Fair trade coffee refers to t a coffee that is licensed as having been manufactured and marketed at a stated set of values. Customers in the developed countries tend to pay more for this coffee with an impression that they are helping farmers at the least developed nations meet their basic and psychological requirements. Free trade, on the other hand, refers to a market model whereby movements of goods within and without the involved countries happen without government’s limitations, for example, charges and taxes.
While, fair trade tends to benefit only the producers of the products in the assumed, least developed nations, the free trade benefits both parties, the producers and consumers. This happens because both have dissimilar opportunity costs. The fair trade movement considers in paying for what they believe to be the reasonable price for a good. The fair price helps boost and withstands the production of the good.
Free trade is vulnerable to many risks, unlike fair trade. Factors such as futures, gearing and the availability of options are tough to foretell. When the market of coffee drops instantly, coffee farmers are forced to sell their products at very low prices, below what they actually spent to produce. This drives the production of the goods to operate on surplus and losses. This susceptibility to price fluctuations makes the fair trade to be the best options especially to the producers of the least developed nations.
Both free and fair trade exists to increase wealth globally. While free trade which is characterized by lack of tariffs and taxes has an impact of increasing wealth to the already developed countries. Fair trade on the other hand tends to benefit and enriches the producers and the suppliers of the coffee from the developing nations.
Secondly, both free and fair trade tends to improve the relationship between the participating countries. This comes about when the least developed country, for instance receives other favors from the developed countries. The favor comes handy due to the agreements that a least developed country has agreed to adhere to. The favor comes in form of grants, donations and loans.
Reference
Ballet, J. “Fair Trade and the Depersonalization of Ethics”. Journal of Business Ethics 26.3
2010): 304-12.
Welsch, Roger P. Free Trade: The Risks of Free Trade. New York: Pantheon, 2007. Print.
