Supply Chain Management and Fair Trade

Topics: Fair trade, FLO International, Supply chain management Pages: 33 (7554 words) Published: May 3, 2014
Supply Chain Management and Fair Trade

Executive Summary

Resources are scarce and overstretched as a result of the fiercely competitive global environment which is as a result of globalisation, population increment and development of new technologies. On the basis of food food supply chain’s dependency on these scarce resources, sustainability of food has to be adopted through various approaches – the conventional approach (freetraide food supply chain) and the alternative approach (fairtrade food supply chain).

This report focuses on sustainability, challenges of sustainability, key reasons for sustainability, food supply chain sustainability theme as well as a critical examination, analysis and appraisal of the fairtrade food food supply chain as advocated by Fairtrade Foundation and Fairtrade International and the normal freetrade food food supply chain through a comparative analysis which is based on consultation of materials from Fairtrade Foundation, Fairtrade International as well as other secondary sources (such as textbooks, articles, journals and websites).

The report concludes that freetrade is a better option to manage the partnership between producers and consumers within a food food supply chain. However, fairtrade could still flourish if its techniques and principles are exposed to a continuous external and internal scrutiny against the continuous movement of the forces of demand and supply which always shape the dynamic nature of the competitive market.

List of Figures
fig1: BullWhip Effect4
fig2: estimated sales19
fig3: Fairtrade International Producer Countries21
fig4: Fairtrade Foundation Sales22
fig5: Fairtrade Foundation Financial Summary23

List of Tables
table1: Fairtrade Minimum Prices and Premiums for all certified products table18

1.0 Introduction

Major challenges of the poor in the globe could be attributed to capitalism (Thorp 2010) and it has to survive in the midst of resources that are extremely scarce. Perhaps, this is the reason for the existence of rich class, middle class (upper-middle class, middle- middle class and lower-middle class) and the poor class. In general, this is the destructive impact of capitalism.

Better prices, decent working conditions, local sustainability, and fair terms of trade for farmers and workers in the developing world are what is attributed to fairtrade by ‘The Fairtrade Foundation and The Fairtrade International’ by promoting and licensing the ‘Fairtrade Mark’. However, major challenges are still being recognised with the farmers in the upstream of the food supply chain (SC) which are on the basis of their inability to survive in the freetrade.

Most of the products consumed at the downstream are from freetrade which are inequitable in terms of profit sharing. The ‘gangsters’ (mostly at the downstream) make most of the money while the weaker ones – the farmers/growers are used as ‘sweat pores’ and are given poor share of low profit margin. It is important to highlight that this is against the idea behind fairtrade which ‘theoretically’ advocates for all SC stake holders to have a fair share amount of profit.

The establishment of Fairtrade is as a result of a collectively established idea by major brand owners, which is in an attempt to address this challenge. Currently, there are regulatory bodies to monitor these fairtrade practises. Thus, a major competition exists between fairtrade and freetrade.

Unfortunately, regardless of whether SC transactions is running on fairtrade policies or still retaining freetrade, brand owners still have to rely on or think about freetrade (despite its hazards) in order to retain their competitive advantages. Ideally, if freetrade were to be equitably practised, there will be equal profit sharing on a global scale. However, that is not the case. Basically, fairtrade disagrees with the injustices of freetrade which traditionally discriminates against...

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