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     From Fair Trade to Ethical Consumption
Add Time :2009-09-08      Hits:3094

From Fair Trade to Ethical Consumption

By Xie Jiaju, founder of Hong Kong Social Entrepreneurship Forum

Source: Hong Kong Social Entrepreneurship Forum


From Fair Trade to Ethical Consumption


     Fair Trade has become a worldwide citizen movement. The meaning will not only be limited with the change of trade relationship between developed and under develop nations but also the connection with every consumer’s behavior. In U.S., Paul Rice is the most efficient person who promotes the Fair Trade movement. And his contribution is remarkable all around the world.

    Although many people have heard about the Fair Trade they may not very clear about the true meaning. In fact, one of Rices contribution is to melt these misunderstandings.  


 Clean Up the Four Main Misunderstandings

    Fair Trade is far away from us. When people hear about the African or South American or Asian poor peasants they will consider that those backward areas are too far from them and have no regular connection with them. Indeed, they are in geography but the products they produced are daily commodities that we will use everyday like coffee, tea, chocolate, fruits and rice etc. The problem is we have not realized the connection between them. As a result of fact, in western countries, it is emphasized that the end user of the trade have to do Ethical Consumption to support Fair Trade that means choose the right products that they will be traded with Fair Trade through the whole supply chain.

    Trade is trade; there is no difference between fair and unfair. Many people suppose that trade is the exchange between the commodities and currency. Under the relationship of supply and demand, it is hard to say the trade is unfair. It could not be a deal if one side dissatisfies with another. Even the people who get limited knowledge about economy know that it is very difficult to find the complete Fair Trade. UnFair Trade is much more common in daily life. The point is how worst the unFair Trade level is. The serious unFair Trade situation in under developed countries is too terrible to accept.  

    On one hand, market information is not match and the producers are in a serious disadvantage position. On the other hand, the strengths of the two sides of trade have great gap. The importers or manufactures in developed countries are much more stronger than the suppliers in under developed countries where they are self-employed business or small cooperatives. Most of the importers or manufactures are in a monopoly industry. So, it is impossible to let the producers negotiate with those big middlemen. The unfair condition appears. 

    Fair Trade is just considered as a charity action and people do it occasionally. For support of Fair Trade, the most valuable thing is to keep buying the Fair Trade products in mind not do that as a charity. Furthermore, those farmers are not beggars but businessmen who want to do trade under the fair and reasonable circumstance and compete with others in the market. For instance, many western counties have a movement called Fair Trade Workplace that means consume the Fair Trade products as many as you can in the office like coffee, tea and so on. In Hong Kong there is a Fair Trade Workplace Association that found by more than ten domestic and international companies. They promote the Fair Trade products in the office (please contact 31205222). So, it is incorrect to view Fair Trade as a charity activity.   

    Fair Trade cannot become the main flow of trade. Although, the Fair Trade products take a small cover of the similar product in market, it is speeding up in last ten years especially the daily using products, like coffee. Many franchises like Starbucks make a great progress in the developed countries. Its total purchasing quantity rises from 2% in 1996 to 40% in 2007. It offers a reasonable price to purchase coffee beans as it makes a good profit through its chain stores. Thus, it enlarges the space of Fair Trade coffee. In U.K., Fair Trade specialist Caf Direct has become the fifth biggest coffee trader nationally. Fair Trade definitely has the reason to be one part of the direct market in future. 


Rice Starts Fair Trade From Basic Level.

     As mentioned above, Rice wants to clean up the misunderstanding and let people know the importance of Fair Trade clearly to take consuming action to support the development of Fair Trade.

    Rice born in an impoverished family in south of U.S. and he paid his attention on the prejudice of society and ethics when he was a young boy. He got a kind of indignant quality. He earned his tuition through selling newspapers, grass cutting and gardening. He is the Yale man with politic and economic courses. When he was 19 years old, he asked for a break of study and came to China to take a view of the land reform and villager’s cooperative collectives. This experience made him to work for assistance of getting rid of the poverty of developing countries.

     He just went to Nicaragua and assisted the local farmers to organize the cooperatives when he left university in 1983. He planed to stay there just for one year but finally he stayed there for eleven years and became an expert of rural cooperative development. During that time, Nicaragua was in wartime and he had to take danger of life to continue his work in hilly areas. Many of his colleagues died but he held the courage of his convictions and he found a new cooperative named Prodecoop in 1990 that includes 52 representatives, 3000 family coffee farming coops. He took the CEO of that enterprise for 4 years and developed it as one of the large-scale organic coffee exporter around the world. He also successfully cultivated one lady to be Executive President. This is a pioneering work in Nicaragua where the male take the domination.         

    In 1994, Rice went back to U.S. and studied MBA courses in the University of California aiming at rethinks and reorganizes the work of promotion of Fair Trade.

    In 1998, he found a NPO named Transfair and became the first Director General. During the past ten years, Transfair promotes Fair Trade with full strength and did great contribution in many regions. 

The Greatest Challenges

     Rice realizes that we need to fulfill four parties’ desire to gain profit if Fair Trade wants to gain attention and a long term development in worldwide.   

    Producer: farmers or coops.

    Operator of the company including importer, manufactures, retailers and wholesalers.


    Environment and ecosystem

    Producer: In U.S., Rice built the Fair Trade Certified Label that makes the border clear what product is the Fair Trade product. Transfair gains the authentication of FLO and becomes the only Fair Trade certification organization in the U.S. today. As for farmers, involvement of authentication can grantee they will receive a higher selling price than market as well as the support to improve their producing and management skill. At the same time, it can help the farmers to apply a low-interest loan. Then it is getting easier for them to run their business.

    Operators of companies: Rice realized that he has to use the business model of thinking to negotiate with the importers of agricultural products in developed countries. He proved that selling Fair Trade products could make profit. His strategy is “pull and push”. “Push” means to guarantee the supply of Fair Trade product through authentication system. “Pull” means to improve the demand of Fair Trade products through introduction to public and consumers.

    Transfair cooperates with relative organizations and do a lot of publication in many different forms to deepen customers’ understanding and encourage them to but the Fair Trade products. For instance, Safeway of U.S. and other big chain stores started to sell the Fair Trade products since 2000. As they said the reason why they do this is “ because the customers are demanding for them.” 

     Consumers: Rice’s information is quite simple towards consumers that buying Fair Trade products is a kind of responsible purchasing behavior. He indicates the consumers that Fair Trade is much more efficient than financial aid to assist poor farmers break free from poverty as it is required to have a sustainable Fair Trade not a giving assistance. He says use your cash as a vote, to vote for a fair world when shopping.  

    Environmental protection: At last, environment protection is as the same important as trade. The products that have been authenticated by Fair Trade will be supported to develop the organic farming and that leads to the connection among producing, consuming and environmental protection. Till now, up to 85% of Fair Trade coffee is organic and other agricultural products also adopt this strategy. 

    Nonetheless, Fair Trade has gained a breakthrough development in U.S. through his hard work. But this is just a beginning for Rice. In the past few years, Rice gained many rewards including the most remarkable Social Capitalist Award by Fast Company magazine press continuously for five years to commend him using innovate and venturous spirit as well as leading an enterprise who has a distinct social mission.  

    In Hong Kong, the promotion of Fair Trade is just at the beginning level. The most active social enterprise is Fair taste that represents the worldwide Fair Trade coffee, tea, and chocolate etc. it’s mission is the same as Transfair that encouraging responsible consuming and let consumers consciously choose a fairer world.

Copyright: International Committee for the Promotion of Chinese Industrial Cooperatives
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