Transcript Fair Trade Label
Fair Trade Coffee
The ethics of consumption
Scope
• “Ethical” consumption • The problem at hand → coffee – What are the options for the distributor?
• Our ethical solution → utilitarian view
The Concept
• The Fair Trade label is a guarantee of “fair compensation” for producers • You pay more for the product • Currently being applied to coffee, tea, chocolate, and fruit (possibly other foodstuffs) • Will it work?
The Numbers
• 82% of consumers in US claimed “corporate citizenship” was influential in their buying BUT… • Just over 1% of coffee imported to US is Fair Trade certified • Not a problem of supply → demand is insufficient • That is only for coffee…
How much are those Ethics in the window?
• “We live in a society where everybody feels guilty” • What is consumers’ willingness to pay for ethics?
• 50 cent premium for coffee v $5000 premium for a car • How many “ethical” purchases make you ethical?
• Are the less affluent then less ethical?
Fair Trade Label on Coffee
• • • •
Advantages
Consumer choice to purchase fair trade sourced coffee Encourages more companies to use ethical resources/process Potential for increased sales Potential benefit to brand reputation • • • • •
Disadvantages
Product more expensive Subscription cost to Fair Trade label Reliability of label accuracy – who guarantees the fairness?
A product that doesn’t have the label can still part take in fair trade – they may not buy the label Subjective nature of fair trade
Without a Fair Trade Label
• • • •
Advantages
Not imposing one set of views onto another Developing countries receive business and benefits Consumers benefit from cost leadership No cost of monitoring of label integrity • •
Disadvantages
Unethical exploitation may occur Consumers less aware of unethical behaviours
Dividing Products
Advantages
• Consumers can choose to make opinions about different sources • Cost/profits allocated efficiently
Disadvantages
• Non-fair trade product cannibalises fair trade product through brand association • Need to advertise why products are separated otherwise – through fair trade label or
Is there a Dilemma?
• Market forces at work • “Fair price” is that determined by the buyer and seller • If coffee producers want more money they can form an OPEC-like cooperative • ‘Ethical soundness’ of a purchase is a product feature that comes at a premium to the buyer
Our Utilitarian ‘Solution’
• Pleasure v pain → aim is to generate the most pleasure… • Label it all as Fair Trade, making no changes to supply system • The increased pleasure of millions of consumers
thinking
they have consumed ethically v No additional pain for producers → they were already paid this wage