Using three ethical principles of the Global Business Standards Codex (GBSC), evaluate the fresh food industry
Fair trade refers to a trading partnership guided by dialogue, transparency and respect with a motive of fostering equity in international trade. Conventionally, the fair trade proponents have had their focus on encouraging involvement of small-scale producers in international trade through provision on guarantees especially fair prices for their commodities, constant supply relationship and access to credit facilities Clapp & Fuchs, 2009, 5).
In my evaluation am going to use transparency, dignity and fairness ethical principles. Concerns have been raised by agri-food actors (farmers, producers and consumers) regarding abuse of market power by major supermarket chains (MSCs). As a result, control or regulations through Ombudsman have been proposed. It has been alleged that major supermarkets are fond of abusing their market dominance while some food outlets serve raw or rotten foods. The three major Global Business Standards Codex principles entail:The transparency principle
The principle requires companies to be truthful in their operations, avoid any deception,, disclose all material facts, and be open and objective in their works (Zelizer 2006, 7). However, in many countries, the transparency principle in the fresh food industry has been ignored. Prices of groceries in some supermarkets have been reported to surpass the level of inflation in certain countries such as Australia. For instance in the year 2009, Australian food prices had gone up by 40% within a decade. According to analysts, this was the highest ever recorded in any economically developed country. Some analysts attribute the scenario to food duopoly and others believe it was due adverse climatic conditions leading to declining in food production. Formation of institutions tasked with the responsibility of monitoring and evaluation of the effectiveness of national competition, globalization and its impacts can help deal with the challenges (Clapp, & Fuchs 2009, 39). However, the multiplicities of interests and players in the field have led to conflicts of interest and blamed for the lack of transparency in the industry. For example, General Agreement on Trade and Tariffs (GATT), and its successor body, World Trade Organization (WTO) have not fully addressed issues of market liberalization and capital flow that can help enhance competition in the industry (Bertucci & Albert, 2001, 4).The Dignity Principle
The principle advocates for respect of human dignity observance of public health and safety, right to privacy and confidential business engagement. It also looks at the issues relating to forceful abuse, freedoms, access to information and employment Security. Through globalization of the fresh food industry, the farmers from poor countries have been able to reap more benefits from the international trade. The farmers have the freedom to export their produce and lead a dignity life through sale proceeds. Fair trade has enabled sourcing of products from medium to large scale commercial farmers and plantations. This was in a bid to fit the traditional make-up of small, marginalized producers used to making supplies through cooperatives. The scenario was common with fruits, tea and wine from farms and plantations in Africa and Latin American countries. The development related goal to this trade fair was to enhance the living standards of waged workers in such countries. The sole aim of guaranteed modest working standards for such workers with the help of FLO’s standards for hired labour. Mainstreaming of distribution channels that include supermarket own food brands and using standards for labour practices has enhanced development and respect for individual in the field of ethical trade thus facilitating the degree of overlap between the two. Economic status of the society needs to be put above everything. This can be gauged in terms of health, security and welfare (Stanwick, & Stanwick 2011, 56).The Fairness Principle
The principle focuses on fairness in dealing, treatment, competition, and business processes. There is evidence of the strong relationship between fair trade suppliers and supermarkets on food brands be it their own or independent brands. The relationships entail building direct links with producers and having a close working relationship with suppliers in a bid to address issues of quality, price and supplies. However, this has been breached in the food industry especially in areas such as long-term supply links and advance notice of supplies. The problem has been the lack of corporation from supermarkets who even after receiving programmes failing to honour such agreements (Hale, 2011, 23). As a result, such producer ends up offloading their fair trade fruits on conventional markets and at below the expected minimum prices since the fruits had already been shipped to the supermarket’s areas of operations. The fact that supermarkets decisions are done on just in time basis is believed to be the leading cause since it relies daily sales and consumptions tendencies to curb storage and wastage costs. This would mean that the risks and costs incurred will trickle down to suppliers who will have to invest in packaging and shipping of the products without a guarantee of selling in the existing fair trade markets. Duration taken before the sale at times takes long resulting into deterioration in quality that would mean imposition of fines on the supplier. Just-in-time ordering has limitation especially for fresh fruits because of their perishable nature, but even dry food products like coffee and chocolate lack of long-term purchase agreements and written contracts also can put producers and others in the same value chain in vulnerable situations (Hasler, 2005, 78).
Stiff competition between suppliers and brands growing on a day-to-day basis as a result of more players has made it hard for fair trade brands and suppliers with higher prices to sustain their market position and attain supermarket listings. There has been an outcry on pressure being generated by supermarkets through strategies such as open book accounting. High prices of products can be attributed partly to larger conventional traders and chain store supermarkets using economies of scale and vertical integration in value chains aimed at lowering costs (Johnson, 2009, 67). For example, issues relating to enforcement of trade agreement and protocols relating to globalization and outsourcing have arisen. Globalization and outsourcing have also led to exploitation of the vulnerable people and countries and unfair trade practices. For example, globalization and outsourcing have led to dumping of goods in the third world and labour exploitation. While such protocols as AGOA, COP 19 and Doha talks have attempted to deal with the issues of globalization and outsourcing, none of these institutions have fully addressed the emerging challenges (Bertucci and Albert, 2001, 35). These challenges affect fairness in the fresh food industry.
References
Bertucci, G. and Albert, A., 2001. Globalization and the Role of the State: Challenges and
Perspectives, [online]. Available at <http://unpan1.un.org/intradoc/groups/public/documents/un/unpan006225.pdf> [Accessed 30th October 2014].
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Hale, T., 2011, Handbook of transnational governance: institutions and innovations. Cambridge: Polity.
Hasler, C. M., 2005. Regulation of functional foods and nutraceuticals: a global perspective. Chicago: IFT Press .
Johnson, C. E., 2009. Meeting the ethical challenges of leadership: casting light or shadow .
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Stanwick, P. A., and Stanwick, S. D., 2011. Understanding business ethics. London: Macmillan.
Zelizer, V., 2006. Ethics in the Economy. Princeton University: Princeton.
