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Introduction To The Fair Trade Market System

By Odessa Edwards

The fair trade market system represents an organized effort to provide farmers and workers in developing countries with fair prices for their product and labor. Apart from improving the lot of individual producers and traders, the system also enables community development and sustainability. This movement, which began in support of coffee producers, now boasts of a 1.24 million strong membership involved in the production and sale of all kinds of commodities and other products such as handicrafts and apparel.

Before signing off on the dotted line, it might be a good idea to take some time to grasp the concept and functioning of these markets and the organizations that manage the whole show. For example, it's critical to understand the context under which terms such as "fair trade" or "Fairtrade" are used. The former refers to the production and trading methods used by the movement, while the latter is the organization which takes responsibility for certification and audits.

The way it works is simple, but at an unimaginably vast scale. If a brand such as Starbucks or any other company wants to use the Fairtrade label on its products and in its stores, it must first get itself certified by Fairtrade USA and/or Fairtrade International. It must also ensure that its coffee seeds are purchased only from certified traders and producers, and the branded end product bearing the label must be sold only by certified retailers.

Fairtrade provides certification after making site visits. They also do regular follow-ups afterwards in the form of audits and inspections. The auditing of large brand-name companies ensures that farmers and workers in developing countries get promised premium rates. This process is carried out in the U. S. By Fairtrade USA, while companies in the rest of the world must contact the nearest branch office of Fairtrade International.

When a community in a developing nation hosts a fair trade market, it has the potential to secure huge benefits. These markets offer stable prices that will not drop below a certain minimum level, thus preventing exploitation of producers and traders due to the vagaries of global commodity exchanges and pricing. The best part is that businesses are required to invest the Fairtrade premium they get into community development projects and incorporating sustainable practices into their operations.

Over time, this leads to all kinds of infrastructure becoming available in these communities. This can be reliable power supply, clean water, sewerage systems, schools, hospitals, etc. A lot of cooperatives that are a part of Fairtrade use the premium to provide loans at low interest rates to members, who in turn are able to make capital investments and grow their business faster.

The movement also plays a major role in efforts to conserve resources and save the planet. A majority (60 percent) of Fairtrade's membership of 1.24 million is located in resource-challenged African and Middle-Eastern communities. The agricultural production efficiency and output in these areas has grown tremendously due to these hundreds of thousands of farmers opting for sustainable methods.

The unqualified success of the fair trade market system can be attributed mostly to consumer-driven trends in the West. A good example is Starbucks, which was dragging its feet until social and environmental activists launched a campaign that made coffee-drinkers aware of the issue. Faced with the threat of boycotts, thousands of Starbucks stores started using the Fairtrade label, leading to huge gains for coffee producers and their communities all over the world.

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