Is Fair Trade Efficient & A Viable Long-Run Model?

Fair trade is a movement working towards the fairer treatment of producers in less developed countries. It tries to do this by ensuring that producers are given a fairer price for their produce, and promoting sustainability by securing the rights of the producers and workers involved. The first shops that started to sell fair trade products were opened during the 1990’s mainly in countries throughout Western Europe.( Fair Trade Foundation 2010 Fairtrade Foundation chronology website: . 27th November 2010 ) Since then the movement has attracted the global eye of multinationals as well as developed countries. The movement tries to make people act upon their own conscience and buy products as well as to try to educate others such as friends and families so they can buy the products.

One of the key points of fair trade is to try to sell the products at a fair price for producers however; this has many factors taken into consideration to get to the final price. This final price is worked out by the initial cost of production followed by the cost of living followed by the cost of other subsidiaries adding their own mark ups and finally the cost of complying with fair trade conditions. The cost of production would include things such as land labour and capital all the initial costs the producer faces in making the good. The cost of living is the minimum or the fair cost of how much a person or a worker needs in surviving day to day. The cost of complying with fair trade standards is a key cost as producers are often monitored to ensure they are agreeing to their share of the deal. With the help of the Fair trade Labelling Organisation (FLO), an organisation, which ensures the fair trade name, is not being misused and people are complying with the standards of fair trade. The FLO educates producers into better book keeping methods and a general teaching of how to comply with the standards.

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The fair trade targets key minority groups and helps them. One of the ways it does this is through the formation of co-operatives. This is a collection of people from a certain community in that region who will receive a percentage of the premium of the fair trader price normally about 10% or more, and then as a community decide on how to best use those funds whether it is to better the infrastructure of the community.

However, despite all that fair trade does there may be reasons to believe that fair trade may be the second best alternative to ...

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