Practice fair-trade

Recently, Fair-trade has got substantial popularity in world-wide trade and a significant growth has been observed in sales market that practice fair-trade. Basically, fair-trade deals with the issue of unequal trade-relationship between producer, seller and consumer. The goal of fair-trade is to provide an equal trade relation between several stake-holders of a particular business product and also provide better support to week (in terms of finance, awareness and/or capacity) producers.

For example, it is achieved through linking or connecting producers and consumers directly. Fair-trade has both positive and negative effects. For example, on one hand it helps the poor and provides better living to producers, while on the other hand it puts some burden on consumers who have to pay bit more. During this decade, there is a very rapid growth in the sales of fair-trade products in Japan, America and Europe including UK. These products include, but are not limited to fair-trade bananas, coffee, and cotton. There is a lot of discussion and literature on fair-trade issues globally as well as in UK.

For example Sally Smith says in one of the article “The literature suggests there may be considerable tension between the values of fair-trade and the commercial principles and practices which characterise UK supermarkets’ global value chains…. Fair-trade appears to be at a critical juncture in its engagement with UK supermarkets” (Smith, 2008). Considering this and some other facts found in literature, in this term paper I’ll discuss about the impacts of fair-trade on cotton market in UK. The reason to choose cotton is that fair-trade cotton has recently got its place in UK and the issues and effects inherent in it are not fully explored yet.

1.1. Research Questions

Since the business of fair-trade cotton in UK is increasing very rapidly, therefore it is the right time to investigate its impact on overall cotton business. The overarching research question that my work addresses is: What is the impact of fair-trade on cotton business in last ten years in UK? In order to answer this question, I consider it important to divide it into sub-questions. These sub-questions will help to analysis data step-by-step to get the final conclusions.

The first sub-question that I intend to pose to myself is: What is the fair-trade activity? And how does it impact upon businesses? The answer of this question will probably lead me to pose the second question for my work and that is: What are the affects of fair-trade on cotton business in UK? Since the cotton business is one of those a few major industries that have not been studied from this perspective in UK. Thus, my findings will contribute in the field of business and management. Besides fair-trade has been recently (2005) introduced in the cotton industry in UK, it make sense to cover the time line between 2000 to 2010 to analysis any change that fair-trade brought or not brought into the trends of cotton industries.

Since there is a lot of relevant published literature available on the topic I am discussing, however due to the limitations of the words, I can not cover the area thoroughly. But there are some basic important issues that I will outline in the following sections. As i have given small intro about fair trade in above paragraph now let’s look in more detail, Netherlands was the starting place of Fair trade Labelling in the late 1980s and the Max Havelaar Foundation launched the first Fair trade consumer guarantee label in 1988 on coffee sourced from Mexico.

Later, the Fair trade Foundation was established in 1992 here in UK by CAFOD, Christian Aid, Oxfam, Traidcraft and the World Development Movement, later joined by the National Federation of Women’s Institutes. Member organisations now also include Banana Link, Methodist Relief and Development Fund, Nicaragua Solidarity Campaign, People & Planet, SCIAF, Shared Interest Foundation, Soroptimist International , Tearfund and the United Reformed Church. Fair trade is the independent non-profit organisation that licenses use of the FAIR TRADE Mark on products in the UK in accordance with internationally agreed Fair trade standards, (Fair Trade Foundation, 2010) but the first products to carry the FAIR TRADE Mark launched after two years in 1994. If we look in literature there have been many different kind of definitions for fair trade.

After reviewing many literatures i found one which can help us in understanding the term fair trade. Moore, studied (FINE, 2001) and stated that, Fair Trade is a trading partnership, based on dialogue, transparency and respect, which seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South. Fair trade organizations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.

Moreover, according to the fair trade foundation sources, Fair Trade is a kind of plan to reduce poverty and to create opportunities for sustainable development. Its goal is to give benefit to workers and producers who have been discouraged or not getting right amount of money for their job by the existing trading system. In addition, under the use of the international fair trade mark the developing countries farmers, workers and their communities can get a better deal as compare to non fair trade trading system, additionally “Through demonstration of alternatives to conventional trade and other forms of advocacy, the Fair trade movement empowers citizens to campaign for an international trade system based on justice and fairness”. (Fair Trade Foundation, 2010)

To understand the situation of research more easily we have to know something about cotton business in UK. How it was started, when and where? Along with the progress and how successful it was? To answer these questions i have gathered some information from published literature. Firstly, the definition of cotton gathered from different source from which one defines cotton as “Cotton is a soft, fluffy, staple fiber that grows in a boll around the seeds of the cotton plant. It is a shrub native to tropical and subtropical regions around the world, including the Americas, Pakistan, India and Africa.

The fiber most often is spun into yarn or thread and used to make a soft, breathable textile, which is the most widely used natural-fiber cloth in clothing today” (Wikipedia 2010). Additionally Business of cotton was started during 17th century in UK through the port of London but, some changes occurs in the imports pattern when Liverpool received a small quantity of the 2000 bales imported in 1709 into the country. Further small quantities of cotton continued to pass through the city during the next 50 years. Additionally, According to International Cotton Association (ICA) there was the first-ever recorded cotton auction in Liverpool in 1757.

Thereafter, the Port’s proportion of cotton imports progressively increased, largely as a result of the inventions of Arkwright, Hargreaves and Samuel Crompton, which revolutionised the Lancashire spinning industry. By 1795, Liverpool was receiving the lion’s share of the 17,000 bales imported into Britain and, whereas the first imports consisted of West Indies and American cotton. (ICA 2010).

Furthermore, in the 1911-1912 Season, import of cotton in the UK mostly in Liverpool was reached at his peak when almost 5,230,000 bales were imported. History of cotton industry suggested that at that time Liverpool became the largest cotton importing market in the world. Deane and W Cole (1964) stated that “The British cotton industry played a central role in its country’s nine-tenth-century development. On the eve of World War I, it remained Britain’s largest manufacturing employer, contributed almost one-quarter of all the nation’s exports, and was still expanding its capacity.”

Fair Trade in cotton Business

Finally, in order to conduct my all research and to get answer of above questions it is very important to look on the cotton industry after trading under the fair trade mark. How it has effected the cotton business in UK? I will begin this section with giving information about Fair trade cotton business. Fair trade certified cotton carrying the FAIR TRADE Mark was launched in the UK in November. To differentiate between fair trade and ordinary cotton, fair trade foundation state that “It is cotton which has met the international Fair trade standard for production of seed cotton and is therefore eligible to carry the FAIR TRADE Mark.

The Mark is an independent product certification label which guarantees that cotton farmers are getting a better deal – receiving a fair and stable Fair trade price and Fair trade premium, receiving pre-financing where requested and benefiting from longer-term, more direct trading relationships”. Additionally, the fair trade cotton is coming to UK market from India, Peru, Mali, Cameroon, and Senegal.

According to fair trade foundation a study in India has shown that the purchase of cotton under fair trade practices has led to increased earnings for rural families and even the first signs of migration back to the villages. Here is the table giving information about sales of some fair trade products during the years of 1998 to 2009. Whereas, cotton has shown an increasing trend in sales after being introduced in 2005.