Obtaining Supplies From Third World Producers: Using the Fair Trade Initiative as a CSR Supply Chain Strategy

Baraka Sarana Tama

Global fair trade practices provide an opportunity for Third World producers to sell their goods on the world market for a fair price. The initiative also provides for workers in Third World countries to be employed under fair conditions, including minimum wages. It is an attempt to reduce exploitation of people in the Third World by multinational corporations. In 2008, the Fairtrade Labelling Organisation estimated that the fair trade market was worth €2.9 billion.

Fair Trade Products

There are many products that can be purchased from fair trade suppliers. These include:

  • Coffee
  • Cocoa and chocolate
  • Sports balls
  • Bananas
  • Wine
  • Ice cream
  • Tea
  • Seed Cotton
  • Honey
  • Homewares

Certification of Fair Trade Products

The Fairtrade Labelling Organisation is a global body that audits and certifies producers and manufacturers on their operations and supply chain. Each item in the supply chain must meet fair trade standards including ensuring fair conditions for workers and environmental sustainability. There is also a requirement for a democratic process for the distribution of the Fair Trade Premium.

Fair Trade Premium – Developing Third World Communities

As well as providing a guaranteed minimum price for products, the Fairtrade Labelling Organisation also imposes a Fair Trade Premium on fair trade products. The Fair Trade Premium is used by the community of the producer to undertake development and improvement activities such as clean water projects, housing and education projects. Each fair trade producer must have a democratic process for distributing the Fair Trade Premium.

Other community benefits of the fair trade initiative include empowerment of farmers and workers and encouragement of environmentally sustainable development.

Benefits of Implementing a Fair Trade Supply Chain

Businesses can implement policies and procedures in order to purchase from Fair Trade producers. Implementing a Fair Trade supply chain can be undertaken as part of a corporate social responsibility initiative. Although the Fair Trade Premium increases the cost price of purchasing fair trade products, the benefits of using a fair trade supply chain for business include:

  • assisting the development of third world countries in an environmentally sustainable manner
  • being seen as an employer who cares about people over profits
  • if the certification of the supply chain is undertaken, the potential ability to use consumer recognised fair trade branding
  • creating new markets for existing products by increasing the purchasing power of third world countries, for example Orange France Telecom’s NetPC initiative in Mauritius.

According to the Fairtrade Labelling Organisation’s 2008/09 Annual Report there are currently 764 certified fair trade producers. Baraka Sarana Tama

The fair trade initiative provides a global response to the problem of exploitation for multinational corporations and improves the living conditions of producers and workers in Third World countries. However the fair trade initiative can also be utilised by businesses in order to further corporate social responsibility activities.