The Advantages and Disadvantages of Fair Trade

Fair Trade is a method of importing commodities that have been produced by workers who are paid a fair wage for their labour. Producers agree to meet particular wage and production standards in exchange for certain import advantages, rather than taking advantage of the free-market system to pay employees in the developing world next to nothing.

On the surface, Fair Trade appears to be a wonderful concept. When you dig a little deeper, you will find that the Fair Trade system also has significant downsides that must be considered. Here are some of the most important things to think about while considering imports in this production system, and the advantages and disadvantages of fair trade.

The Advantages of the Fair Trade Concept

Implementation of Improved Wage Systems

When using the Fair Trade approach, living wages are more than a few cents per hour. Many cooperatives pay workers significantly more than what the general market provides on a local level. Many cooperatives also make investments in their workers’ communities, such as modern medical care, educational opportunities, and education on sustainable food growing processes.

Multiple Extended Community Benefits

The Fairtrade approach provides benefits to entire communities through cooperatives and providers. Many people are allowed to operate in environments that are substandard by local standards, and worker safety is frequently a primary issue. The production model forbids the use of hazardous chemicals and other substances, which serves to protect families as they live and work.

Decreased Discrimination and Increased Opportunities for Women

Discrimination is prohibited for workers in a Fair Trade cooperative. This ensures that local workers have equitable access to job prospects that may not always be available. Gender and religious discrimination are the two main points of attention. That is why women make up the majority of cooperative workers, as they can earn three times as much [or more] through Fair Trade than they could through more traditional means.

A Reduction in Dangerous Child Labor

In the developing world, children are a valuable commodity. Many youngsters work long hours without receiving any compensation, or if they do, it is a fraction of what they deserve. Fair Trade practices reduce the demand for child labor by ensuring that workers are paid fairly, reducing the need for families to force their children to work to help support the home. As a result, students can instead acquire a proper education.

Improved Social Conditions

Fair Trade cooperatives have been operating in certain places for nearly 20 years, and there has been a tremendous change in the social conditions of small villages and communities.

Higher levels of profitability have resulted from improved business education, while safety and health have also improved. Farming methods have improved, resulting in larger yields with less labour. A greater standard of living has been established as a result, benefitting thousands of people.

Small Businesses Can Compete Internationally

On the international scale, small cooperatives and entrepreneurs who become Fair Trade certified can rapidly compete with major corporations. Because price and distribution are handled equitably when products are imported, big scale buyers are often unable to exploit workers or drive competitor cooperatives out of business.

Businesses are Afforded Minimum Price Protections

When a cooperative or producer receives Fair Trade certification, they are guaranteed a specific return for the commodities they create. Because the minimum price can never go below market level, many people invest in local communities. Community investments raise market pricing, allowing for a higher profit margin on the items produced.

Organic Production Flourishes

In the industrialized world, the debate has shifted to the benefits and drawbacks of ingesting GMO foods. There is no argument in the realm of Fair Trade. Organic approaches are nearly always applied, resulting in a long-term developing pattern that the environment can support year after year.

The Disadvantages of Fair Trade

Fair Trade Certification Carries Significant Fee Disadvantages

To become certified as Fair Trade, a business, an individual, or a cooperative must go through a lengthy and expensive assessment process. There are membership fees that must be paid if you are accepted, as well as annual payments to keep your certification current. The price of the membership can be several thousand dollars, putting it out of reach for some local enterprises wanting to make a difference in their communities.

Customer Bases Can Be Limited

When contrasted to “normal” products that fall outside of this type of market, Fair Trade products usually have a premium price connected with them because the fees are high, and workers earn competitive rates of pay. The rising prices do not appeal to budget-conscious consumers who opt for a lower-cost, similar-quality product, even if they find the Fair Trade model admirable.

Large Scale Buyers Rarely Consider Fair Trade Products

The world’s largest product buyers are now considering the total cost of their inventory purchase. If factory agriculture and assembly line production can produce things of comparable quality at a 20-30% lower cost, the major buyers will buy the less expensive product. This makes it difficult for Fair Trade providers to gain a meaningful foot in the door, and as a result, the environment suffers because of profit-driven rather than sustainable methods being the norm.

Fair Trade Community Standards Have Become Distorted

The Fair Trade model been criticised for manipulating and warping the global economy, and it also excludes some of the world’s poorest workers and farmers. This means that the Fair Trade model could be driving certain people out of business in order to sustain itself, which is the exact opposite of why it was introduced in the first place.

The advantages and disadvantages of Fair Trade demonstrate the importance of ensuring that immoral practices are no longer hidden. Instead of focusing on low-cost goods and services, we should focus on the working conditions of those who produce the things and services we consume. These laborers are frequently exploited by low prices. Although Fair Trade policies are not perfect, they do aid in the prevention of free-market exploitation.