Intro

Fairtrade and organic products both fall under the umbrella of ethical consumerism. Ethical consumerismrelates to the consumers’ decision to purchase certain products over others due to the ethical issues related to them. ‘By choosing certain products over others…consumers can embrace or reject particular environmental and labour practices and make other value claims based on the ethical values they hold’ (Kirchhoff, 2014).
Organic and Fairtrade produce has become a popular trend, being described as a social phenomenon (Carrier and Luetchford, 2012). This shows that consumers are becoming more conscious in their choices of products; they are more considerate in regards to where their products come from and how they are made, in conjunction with other social and environmental aspects. The result of this is a constant growth in popularity for Fairtrade and organic products.


Fairtrade

What is Fairtrade?

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Fairtrade is a globally recognised movement and brand that looks to offer better work-standards and payment for the farmers and workers of products. ‘Fairtrade is a movement for change that works directly with businesses, consumers and campaigners to make trade deliver for farmers and workers. We are a global organisation working to secure a
better deal for farmers and workers’ (Fairtrade, 2015).






What Fairtrade does

‘Fairtrade works to benefit small-scale farmers and workers, who are amongst the most marginalised groups globally, through trade rather than aid to enable them to maintain their livelihoods and reach their potential’ (Fairtrade, 2015). Upon the purchase of a Fairtrade product, the initial farmers and workers gain a fairer share of the profit. This exceeds the payment products that do not possess the Fairtrade mark give to their farmers and workers.


(Fairtrade Foundation, 2012)



The success of Fairtrade


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Year by year, the sales of Fairtrade products have been growing across all continents (see Figure 1). This illustrates that despite Fairtrade products being slightly more expensive in comparison to supermarket own-brand options, consumers are considering the social benefits of purchasing Fairtrade products; not only in one region, but globally. As a result of this, it allows the farmers and workers who produce these products to gain a better standard of life. This growth could also be a result of Faitrade’s ability to offer a larger selection of their poducts to the consumer, as year upon year more companies are obtaining the Fairtrade brand within their own products. Therefore, consumers may be purchasing the same product (possibly due to brand loyalty) which may have only recently taken on the Fairtrade mark and therefore consumers are helping without even knowing.







Advantages


For producers:

1. Stable prices
The vast majority of Fairtrade products possess a Fairtrade minimum price; this is done with the aim of sustaining the costs of production. Subsequently, producers will not suffer due to being part of a price war.

A further look into Fairtrade Minimum Prices can be found on this table here.


2. A Fairtrade premium
This Fairtrade premium is an add-on to the agreed Fairtrade price and is used to improve the lives of producers. The producers decide amongst themselves how it will be spent and more often than not it is invested into the society itself. This is through healthcare, education and farm improvements.


3. Partnership
This refers to the partnership between producers and the Fairtrade International Board. Producers are constantly in communication with the Board by talking to people from its Committees. By doing so, producers can have an influence over the Fairtrade minimum price, premium and standards.


4. Empowerment of farmers and workers
By working with producers and allowing them to better their lifestyles, Fairtrade are providing an opportunity to give them more of a future. This opportunity is offered through the Fairtrade premium (mentioned previously) and is spent as seen fit by those on the committee representing their fellow workers. Empowerment of farmers and workers is the main goal of Fairtrade.

(Fairtrade International, 2011)


Fairtrade argue that by purchasing Fairtrade products, everyone wins. This includes the consumer, traders/companies and the environment.
For consumers, Fairtrade produce provides the option to purchase a product that possesses underlying principles that match their own. As the range of Fairtrade products expands, it allows consumers to have increased choice.
For traders and companies, possessing products that are labelled with the Fairtrade mark (launched in 2002) is extremely positive. It awards them a greater credibility as it is recognised worldwide. This also directly links with the company’s social corporate responsibility strategy.
In terms of the environment, producers must follow a number of regulations in order to remain under Fairtrade. These include:
  • Protect the environment in which they work and live. This includes areas of natural water, virgin forest and other important land areas. As well as dealing with problems of erosion and waste management.
  • Develop, implement and monitor an operations plan on their farming and techniques. This needs to reflect a balance between protecting the environment and good business results.
  • Follow national and international standards for the handling of chemicals. For this there is a list of chemicals which they must not use.
  • Not, intentionally, use products which include genetically modified organisms (GMO).
  • Work out and monitor what effect their activities are having on the environment. Then a plan must be made as to how they can lessen the impacts before then checking that this plan is executed.


(Fairtrade International, 2011)

Disadvantages

Although there are many advantages for purchasing Fairtrade products, seemingly to all parties involved, there are also drawbacks.
Firstly, Crane and Matten argue that ‘the increased commercialization of the fair trade movement could potentially put pressure on its ethical standards’(2007). This could result in many rules and regulations not being updated over time due to so many large, influential companies that have commercialised Fairtrade being able to have a say in how it is run. Therefore, in the future, the progress and growth of Fairtrade may stagnate, affecting the producers whom Fairtrade was founded solely to help.
Davis and Crane offer another disadvantage when they state that ‘strict regulations, for instance of the national fair trade body in the UK, can effectively impose what they call a ‘moral curtain’ on ethical decision-making’ (2003). They believe that Fairtrade can use their higher power attained through a said ‘moral curtain’ to affect decision making. This means that the early stages of the supply chain, in which Fairtrade are more active, are almost sacrosanct. As it is seen to be more ethically just, they will not be ridiculed as much as the later stages of the supply chain, such as the marketing, sales and retail of the final product. This could eventually put a strain on relationships between Fairtrade in addition to companies and businesses active in the later and final stages of production.

Changes in Fairtrade over time



Fairtrade recently celebrated their 20th anniversary in 2013 and they have gone through some massive changes over these years.

Fairtrade celebrates 20 years



Why is Fairtrade relevant to the business world?


Fairtrade products are constantly growing both in sales and product choice, thus showing that there is a current demand for it in the business world (see Figure 1). It is constantly growing and is predicted to grow further. A major example of this is one of Fairtrade’s first products, coffee: “In 1998, Fair Trade USA’s first year, 76,000 pounds of coffee were certified. In 2013, 154 million pounds were certified. In total, Fair Trade USA has certified more than 1 billion pounds of coffee” (Clifford, 2014). The change in sales from 1998 and 2013 are substantial and go to show just how far Fairtrade have come, the addition of major brands such as Starbucks and Waitrose reiterate this.
This trend of consumers caring more about where their products come from in regards social and environmental aspects is a major factor for the growth of Fairtrade.



Organic products

What are organic products?


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Lampkin defines organic farming as “a system which seeks to avoid the direct and/or routine use of readily soluble chemicals and all biocides whether naturally occurring, nature identical, or not” (1992). This definition relieves the common misconception that organic farming is farming ‘without chemicals’. This is because all material, both living and dead is composed of chemical compounds.
Using the United States as an example, the market for organic produce has grown rapidly, being “up 12 percent last year, to $12.4 billion, compared with 2010, according to the Organic Trade Association” (Chang, 2012).


Success of organic products

Organic products sell differently across the world. However, “more than 80% of all organic food sales in the EU take place in only four countries; Germany, the UK, France and Italy” (The Scottish Government, 2011). Figure 2 illustrates the sales of organic produce from years 2001 to 2009. Overall, there is steady growth in the sales of organic produce, although sales in the UK look to be declining from 2008 to 2009. This links to what Smithers states, according to Smithers, this decline continues for a number more years, right up until 2013. In 2013, the number of sales finally started to show a rise to £1.79bn in 2013 – up from £1.74bn in 2012 (2014).

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Advantages



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All of the advantages to organic food stem from comparing them to their non-organic alternatives.


Firstly, non-organic produce use pesticides during the farming process, these pesticides can leave a residue on the produce and by consuming this produce; the consumer will be consuming this. Although it can be argued that the government do have limits on how much of this residue is allowed to be on produce and it is ensured that this is never exceeded for safety reasons (Mayo Clinic Staff, 2014). Some consumers prefer not to take this risk and choose the organic option as there is no pesticide residue at all.

Following this advantage of organic produce not possessing a pesticide residue, this also means that it cannot damage the water supply through eutrophication. Eutrophication is the process in which fertilisers that are used in non-organic farming methods run off into nearby water and cause an increase in nutrient levels. This has a knock on effect on both plant life and the animal life that resides in the water (Water Pollution Guide, 2015). Figure 3 illustrates this



Organic produce contain no food additives, preservatives or fortifying agents such as artificial sweeteners, colourings and flavourings. Therefore, many shoppers who like to watch what they put into their bodies, or that of their families, prefer to select organic produce for cooking and eating.
Organic farming methods and practices are specifically designed to best benefit the environment that surrounds it. As a direct result of this, a number of consumers choose to purchase them instead of non-organic produce.

Disadvantages


One of the major drawbacks to purchasing organic produce over the non-organic alternatives is that organic is more expensive.

The image below shows the price difference between non-organic whole chickens and organic whole chickens in ASDA as of the 18th February 2015. It clearly shows that the organic option is more expensive.

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Another disadvantage to organic products is that they may spoil faster. This is because they have not been treated with preservatives and this in turn affects the shelf-life of the product. However, some consumers choose to purchase organic products due to the fact that preservatives and additives are not added, so they will already be aware of this; it is not a high deterrent.

Is organic produce more nutritional than non-organic?

There has been a lengthy debate as to whether organic products are healthier and more nutritious for you in comparison to their non-organic competitor.

A team from Newcastle University conducted an experiment in which they grew fruit, vegetables and reared cattle on adjacent organic and non-organic sites across Europe. Their results showed that up to 40% more antioxidants could be found in organic fruits and vegetables than in non-organic. This experiment shows that organic produce provide much more nutritional benefits that non-organic. (BBC News, 2007)

In contrast to this, Stanford University conducted a comparison experiment between organic and non-organic products in 2012. Their findings proved to be very different results as they concluded that “fruits and vegetables labelled organic were, on average, no more nutritious than their conventional counterparts, which tend to be far less expensive” (Chang, 2012).

These experiments differ as one (Newcastle study) was conducted in Europe whilst the other (Stanford) was conducted in the United States. This could affect the results as the surrounding environment will not be the same. However, although both studies were conducted by universities, the Stanford University must be seen as more reliable as it is more recent by five years, the Newcastle University study was conducted in 2007 whereas the Stanford was in 2012.

Changes in organic produce over time

As mentioned earlier in the Success of organic products section, the sales of organic produce had been in decline. However, that changed as of 2013 and this trend is expected to rise further.

The timeline below displays the development over time for organic products and how the trends have changed in terms of the popularity of organic produce. As shown in the illustrated timeline, organic produce becomes more popular and mainstream after the 90’s. Light predicted this by stating that the “organic produce market is going to boom and demand for products offers great potential for food producers as organic is becoming mainstream” (Light, 1996).

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Why are organic products relevant to the business world?

Similar to that of Fairtrade products, the sales of organic products directly correlate with the consumer’s interest in where their food comes from and the social and environmental factors that stem from it.

As well as this, the popularity of organic produce is definitely linked to the perceived health benefits that they can offer over the alternative non-organic produce. Although this is constantly debated, consumers may not look into media and scientific documentation for an answer, therefore once they are told that organic produce comes with many health benefits, they believe it.
Therefore, like Fairtrade products, organic produce is relevant to the business world as there is a demand for it. If there is a demand for something, it is the business world’s obligation and job to supply for it.








References

Baourakis, G. (2004). Marketing Trends for Organic Food in the 21st Century. Singapore: World Scientific.

BBC News (2007) Study hails organic food benefits [Online] Available from: http://news.bbc.co.uk/1/hi/england/tyne/7067226.stm [Accessed 18 February 2015].

Carrier, J.G, Luetchford, P. (2012). Ethical Consumption: Social Value and Economic Practice. Oxford: Berghahn Book.

Chang, K. (2012) Stanford Scientists Cast Doubt On Advantages Of Organic Meat and Produce [Online] Available from: http://www.nytimes.com/2012/09/04/science/earth/study-questions-advantages-of-organic-meat-and-produce.html?pagewanted=all&_r=0 [Accessed 18 February 2015].

Clifford, C (2014) How Fair Trade Went From a Crazy Coffee Concept to a Global Sustainability Trend [Online] Available from: http://www.entrepreneur.com/article/235435 [Accessed 18 February 2015].

Cox, S. (2007) Uprooting the organic claims [Online] Available from: http://news.bbc.co.uk/1/hi/magazine/6595801.stm [Accessed 19 February 2015]

Crane, A. and Matten, D. (2007) ‘Suppliers, competitors, and business ethics’ In: Business Ethics. Second Edition. New York: Oxford University Press Inc: 390-394.

Davis, I.A. and Crane, A. (2003) ‘Ethical decision-making in fair trade companies’. Journal of Business Ethics, 45 (1): 79-92.

DeCarlo, J (2011). Fair Trade and How It Works. New York: The Rosen Publishing Group.

Fairtrade Foundation (2015) Coffee [Online] Available from: http://www.fairtrade.org.uk/en/farmers-and-workers/coffee [Accessed 17 February 2015].

Fairtrade Foundation (2014) Fairtrade celebrates 20 years! [online video] Available from: https://www.youtube.com/watch?v=ibiKlB50wKA [Accessed 20 February 2015].

Fairtrade Foundation (2012) Take a Step for Fairtrade I Full campaign movie. [online video] Available from: https://www.youtube.com/watch?v=J60mvcp_Q_E [Accessed 20 February 2015].

Fairtrade Foundation (2015) What Fairtrade does [Online] Available from: http://www.fairtrade.org.uk/en/what-is-fairtrade/what-fairtrade-does [Accessed 17 February 2015].

Fairtrade Foundation (2015) Who we are [Online] Available from: http://www.fairtrade.org.uk/en/what-is-fairtrade/who-we-are [Accessed 17 February 2015].

Fairtrade International (2011) Minimum Price and Premium Information [Online] Available from: http://www.fairtrade.net/price-and-premium-info.html [Accessed 17 February 2015].

Fairtrade International (2011) Benefits of Fairtrade [Online] Available from: http://www.fairtrade.net/benefits-of-fairtrade.html [Accessed 17 February 2015].

Fairtrade International (2014) Monitoring the Scope and Benefits of Fairtrade, 5th Edition – General Overview [Online] Available from: http://www.slideshare.net/fairtrade/monitoring-data-ppt-saveaspdf?ref=http://www.fairtrade.net/impact-and-research.html [Accessed 17 February 2015].

International Trade Centre (2006) Fair Trade [Online] Available from: http://www.tradeforum.org/Fair-Trade/ [Accessed 19 February 2015]

Kirchhoff, C. (2014) 'Ethical consumerism'. Encyclopædia Britannica.

Langen, N (2012). Ethics in Consumer Choice: An Empirical Analysis based on the Example of Coffee. Germany: Springer.

Light, E. (1996). Organic Take Root. NZ Business. 0 (0), 0.

Mayo Clinic Staff (2014) Organic Foods: Are they safer? More nutritious? [Online] Available from: http://www.mayoclinic.org/healthy-living/nutrition-an d-healthy-eating/in-depth/organic-food/art-20043880 [Accessed 18 February 2015].

Smithers, R. (2014) Organic food and drink sales rise after years of decline [Online] Available from: http://www.theguardian.com/environment/2014/mar/13/organic-food-drink-sale [Accessed 18 February 2015].

The Scottish Government (2011) Organic Futures: An Action Plan for organic food and farming in Scotland [Online] Available from: http://www.gov.scot/Publications/2011/03/14093552/4 [Accessed 18 February 2015].

Whole Foods Market (2015) Organic Industry Timeline [Online] Available from: http://www.wholefoodsmarket.com/mission-values/organic-farming/organic-industry-timeline [Accessed 19 February 2015].

Water Pollution Guide (2015) Eutrophication [Online] Available from: http://www.water-pollution.org.uk/eutrophication.html [Accessed 20 February 2015].

World Bank (2005) Agriculture Investment Sourcebook: Agriculture and Rural Development. Washington DC: World Bank Publications.

World Resources Institute (undated) About Eutrophication [Online] Available at: http://www.wri.org/our-work/project/eutrophication-and-hypoxia/about-eutrophication [Accessed 20 February 2015].

Additions


How fair is fair trade?


The UK is at present the world’s biggest fair-trade market and yet it continues to grow. There are more than 2,500 product lines in the UK that carry the Fairtrade mark. Last year the UK spent £290 million on fair trade food, furniture and clothing which was an increase of 46% compared to the previous year (The Independent, 2012.) However there is much debate surrounding whether fair trade is as fair as everyone initially assumes. An article taken from The Independent raises the concern that it is not possible for poorer or remote farmers to be helped by the Fair Trade Company. A report from the BBC has given a democratic account surrounding the issue. It demonstrated that some of views of Fairtrade spend the majority of the time focusing on initially providing a fair price for the poorer farmer. However it has been argued that the Fair Trade Company should prioritise issues that arise for the farmers such as mechanisation and industrialisation. This would therefore erase the issue of the farmers in the developing world carrying out back- breaking work and would put an end to the poverty cycle (Spiker, 2010.)This seems a fair argument for the main reason that it would eventually in the long term mean they would be able to work in competing on the similar level overall. Within the report was a quote from Steve Daley who is from the Worldwrite charity and he states that ‘how can a few extra pennies a day from Fairtrade be celebrated as an outstanding achievement?’ He further carried out a report in the Financial Times with information with the fact that in Peru coffee farmer where being paid 10 soles a day for working 6.00am until 4.30pm. In conclusion he revealed that this was not a massive increase compared to regular famers who were getting paid 8 soles. He concluded the article stating that ‘Fairtrade seems to be rooted in a conviction that small is beautiful, thinks they need to focus more on developing modern agricultural methods. He states that ‘flattering Western shoppers’ is what fair trade is all about’ (BBC News, 2007). Other critics have agreed along similar lines as Daley, with their argument being that they feel that Fair Trade could be a trap for farmers, ‘tying them into a relationship of dependence with charity-minded shoppers in the West.’ Madsen Pirie who works for think-tank of the Adam Smith institutes says that ‘protecting the market for certain producers, the movement effectively makes farmer prisoners to our market.’

References:


BBC News (2007) How fair is Fairtrade? [Online] Available from: http://news.bbc.co.uk/1/hi/magazine/6426417.stm [Accessed 21/04/2015]

Morrison, S. (2015) ‘Fairtrade: Is it really fair?’ The Independent [Online] Available from: http://www.independent.co.uk/news/world/politics/fairtrade-is-it-really-fair-7717624.html [Accessed 21/04/2015]


Spicker, P. (2011) Stigma and social welfare. [e-book] Croom Helm. Available from: http://www2.rgu.ac.uk/publicpolicy/introduction/books/Paul%20Spicker%20-%20Stigma%20and%20Social%20Welfare.pdf [Accessed 21/04/2015]