean that a retailer is making excessive profits, while lower prices on Fairtrade products don?t necessarily reflect a more ethical stance by a retailer as distinct from a commercial strategy. At the end of the day, as consumers we all have to make our own personal choices about who we buy from and how much we are willing to pay. The Fairtrade Foundation will continue to work with all retailers to maximize the sales of Fairtrade products as this is the best way to deliver more benefits to more people in the developing world; in doing this, it is crucial to ensure that consumers also get value for money. ...read more.

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