The unfair value shared in fair trade value chains

Abstract

Fair trade is a trading partnership that seeks greater equity in international trade by offering better trading conditions to producers and workers in developing countries. The higher final prices of the products should result from the floor price at the first stage of the value chain; however, the final price is also strongly influenced by the value added at the next stages. The objective of this study is to highlight the price escalation observed at the later stages of the supply chain, which does not appear to be aligned with the principles of fair trade. This is a comparative analysis of the value added at different stages of the supply chain. It compares the potential hypothetical market price of several fair trade goods with the actual price, which increases in value at successive stages of the supply chain. The data was collected from publications within the agri-food sector for coffee, bananas and cocoa. It is argued that in order to achieve a more competitive price, it would be necessary for other actors in the supply chain to become more involved rather than just consumers. This can be accomplished without a reduction in profits, which will remain at the same level as those generated by non-fair trade products. Furthermore, it will contribute to an increase in fair trade product sales. Finally, the research also suggests some measures to increase the engagement of non-producers in the creation of socially responsible businesses.