Fair Trade: A Social Responsibility

Emily Wiley

December 3, 2010

“On world food day one billion people around the globe will go to bed hungry” according

to the Fair trade foundation (Fair Trade Foundation, 2010). Fair trade could be the answer. Fair

trade is a system of trade that relies on creating direct communication between global businesses

and the producing communities that provide businesses with the food they sell. Through fair

trade, farmers will receive a fair price for their products, have more direct involvement in the

market place, and be able to keep up with environmental and labor rights standards (Green

America Come Together). It can also give consumers the power to purchase goods that will

support the fair trade movement and help farmers all over the world. Without these business

practices that lead to the achievement of economic, social, and environmental goals, small,

family owned farms in North America will soon face the problems that developing countries

around the world are already facing, such as hunger. These farmers are providing the goods to be

sold, yet they get an ever-decreasing portion of the profits from the food they grow and sell. Fair

trade started with Alternate Trade Organizations, or individual companies who commit to work

directly with producing communities in the U.S. and in developing countries to market their

products directly with consumers. These organizations created equal exchange, meaning they

take out the middlemen and provide direct communication between the producer, seller, and the

consumer. This provides a better price for consumers while also giving farmers their fair share of

the profits. The three main crises that will increase this growing problem are rising food prices,

the global financial crisis, and crop failures.

Rising Food Prices

The price of food is increasing by almost 40 per cent throughout the next decade, despite

the fact that there is a growing demand from these markets. Hunger is spreading along with food

insecurity due to “price spikes” and the economic financial crisis (Allen, 2010). Farm

commodity prices reached record peaks two years ago, have fallen, are expected to rise back up

again and will eventually drop to original levels from previous decades. Wheat and grain have

experienced a 15 percent to 40 percent rise, while vegetable oils are 40 percent higher and dairy

is 16 percent higher. Even more detrimental, corn prices have risen 20 percent, which leads to

problems for corn-fed livestock farmers, making the price of meat rise even though there is an

increasing demand for meat (Keefe, 2010). Another problem influencing the price of food is the

expanding biofuels industry, causing a greater need for wheat, coarse grains, vegetables, oils, and

sugar (Allen, 2010). One billion people are thought to be under nourished due to the rise in food

prices, and in order to solve this investments are needed to encourage these people that depend

on smallholder agriculture. This will increase profits and will “increase prosperity in poverty

stricken regions” (Allen, 2010). Also, agricultural production must become more productive and

needs a well functioning trading system to guarantee fair competition. This will also help surplus

food get to where it is needed most. For developing countries Brazil, China, India, Russia,

Ukraine, and many others, their policies will have greater importance in the conditions of global

markets.

The Global Financial Crisis

A recession is “a significant decline in activity across the economy, lasting longer than a

few months” (Investopedia). It can be seen in employment, industrial production, income, and

whole-sale retail trade. Whole-sale retail trade affects the food industry and fair trade, and

through the global financial crisis consumers and farmers alike will lose money, jobs, and

opportunities. Along with rising food prices, the recession is partly to blame for the growing

hunger that is taking place in parts of the U.S. and even more so in developing countries, since

consumers cannot afford the increase in food prices.

Crop Failures

Weather conditions are growing harsher for farmers and their crops due to the global

climate change, causing crops to fail more than ever. Examples are excessive droughts in Brazil

while heavy rains pound Canada and Europe. The U.S. is even experiencing drought in some

places (Keefe, 2010). The crop failures that Russia is experiencing could become more common

around the world due to the changing weather patterns, causing more heat and drought stress. In

China, “more than 35 percent of crops may fail through 2099” (Ruitenberg, 2010). The

adaptation of new crops that can better handle heat, water, and lack-of-water stress, along with

the modernization of farming methods and improvement of social and economic conditions

could prove to be beneficial to farmers all over the globe.

Fair trade can ensure a fair price to consumers while also giving producers their fair share

of the profit, while also helping in this time of economic need by allowing farmers and producers

to continue to get a profit while providing our grocery stores with necessary products. Crop

failure will not be as detrimental with the help of fair trade, seeing as how farmers will be better

able to afford to take care of their crops. Overall, fair trade will affect the global market by

improving the standards in which food is produced and sold. This issue is much more extreme

than I imagined, seeing as how farmers are losing their livelihood and more people are starving

every day. Fair Trade is the answer for these farmers to end their fight for survival, and is a way

to aid developing countries and help them to be more productive, while also helping consumers

to save money during this hard economic downturn.

Bibliography

Allen, K. (2010, June 15). Guardian.co.uk. Retrieved December 3, 2010, from Food prices to rise by up to 40% over next decade, UN report warns: http://www.guardian.co.uk/business/2010/jun/15/food-prices-rise-un-report

Equal Exchange. (n.d.). Retrieved December 3, 2010, from Fair Trade: http://www.equalexchange.coop/fair-trade

Fair Trade Foundation. (2010, October 15). Retrieved December 3, 2010, from Business As Usual Is Not An Option On World Food Day: http://www.fairtrade.org.uk/press_office/press_releases_and_statements/october_2010/business_as_usual_is_not_an_option_on_world_food_day.aspx

Green America Come Together. (n.d.). Retrieved December 3, 2010, from Fair Trade: http://www.greenamerica.org/programs/fairtrade/

Investopedia. (n.d.). Retrieved December 3, 2010, from Recession: http://www.investopedia.com/terms/r/recession.asp

Keefe, J. (2010, October 11). MoneyWatch.com. Retrieved December 3, 2010, from Food Fight: Crop Failures Mean Higher Food Prices Worldwide: http://moneywatch.bnet.com/economic-news/blog/macro-view/food-fight-crop-failures-mean-higher-food-prices-worldwide/2647/

Ruitenberg, R. (2010, October 7). Bloomsberg Business Week. Retrieved December 3, 2010, from Crop Failures to Increase on Climate Change, Researchers Say: http://www.businessweek.com/news/2010-10-07/crop-failures-to-increase-on-climate-change-researchers-say.html