Fairtrade International: Applying Environmental Economics

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Introduction

Much has been said regarding the need for sustainability. It is a viable concept but in reality businessmen had to consider the profitability of their company. In the case of agriculture the backbone of a nation’s economy the farmers had to be convinced that their hard labor is being compensated. Yet since big corporations are forced to lower operational cost they have created a system of lowering the value of farmers’ output. As a result corporations get richer while farmers – especially those supplying raw materials from the Third World countries – continue to remain dirt poor. On the other hand these farmers have nowhere to go and therefore they are forced to utilize non-sustainable farming practices to the detriment of the environment. Fairtrade International hopes to empower the farmers in order for them to develop farming practices that are sustainable and help conserve natural resources.

Fairtrade international

A great deal has been said regarding the need for sustainability. It is a viable concept but in reality businessmen had to consider the profitability of their company. In the case of agriculture the backbone of a nation’s economy the farmers had to be convinced that their hard labor is being compensated. Yet since big corporations are forced to lower operational cost they have created a system of lowering the value of farmers’ output. As a result corporations get richer while farmers – especially those supplying raw materials from the Third World countries – continue to remain dirt poor. On the other hand these farmers have nowhere to go and therefore they are forced to utilize non-sustainable farming practices to the detriment of the environment. Fairtrade International hopes to empower the farmers in order for them to develop farming practices that are sustainable and help conserve natural resources.

The power of Fairtrade to change the way raw materials are processed and consumed is in creating a link between the farmers and the end users. In the modern age the connection between farmers and consumers has been severed by the creation of multinational corporations developing plantations in Third World countries and then manufacturing and processing products that will be priced way beyond what was paid to the farmers. By creating a link to the consumers, the end users can increase the earning capability of the farmers because there is a now a way to ensure that a minimum amount has to be paid for their produce. Thus, the bargaining power of poor farmers had been enhanced through Fairtrade.

The Strategy

The price of goods is the key to the strategy. Farmers will not be inspired to work harder and use eco-friendly tools if they cannot find the reason for doing so (Burningham, Davies, & Grant, 2004).

However, the quality of the produce must be at par with other suppliers or else consumers would shift to other sources of products. It is important that Fairtrade International partner with producers to help them increase their capability to increase the quality of their produce while lowering cost (Reynolds et al., 2007). In the same level Fairtrade International has to increase the number of commercial partners and increase their commitment in order to increase demand for Fairtrade labeled products.

Fairtrade Prices

For producers that are under the Fairtrade scheme can be assured of a minimum price for their goods. Thus, farmers will never be at the mercy of market forces. They will be assured that the cost of production is covered therefore they can plan ahead and develop sustainable practices.

Fairtrade Premium

Fairtrade International helps producers develop organizations that are mindful of their welfare. Thus, funds coming from commercial partners can be channeled to these organizations and used to improve the lives of the farmers and their families.

Fairtrade Products

Bananas
Cocoa
Coffee
Cotton
Flowers
Fresh fruit
Honey
Gold
Juices
Rice
Spice and Herbs
Sports Balls
Sugar
Tea
Wine

The list means that Fairtrade covers a wide range of products. These are also products that can easily be exploited by multinational corporations that can use cheap labor and unfair practices.

Banana

Multinational corporations corner a huge share of the market. Thus, it is easy to exploit farmer by forcing them to use non-sustainable farming practices. Others are forced to sell their produce at a very low price. Fairtrade gives banana farmers the power to change their economic, social, and environmental conditions.

Coffee

Fairtrade members are assured of a minimum price for their produce. At the same time they have access to technical knowledge regarding recent trends in coffee production as well as access to commercial partners willing to invest in their labor.

Starbucks is the largest purchase of Fairtrade coffee. Starbucks being the largest purchaser of Fairtrade coffee is the evidence that sustainable practices can be profitable.

Poor Farmers – Third World Economy

Most of the time businessmen are only interested in increasing revenue therefore there is little regard for management of resources for the benefit of future generations. It is time to change this mindset and develop strategies that would not discount the value of future generations.

Environmental Economics

It is time to change the way people see the economy and the environment. There is a way to merge the two in order to develop sustainable practices that are not only worth listening to in the classroom but something that is attractive to both consumers and producers. Gandhi’s quote is taken from Burningham, Davies, and Grant.

Fairtrade is a Movement

Fairtrade will not succeed if it remains an organization. It will change the world if it become a movement supported by consumers, commercial partners and producers. It has to be made clear that it is more expensive to produce something that benefits the farmers and the environment. Thus, there must be a commitment from the consumer-end of the production cycle so that farmers are empowered to develop and maintain sustainable farming practices.

References

Burningham, D., J. Davies, & S. Grant. (2004). Environmental Economics. Oxford: Heinemann Educational Publishers.

Fairtrade International. (2011). Challenges and Oppurtinities. Web.

Markandya, A. (2002). Environmental Economics for Sustainable Growth: A Handbook for Practitioners. UK: Edward Elgar Publishing Ltd.

Reynolds, L. et al. (2007). Fair trade: The challenge of Transforming Globalization. New York: Routledge.

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