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Fairtrade: Building an ethical consumer brand

  • October 2015
  • -
  • MarketLine
  • -
  • 24 pages

Introduction

Commodities such as coffee and cocoa are grown by farmers who suffer from low incomes, volatile prices, and lack of capital. The Fairtrade scheme offers them minimum purchase prices and a social premium payment. With high recognition and rapid growth in sales, Fairtrade is one of the world's most successful ethical consumer brands.

Features and benefits

* Find out about the problems facing agricultural commodity producers in low- and middle-income countries.
* Discover how the Fairtrade scheme operates for producers and consumers.
* Get data on the global Fairtrade product market over the 2009-2014 period.
* Learn about how volunteer activists and development NGOs are spreading awareness of Fairtrade and the problems of poverty it is attempting to solve.
* Hear some of the criticisms that have been leveled at the Fairtrade concept.

Highlights

Global sales of Fairtrade-certified products had double-digit annualized growth over the 2009-2014 period. The UK was the world's largest market for Fairtrade products in 2014.
Small-scale coffee farmers around the world were badly affected by the "coffee crisis" around 2002, when increasing supply from countries such as Vietnam led to a slump in global coffee prices. Such volatility is typical of agricultural commodity prices.
The Fairtrade scheme guarantees a minimum price for the growers, and offers a premium that can be used to fund improved agricultural techniques and community projects such as schools. In addition, it provides a certification and labeling system that acts as an ethical guarantee to consumers.

Your key questions answered

* Why is it difficult for producers of agricultural commodities in developing countries to escape poverty?
* How does the Fairtrade scheme aim to alleviate the problems of producers?
* How popular and trusted is the Fairtrade brand around the world?
* How valuable is the global Fairtrade market, and which countries have the largest market?

Table Of Contents

Fairtrade: Building an ethical consumer brand
OVERVIEW
Catalyst
Summary
MANY PRODUCERS LACK MARKET POWER
Coffee, cocoa and sugar are mainly grown in low- and middle income countries
Producers lack economic options
Incomes are low
It is hard for producers to add value
Growers are exposed to volatile commodity prices
Diversification of crops can be difficult
Labor practices can be exploitative
Use of child labor is economically dubious
Some cocoa production uses slave labor
THE FAIRTRADE SCHEME AIMS TO REDRESS THE BALANCE
Fairtrade ensures minimum prices are paid to growers
The Fairtrade Foundation requires price risk management strategies
Standards are set out for workers and employers
The Fairtrade Premium is paid into a communal fund to improve living conditions
Products are certified and labelled for consumers
THE FAIRTRADE MARKET IS GROWING STRONGLY
Sales of Fairtrade products are increasing strongly globally
Why is the Fairtrade market expanding so rapidly?
The Fairtrade logo is well-known to consumers
The adoption of certification by major brands is boosting the market
Buying the products is presented as activism
Development NGOs provide free "marketing" in their educational and campaigning activities
There are some criticisms of the scheme
Does Fair Trade encourage oversupply?
Does Fair Trade focus too much on cooperatives?
Is the Fairtrade brand leaving other schemes in the shade?
CONCLUSIONS
Fairtrade is one of the strongest ethical consumer brands
APPENDIX
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