If you have recently heard the word “Fair Trade” or purchased a product with the Fair Trade label in the supermarket, this post is for you! So, how much do you really know about Fair Trade Food products? Is it a brand such as Cadbury or Madhusudan? Does it taste good or exotic? Let’s dive right in to know what exactly a fair trade is.
Yes. It is a business brand launched by World Fair Trade Organisation which is currently operating in more than 70 countries and empowering the small farmers and growers worldwide. World Fair Trade Organisation is a non-profit federation which has been helping a million of small farmers all over the world to obtain an equitable profit during the supply chain management. If you see any product labelled as Fair Trade Organization (FTO), it means an equal part of the price you pay to the seller while purchasing would be given to the farmer who produced it- no exploitation, no discrimination!
While talking about the agricultural business & marketing in India in particular, this first step towards farmer innovation has been helping the small growers & farmers’ community in the backward agricultural areas- especially in South.
On closely looking at the supply chain management that is prevalent in many provinces, states and countries, you can easily understand the need & role of Fair Trade in the global market.
Supply Chain Management Since Past Few Years
In a supply chain management cycle, the seller who is directly making the deals with the customer gains much profit than the ones who have supplied, distributed, or manufactured the product. The main grower, farmer or manufacturer lies in the periphery of marginal costs upheld throughout the chain. A farmer sells the food grains he produced to the local moneylenders, village traders, or the buyer at a fixed price to those who have shop at outside the village or far away from agricultural land, mainly to the city people. The one who has a large agricultural land leading to a plenty of food grains or products produced is the one who undertakes relatively higher profits than the one who owns a small land or grows the food grains/crops at a smaller scale. This is so because an established farmer takes advantage of government subsidies and easy access to credit which falls out of small farmers’ reach.
Therefore, the small farmer or the primary source of production is not paid with the deserving amount as the funds given by a customer while making purchase decreases with the number of players in the supply chain. This has led to great exploitation of small farmers as they can’t do anything about it. They must sell their products to the buyer at any cost which is better than no sale at all.
This has been observed by the Fair Trade organization & thus made efforts to help the small traders grow, earn an easy living, and avail the equitable fund through the means of production and consumption.
What does Fair Trade do?
Fair Trade picks the agri-products or other commodities from the local small farmers, and market them to the consumers with a fixed minimum price plus a Fair Trade premium. The fixed price compensates them for the resources, materials and hard work invested in the production whereas the Fair Trade premium gives the farming community an additional amount which they can use to establish decent working or living conditions for betterment.
This premium price or fund is then invested in building schools, toilets, colleges, houses etc., for the farmers' community. It eventually has uplifted more than 20, 000 farmers & labourers in India alone and provided them with the better occupation and career prospects to their offsprings.
The Fair Trade mainly provides the products such as coffee, handicrafts, sugar, bananas, chocolates etc., which you can identify with the Fair Trade label. All its products are assured with the quality, and justified the premium price to the labour, farmers and workers. These are supplied to the supermarkets, and direct markets only after the certification and verification of the compliance to the Fair Trade principles.