producer makes on each item) is much higher. For instance, nearly everyone wants to own a television or a mobile
phone, and there is a lot of competition in the area of production, forcing the prices to be competitive too. The
producers have to sell a large number of items to make a profit because their profit margin is small. But not everyone
wants to buy hand-made jewellery, or a machine for sticking labels onto bottles. This enables the producer to charge a
price much higher than the cost of making the item, increasing the profit margin. But at the heart of any sale, whether
they sell many items for a small profit, or a few items for a large profit the prime motivation for the producer is to
make as much profit as possible.
At least, that was the case until relatively recently when, to the great surprise of many, companies started trading
without profit as their main objective. Ethical trade began as an attempt to cause as little damage as possible to the
producers of raw materials and manufactured goods in poor countries. This movement put pressure on the industry
to see to it that working conditions and human rights were not damaged by the need for poorer people to produce
goods. In short, it drew to the world’s attention the fact that many poor people were being exploited by big businesses
in their drive to make more profit.
There have been many examples throughout the developing world where local producers were forced by economic
pressure to supply cash crops such as tea, coffee and cotton to major industries. These people are frequently not in a
position
to fix their prices, and are often forced by market conditions to sell for a price too low to support the
producers and their community. Worse still, while the agricultural land is given over to cash crops, it robs the local
people of the ability to grow their own food. In time, through over-production, the land becomes spent and infertile,
leading to poverty, starvation, and sometimes the destruction of the whole community.
Fair trade policies differ from ethical trade policies in that they take the process a stage further.
Where ethical
policies are designed to keep the damage to a minimum, fair trade organisations actually work to improve conditions
among producers and their communities. Fair trade organisations view sustainability as a key aim. This involves
implementing policies where producers are given a fair
price for the goods they sell, so that they and their
communities can continue to operate.
Although many big businesses are cynical about an operation that does not regard profit as a main driving force, the
paradox is that it will help them too. With sustainability as their main aim, fair trade organisations not only help the
poorer producers obtain a
reasonable standard of living, but they also help guarantee a constant supply of raw
materials. This form of
sustainability benefits
everyone, whether their motive is making a profit or improving the lives of the world’s poorer people.
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