Market Trends Related To Fair Trade And Its Influences In Developing States
Numerous studies have been made about a wide variety of topics regarding Fair Trade and its effects. Nowadays, both productions and sales of FT products have increased because of the increment of the popularity of Universalism and ethic consume; elements that affect productive territories constantly either positively or negatively depending market tendencies, production and economic issues. For example, studies have documented that consumers’ decisions to buy FT products are associated with their perceived social justice. In the same way, studies of organizational behaviors have also suggested that perceived organizational justice among employees stimulate the employees’ perceptions of effectiveness in strategy and activity development for their organization.
Furthermore, other economic factors can actively affect the process of the ethically produced goods. Even though, Fair Trade features are constantly improving certain conditions regarding poverty in productive states. Owing to the previous fact, FT conditions can vary depending specific time and space, which will be explained throughout three thematic units relating economic factors that affect FT production, its consequences in developing countries and the condition of this process.
Fair trade can affect positively serious economic related phenomena in developing countries; even though, most of them have strong social, cultural and financial problems. This happens because of the lack of enough control against corruption and other political and economic issues. Although, mainly Fair Trade has positively influenced production and sales in these countries, in some cases it has affected other scales. In its efforts to achieve social justice and alter the unjust terms of trade that hurt small farmers worldwide, FT utilizes the same mechanisms of the very markets that have generated those injustices (Jaffee, 2007). Thus, we can say that, in some cases, it can be harmful for these countries to rely directly on this kind of institutional arrangements. Furthermore, most people who work in the agriculture industry are poor, so that not enough resources can be designated to developing technological ways to produce goods and improving the ways in which these products are traded to developed countries. However, FT-related enterprises should guarantee fair incomes and resource distribution among the producers of FT products. Due to the previous described facts, products such as bananas or coffee, which are successfully exported via FT agreements, cannot completely benefit all of the less fortunate areas where poverty is entirely located.
Another important issue concerning the production of FT goods is the market behavior due to its unstable rates and the unpredictable way in which consumers tend to buy certain specific crops. In some cases, costumers prefer to buy ethically approved products; although ambiguity remains regarding what motivates costumers to purchase those goods. In the same way, theories exist concerning this topic; for example, we can quote universalism as a determinant factor in the amounts of FT products sold worldwide. People who are more likely to approve universalism are passionate about equality and strong advocates of protecting the natural environment and ensuring social justice for all. Thus, we can see that most important features of universalism also can fit into the characteristics of Fair Trade. After that, structural equation modeling suggests that Fair Trade purchase intention is driven by both societal and self-interest values (Yamoah, Duffy, Petrovici, & Fearne, 2014). Through the previous stated fact, we can agree that normally people try to follow tendencies related to societal values and preferences, which make that FT products obtain certain popularity among consumers throughout developed countries. Moreover, in the last two decades, sales of ethical products have grown substantially, leading to the assumption that a growing number of customers are increasingly considering ethical and social issues when purchasing products (Auger, 2007). On the other hand, a justification of a price increase due to growing costs (either due to a tax or due to a fair trade commitment) for the Company provides a positive motive for the consumer. Even though, these values do not significantly affect costumer perceptions of factors that may be perceived as barriers to purchase intention. Thus, motivation is an important fact concerning sales, but it cannot specifically determinate all of the market variations.
Besides, the objective of the fair trade arrangement is to help achieve better conditions for producers via diplomatic ways. In practical terms, this system accomplishes this objective by cutting out many of the intermediaries or middlemen (Jaffee, 2007). As long as prices are high, the production of these crops can increase, and eventually, benefit their first hand producers entirely. Meanwhile, socially responsible behavior (SRS) is another relevant determinant of ethical consumption and particularly Fair Trade consumption. For these reasons, crops such as bananas or coffee have experienced a marked increase in sales throughout the world, and countries such as Panama or Brazil have successfully improved their production. Despite the visible influence of organic production, it is the fair trade market and its guaranteed minimum prices that affords economic stability to certain productive areas (Jaffee, 2007). Finally, we can conclude that producers normally obtain benefits from Fair Trade negotiations; even though, this process can be negatively affected by a variety of elements relating market tendencies or bad administration of resources.
After demonstrating the different varieties in the market tendencies worldwide concerning Fair Trade arrangement as well as its different effects towards developing countries, it is relatively easy to conclude that, in order to improve the conditions of these states, governmental actions that slow commercial efforts towards the productive area should decrease. After that, conditions of less fortunate people who produce FT goods can improve. In the same way, companies can also contribute to this by designing an ethic plan towards FT crops. Studies have concluded that companies can influence consumers’ evaluations through their justifications for a Price increase. Following a strict cooperation between producers and consumers, the quality of the goods can be improved, as well as helping these agricultures or miners to stabilize themselves economically.
According to the previous statement, governmental agencies ought to stop pushing backwards the correct process of Fair Trade and start promoting the concept of ethic production. Thus, both social and economic features on developing countries will improve substantially. Finally, the topics previously stated in the present research can demonstrate that through the Fair Trade arrangement and its correct usage both producers and costumers can be equally beneficiated.
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