Fair Trade Case Study.docx
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Fair Trade Case Study.docx
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FairTradeCaseStudy
1.0Background
FairTradecommonlyfocusesonthefigureofthesmallholdingpeasantproducer.Theeffectivenessofthisasastrategyliesinthewidespreadappealofaneconomybaseduponindependentfamilyproducerstryingtosecurelivelihoodsinimpersonalandexploitativeglobalcommunitymarkets.TheFairtrademovementhasachievedconsiderablesuccessinrecentyears.ThesuccessofFairTradeextendsbeyonditssalesfigures,asitisalsocreditedwithhavingputpressureonmainstreammanufacturestobemoreethnicalandtoadoptmoreofastakeholderapproachinbusinesstransactions(Madeley&Litvinoff,2007).
However,beneaththeapparentsuccessremainsomefundamentalquestionsandtensions.Theculturallyappealingmoralitytaleneedstobeexaminedbydocumentingkeyaspectsofthepoliticaleconomyofcoffeeproduction.TheattemptbyFairTradetopersonaliseeconomicrelationshipsbetweencoffeeproducersandconsumersdivertsattentionawayfromaspectsofthepoliticaleconomyofproductionforthemarket.Therepresentationofproducersasneedyandhelplesswithmultinationalcorporationsisdeeplyproblematic.SucharepresentationrevealsasignificantandsomewhatconcerningdiscrepancybetweenthelivesoffarmersandthenarrativesdisplayedinWesterncampaignsfortradejustice(Case:
Caffeinewithaconscience).
2.0SituationalAnalysis
TheacademicliteratureonFairTradethathasemergedinrecentyearshasbeguntoquestionsomeofitsmarketingandunderlyingassumptions(Goodman,2004).ItisessentialtouseSWOTanalysistoidentifymainissuesofthiscase,whichincludesanalysistoolsofstrengths,weaknesses,opportunitiesandthreats(Houben,Lenie&Vanhoof1999).
Strengths:
Foremost,FairTradehaspushedavaluechainperspectiveoncoffeetogeneratehigherprofits.Thepromotionalmessagesshownoncoffee,andcontainedinleafletsandmagazineadvertisementsconveyasenseofpartnershipandmutualbenefittoamuchgreaterextent(Berlan,2003).Moreover,FairTradehasawidelytraderelationship.Atlast,A&Fhasappliedeffectivemarketstrategiesthatcoffeehasbeenrepositionedthroughmarketingtomeettheincreasingdemandfromconsumersforgoods.
Weakness:
PresentingFairTradeas“amodern-daymarket-based‘RobinHood’”anduseofsuchimagesinmarketingisproblematic(Cubero,2006).Further,duetotherelativelylowdemandforFairTradecoffeeintheWestandhighlabourstandards,farmershavelessmotivationtobecomemembersandimprovethequalityofcoffee.
Opportunities:
Inrespectofinternationalcooperation,theuniquenessofFairTradebenefitsneedstobeplacedinthebroadercontextoflocaltradingrelation.Intheviewofthestructureofthecoffeeindustry,althoughahigherpricewascitedasareasonforbeingamemberofFairTrade,farmimprovementschemes,agriculturaltrainingarefarfromenough.
Threats:
SincetheimpactandthepotentialofFairTradehavebeenoverstatedinitsmarketing,thiscouldresultinalossofconsumerconfidenceifrepresentationsprovetoexceedreality(Valkila,2007).Inaddition,withincreasingbargainingpowerandmitigatingrisk,farmerswouldprefertotakestepstosecurethesewithouttheneedforforeigninterference.
2.1Identificationofcaseissues
InthecaseofFairTradecoffee,theshifttowardsamoreexplicitmoralityofconsumptionisreflectedinthecaseoftropicalcommodity.Theethicalsupplychainsattributestheincoherenceofdebatesregardingbusinessethicstotheoversimplificationinvolvedincommonunderstandingofmarketprocesses.
2.1.1Identifythedilemma
PresentingFairTradeas“amodern-daymarket-based‘RobinHood’”anduseofsuchimagesinmarketingisproblematic(Cubero,2006).Firstly,thesetestimoniesillustratethatcoffeehasbeenrepositionedthroughmarketingtomeettheincreasingdemandfromconsumersforgoodswhichconnectthemtocommunitiesacrossglobe(Roseberry,2001).Furthermore,thenarrativesofpovertyandgratitudetypifybroadertendencieswithinconsumptionandethicaltrade.Thismarketingreliestoalargeextenttoadvertisementsforcoffeeasa“onceuponatime”narrativeofarduousnessandinequalitythatbecomesa“happyeverafter”onceconsumerscommittofairtrade(Opal,2004).Morebroadly,Dolan(2005)arguesthatimagesofimpoverishedAfricanworkersarecommoditisedbysupermarketsandNGOstopeddleethicallyproducedwares,atendencywhichwasillustratedbytheCo-operativesupermarket.Promotionalcardsshowingthefairtradelogoandapictureofanunhappy-lookingAfricanchildsittinginfrontofanalmostemptybowlweredisplayedineachaisle.Therefore,effortstoestablishlinksbetweenproducersandconsumerscandistortunderstandingsofthecommunitychain.
2.1.2Gatherallrelevantfacts
Asdeliveredinthecase,manysourcesadvertisingFairTradecoffeeshowfarmersbeing“saved”byFairTrade,expressinggratitudetothewesternconsumerandpleadingforcontinuedsupport.Forincidence,thepromotionalmessagesshownoncoffee,andcontainedinleafletsandmagazineadvertisementsconveyasenseofpartnershipandmutualbenefittoamuchgreaterextent(TheOxfamMakeTradeFairwebsite).Thislikelyreflectshowtherelationshipbetweenthefarmersandcooperativepartnershasconsolidated.
2.1.3Definetheethicalissuesatstake
Infairtradethemarketingofthesmallfarmertoconsumersisexemplifiedbypackaginganddatadrawnfromwebsites,andreproducedinfairtradecertificationpolicy.Thisemphasisisechoedinapopulistsocialmodelofsmallholders.TogethertheserepresentationsindicatetheromanticculturalappealofpeasanteconomiesinWesternculture,whichfairtradedrawsupon(Kearney,2002).
Foremost,thesmallfarmermodelisthen“deconstructed”byreferencetothreerelatedareasofpoliticaleconomyinthefieldworksite:
landholding,incomestrategies,andthelabourprocess.Whilesmallerlandownerstendtoconcentrateoncoffeeandcombinethiswithwagelabourorsmallcommercialenterprises,farmerswithlargerholdingsdiversitytoproducemilkandbeef,andofteninconjunctionwithcoffee.Inareasmoresuitedtocoffeeproduction,thereisatendencytowardsmoreextensivecoffeeholdings,especiallybylargerlandowners.Sincethefairtradepremiumiscalculatedanddisbursedinaccordancewiththequantityofcoffeedeliveredforprocessing,thegreatestbenefitsfalltothoseproducingmostcoffee:
farmersinbetterproductionzonesandwithmoreland.
Secondly,theissueofdifferentiationisexaminedinrelationtowagelabour.Acrucialissueisthepointsatwhichcoffeeproducinghouseholdsselltheirownlabour,orconverselyneedtobuyoutsidelabourin.Akeyissueisnegotiationandcontestationaroundfluctuationsinlabour,inwhichrespecttheharvestisacrucialtime.Forthevastmajorityofthese“small”farmersinvolvedinfairtrade,migrantworkersareaprerequisiteforengagementincoffeecommoditymarkets.Thisraisestheproblemofhowfarmersdealwithandconfrontconflictsofinterest,andhowthesearemanaged.Inanycase,requirementsforlabourandthewayitisorganisedleadtotensionsandresistancesbetweenfarmersandworkersthatareplayedoutinthemicro-politicsofeverydaylife.
Intheend,duetotherelativelylowdemandforFairTradecoffeeintheWest,onlyasmallproportionofcoffeeisboughtbyFairTradeorganizations.Asthenumberofproducerswhoproducecoffeecertified“fair”issodisproportionatetothevolumeofFairTradesales,thepremiumgeneratedbythesesalessimplycannotfundprojectsinalltheproducersinvolved.Asaresult,therearemanyproducersthathavenotyetreceivedpracticalbenefits.ThisisnotduetoafailureonthepartofthefarmersbuttoaninsufficientdemandforFairTradecoffeeintheWest.ArepresentativefrommainstreamcoffeemanufacturerspointedoutthattheyboughtFairTradecoffeeasanethicalalternativeforfarmerstoreapthefinancialbenefitsofFairTrade.However,thefactisthattheyusethis“special”statustogeneratehugeprofitsforthemselvesthatcausedisproportionateprofitofthecoffeeindustry.
2.1.4Identifyallstakeholders
Primarystakeholdersare:
westerncustomersofFairTradecoffee,third-worldcoffeeproducers&workers,licensed-buyingcompanies&retailers,shareholdersofFairTradeandFairTradeorganisations(FLO,IFATandNGO).Secondarystakeholdersare:
localcommunityorganizations,themediawhoaregivingFairTrade’scontroversiestheexposure,un-licensed-buyingcompanies&retailers(Murphy,Laczniak,Bowie&Klein2005).
Basedonthecase,westerncustomersandlicensed-buyingcompanies&retailersareoppositesides.Besides,third-worldcoffeeproducers&workersandlicensed-buyingcompanies&retailersarealsooppositesides.Supportingfarmersafairpricecandpresentingatruevalueforcustomersaresocietywant.Thus,consumersandfarmersshouldberankedpriortocompanies&retailers.
2.1.5Identifyalltheconsequences
(1)Intheshortrun
WesterncustomersofFairTradecoffee:
themarketingofFairtradeattributesagencytotheWesternconsumerandemotiontotheThirdWorldproducer,thusconsumersprefertopaymore.
Third-worldcoffeeproducers&workers:
higherpricewouldsomeextentmotivatefarmerstobecomeamemberofFairTrade.WorkersseemtogethigherwageduetohighstandardoflabourwageofFairTrade.
Licensed-buyingcompanies&retailers:
highprofitwouldbegeneratedbyputtingahigherpriceforconsumerandreducingcostwitheliminatingthemiddleman.ShareholdersofA&F:
ShareholdersareabletogetmoreprofitfromA&F’shighmediaexposure.
FairTradeorganisa
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