Fair Trade Practices

• The Equal Exchange defines Fair Trade Practices as " a set of business practices voluntarily adopted by the producers and buyers of agricultural commodities and hand-made crafts that are designed to advance many economic, social and environmental goals."
• Fair Trade originally started with a number of individual organizations known as Alernative Trade Organizations (ATOs) who committed to selling the products and merchandise of indigenous people at market. By cutting out the middleman ATOs were able to pay the indigenous producers considerably more than usual. They were still able to sell the items at a competitive price at market.
• There is ongoing confusion among consumers regarding exactly what is meant by the term fair trade. Part of the confusion has arisen from the fact the term is often used as a blanket term for any type of alternate method of commerce.
• A University of Notre Dame study found that while consumers were willing to pay a premium for Fair Trade coffee, it was only a small premium.
• In 2015, Stanford Business investigated whether despite claims that they would purchase Fair Trade goods over the run-of-the-mill variety, they follow through if price became an issue. One of the studies authors, Jens Heinmueller explained the results "There’s a lot of difference between cheap talk and real money, this research shows people are willing to pay for the label."
• The motivations as to why people were prepared to pay for fair trade products was not explored, as one of the studies authors explained, "The simplest type of assumption is that consumers derive a warm glow from supporting a program that is helping poor coffee farmers, yet there are other explanations: Consumers may buy it to keep up appearances or as a status symbol."
• One of the ongoing difficulties for fair trade has been, while consumers claim they support the practice, many are unwilling to pay the premium price that attaches to the product, as the Satemwa Tea and Coffee producers found out. Excitement, after being certified a good employer, turned to despair when they had difficulty selling their tea because of the premium attaching to the product. In the end, Satemwa was forced to sell its products through the non-fair trade channel to attract a buyer.

Summary

• There is a considerable amount of research and data available that addresses this issue. There are also a number of studies on this point, to the extent that we have barely scratched the service in our initial hour of research. We suggest a multi-pronged approach to this research, so all aspects can be addressed.