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The economics of fare trade (0)

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THE  ECONOMICS  OF  FARE  TRADE
RALUCA DRAHUSANU
DANIELE GIOVANNUCCI
NATHAN  NUNN

Summarised by: 
Tartu 2015
Outline
What is fare trade?
What fare trade aims to do.
Requirements  for certification
Does fare trade  work ?
What is  fair  trade?
•  Social  movement  whose  
stated  goal  is to help 
producers  in developing 
countries achieve better 
trading  conditions  and to 
promote sustainability
• Label informs consumers 
that the product was 
produced in a social y and 
environmental y 
responsible  manner
Fair trade aims to:
•  Improve  the  living  conditions of producers in developing 
nations
• Attempts to achieve higher prices for producers
•  Greater  availability of financing for producers
• Longer- term  and more sustainable  buyer -sel er 
relationships
• The  creation  and/or maintainance of effective producer or 
worker  organizations
• Improved social goods and community development
• Use of environmental y  friendly   production  processes
Requirements for certification:
1. Prices - produsers are guarateed a minimum  price  for 
the  good , and a fare trade  premium
2. Workers -  safe  working conditions, wages at  least  
equal to the  legal  minimum,  child  labor is prohibited
3. Institutional structure -  farmers must work as 
cooperatives, where  decisions  are made democratical y
4. Environment – certain harmful chemicals are forbidden
5. Stability and  access  to credit -  buyers agree to long-
term contracts (at least one  year )
Does fair trade work?
UPSIDES
• Fare Trade farmers  received  an  average  price of $0.56 
per pound, while conventional farmers received an 
average price of  $0.40 per pound
• Fair trade is associated with higher yields, incomes and 
sales
• Fair trade farmers receive 4 cents more per pound for 
exports, but  there  is no difference in  terms  of quantity  sold  
or exported
• Fair trade has been successful at promoting 
environmental y friendly practices
Does fair trade work?
DOWNSIDES
• Mainstream  coffee  buyers (Starbucks, Nestle) are less 
wil ing to enter into longer-term stable contracts
• The  prise   floor  is meant to provide a  safety  net for the 
farmers in the event that coffee prices fal  significantly but 
in  real  life it does´nt always work
• Fair trade certified farmers receive greater income, but 
not always their  hired  workers
•  Getting  certified is  expensive , there are  joining  fees that 
must be  paid  if accepted and there are annual fees that 
must be paid to maintain that certification
• The largest issue is the distribution of benefits
To sum it up
We  talked  about what the fair trade is
What its aim is
How to get certified
What are the upsides and downsides of fair trading
Vocabulary list
• Yield- production of labor
• Non-monetary- of or relating to the coinage or currency of a  country .
• Conventional- an agreement, compact, or contract.
• Fluctuation- continual change from one point or condition to  another .
• Price floor- lowest price
• Deleterious- injurious to health:
• Intermediaries- being  betweenintermediate .
• Beneficiaries-a person or group that receives benefits, profits, or advantages.
• Frictions- dissension or conflict between persons, nations, etc., because of 
differing  ideas , wishes, etc.
• Determinants- a determining  agent  or factor
• Causal impact- of, constituting, or implying a  cause .
• Aggregate- to  amount  to (the number of)
• Intermediary- being between; intermediate.
• Correlational- mutual relation of two or more things, parts, etc.
•  Provision -providing or supplying of something, especially of food or  other  necessities
Referenses
• http://
scholar.harvard.edu/files/rdragusanu/files/jep_firstdraft_
sept10_2013.pdf
(27.10.2015)
•  https://en.wikipedia.org/wiki/Fair_trade  (30.11.2015)
•  http://dictionary.reference.com/browse/monetary?s=t 
(30.11.2015)
• www.google.com (pictures)
THANK YOU!

Document Outline

  • Slide 1
  • Outline
  • What is fair trade?
  • Fair trade aims to:
  • Requirements for certification:
  • Slide 6
  • Does fair trade work?
  • Does fair trade work?
  • To sum it up
  • Vocabulary list
  • Referenses
  • Slide 12
Vasakule Paremale
The economics of fare trade #1 The economics of fare trade #2 The economics of fare trade #3 The economics of fare trade #4 The economics of fare trade #5 The economics of fare trade #6 The economics of fare trade #7 The economics of fare trade #8 The economics of fare trade #9 The economics of fare trade #10 The economics of fare trade #11 The economics of fare trade #12
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