Fair Trade – Structure and Impact How Fair Trade

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Fair Trade Structure and Impact How Fair Trade Works Buyers in U.S. agree to pay a premium for products exported by developing nations Originally only commodities notably coffee As movement developed, handicrafts became major part of

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Fair Trade – Structure and Impact<br>
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How Fair Trade Works Buyers in U.S. agree to pay a premium for products exported by developing nations
Originally only commodities – notably coffee
As movement developed, handicrafts became major part of Fair Trade
Some type of organization – an NGO or a Fair Trade organization develops contacts with growers or producers in developing nation
Arrange to have good shipped “outside” normal trade channels
Avoids middlemen from taking most of the returns to the product<br>
03
Economics of Coffee Consumer pays $6 or $7 per pound for a good Arabica coffee
Mark up at grocery store could be 1/3 to ½ of that
Distributor also might take 1/3 for shipping and local distribution
Advertising, other costs are also added
Grower is left with (in the past) about $1/pound on a $6 or $7 sale
Much of the coffee sold in lesser developed countries is sold through “coyotes”
Buyers who deal directly with growers who have no way of contacting purchasers who might pay more<br>