Fair trade is a different way to do business. It is an agreement between cooperatives and coffee bean producers. The agreement between the two parties induces some positive and negative effects. The key factor in the agreement is the coffee producers receive payments that are higher than the standard price of coffee. On the negative side, the price to buy coffee for consumers is somewhat higher.
But, the extra money spent is indirectly contributed back to the community. The main focus of the fair trade coffee agreement is to promote healthier working conditions, as well as provide an increased economic incentive for farmers to harvest coffee.
Other positive effects consist of:
- A more direct relationship between the coffee producer and the cooperative purchasing the coffee. This provides more profit for the farmer and the opportunity to compete in the global market.
- Prompt and fair payment for farmers, allowing for faster transactions and increased morale in coffee producers.
- Providing opportunities for marginalized producers, giving coffee growers the chance to expand and improve production.
- Standards that protect workers, and requires producers to support the community.
As with anything else, specific standards must be met by producers and fair trade cooperatives for business to be conducted. Fair labor conditions must be in effect within the coffee producers work force. Safe working conditions must be provided and child labor is strictly prohibited. As previously stated, the trades between cooperatives and producers must be as direct as possible with minimal use of any middle men. Fair trade farmers and farm workers are completely in charge of the use of revenue and any investments to be made. In addition, fair trade farmers and workers must invest fair trade premiums into community development organizations. Organizations like healthcare services and scholarship programs.
The fair trade coffee agreement is an intricate program that benefits many people, directly and indirectly. Coffee producers are provided with more benefits, revenue and opportunities. While cooperatives are able to create a beneficial relationship, conducting business directly with the producers.