International Economics group project

Higher Certificate in Business Studies

Year 2

Student Number  Student Name 

A00302884 Vittoria Balangione  

A00302968 Laura Giorcelli

A00302967  Marta Giachello

A00302913 Marta Rubiola

A00303012 Mahboobeh Ghorbani

 While doing shopping at the supermarket, it has
become more and more common to find some
products with a special logo on their packaging:
this reminds of fair trade, an ethical mark and
system which has been established to support
farmers and workers in less developed countries
and ensure they have a decent, sustainable
livelihood. They are the last of the global supply
chain and receive very little of the share in profits
from the sale and so the goal of Fairtrade is to
create a more equitable and sustainable global
trading system between producers in the Global
South and consumers in the Global North. For this reason, Fairtrade is considered as a leading
system to reduce poverty and overcome disadvantage and marginalisation by providing better
prices, which actually reflect the work done, greater equity and transparency and avoid resource and
workforce exploitation. Additionally, it gives farmers more bargaining power, which helps to
reduce their dependence on middlemen and other intermediaries, who often take a large share of the
profits. The idea is that of directly connecting workers and farmers with businesses that buy their
products to ensure that the first ones are always free to take part in each step of the exchange
process and that internationally agreed standards are achieved. This benefits producers, workers,
and the environment, while also providing consumers with high-quality products that are produced
with fairness and transparency.

The history of Fairtrade

The concept of fair trade was already present in the 1950s, when the worldwide population started
feeling the need for fair marketing organisations, which could offer advice and support to people
working in developing countries. However, it was in 1968 that this movement started rising its
voice: developing countries proposed a new political agenda at the United Nations Conference on
Trade and Development, showing the exigency to establish equitable relationships with developed
countries and explaining they needed trade, not help to fully exploit their potential and set up
improvements for the long- term. That agenda contributed to sharing fair trade practises around the
world and later on led to the foundation of many organisations, such as Fairtrade or WFTO (World
Fair Trade Organisation), that still contribute to set up sustainable living and growth thanks to
mutual respect and reciprocal benefits.
What are the benefits of Fairtrade?

Nowadays there are 2 billion people that live on less than $2 a day, and West African farmers make
less than 50 cents a day. Most of them are growers, workers, and producers of agricultural goods
such as cocoa. 
To receive the benefits of fairtrade, farmers and communities need to be eligible for the Fairtrade
certification. For a product to be certified it needs to meet The Fairtrade standard, which are a set of
criteria that define what is considered fair trade: no child labour involved, decent wages and
benefits, the right to freedom of association, sustainable working hours, health and safety standards
and environmental goals. If all these criteria are met, a community or a farm is qualified to get the
Fair Trade certification.
This goal is achieved through two
primary mechanisms that are the
foundation. The first is a guaranteed
minimum price to be paid if the product
is sold as Fair Trade which helps to
ensure that farmers can cover their costs
of production and make a decent living
from their work. The graph shows that
fairtrade's price provides a floor when the
worldwide price is lower, which acts as a
safety net in periods of economic crisis.
On the other hand, when the market price
is higher, this is the one to be paid. This
concept is also known as Living Income
Reference Price, which indicates the price needed for full-time farmers with adequate, sustainable
productivity levels to earn a living income. The Net Living wage comprehends nutritious food,
decent housing, and other essential needs. An additional amount is included for emergencies to
arrive at the estimated household expense. This figure is then divided by the average number of
full-time-equivalent workers in a typical household in the region to determine the Net Living wage.
To calculate the necessary gross wage, any deductions or taxes are included.

The second is a price premium paid to producers in addition to the sales price which is set aside and
invested in projects that improve the producers’ quality of life and communities such as building
schools, healthcare clinics, water wells and general improvements in water treatment systems, crops
storage facilities, as well as to support training and education programs and conversion to organic
production techniques. By improving access to these essential services and resources, Fairtrade
helps to create opportunities for economic growth and development in rural communities. Prior to
2008, for coffee, this premium was set at 10 cents per pound but now it is 20 cents per pound with
5 cents earmarked for productivity improvement. 
Without fairtrade, in many developing countries it is easy for people to take part in criminal
activities as a result of extreme poverty and no prospects of economic growth. For example, in
South America, there is a rampant problem with drug trade related to organised criminality, which
attracts poor farmers to fall in the coca production, because of its high profitability and demand. It
is a dangerous and illegal industry that often leads to violence, human rights abuses, and
environmental damage. That is why fairtrade helps farmers transition to more sustainable and
profitable crops, such as coffee, tea or fruits and vegetables.

Human rights, child labour, living conditions, gender gap: how does fairtrade faces these
problems?
Fairtrade tackles many issues in regards to human rights, the first of them
being child labour. It is estimated that 112 million children and youth work
in agriculture. Many of them do not attend school, have little time to play
and do not receive proper nutrition or care. There are many causes such as
the lack of education, discrimination, conflict, and natural disasters.
Fairtrade has established criteria to minimise child labour. Children below
the age of 15 cannot be employed and those below the age of 18 cannot
undertake work that endangers their schooling. Moreover, they are only allowed to help on family
farms under strict conditions (for example, outside of school hours or during holidays). It is difficult
to provide products that are free of child labour 100% but if the requirements are violated,
immediate actions are enabled.
Furthermore, Fairtrade supports women to challenge historic gender
roles. A specific strategy has been set to increase the participation of
women in decision-making and ensure the benefits of Fairtrade are
shared more equally. In the cooperatives, Fairtrade ensures  no
discrimination on the basis of gender or marital status, zero tolerance of
behaviour that is sexually intimidating or abusive and assures no testing
for pregnancy when recruiting workers. Producer networks are rolling
out schools of leadership with the specific goal of enabling women to
learn business and finance skills. Many of these women take on
leadership and committee positions within their cooperatives and
communities. 
Climate change
Fairtrade also promotes economic development by encouraging
sustainable agriculture. By providing farmers with technical training and
support, Fairtrade helps to improve agricultural practices, increase
productivity, and reduce environmental impact. This helps to ensure that
farmers can continue to grow crops in a sustainable way, which
contributes to the long-term economic viability of their communities. For
this reason, the standards regarding environmental concerns include
limiting the use of pesticides and promoting sustainable farming practices.
Another big aspect of Fair Trade is the discussion around climate change: those living in the less
developed countries are also those who have to directly and most intensely face the negative
impacts of climate change on a daily basis. Environmental catastrophes, such as wildfires, floods
and drought are on the rise, caused by other factors like rising temperatures, destruction of natural
habitats and pollution. All of these elements have terrible consequences on production and threaten
the livelihood of local farmers and producers, which everybody relies on, since the majority of the
world food supply is produced by small farms in developing countries. Not only environmental
protection is part of the criteria for the certification, but Fairtrade has also put a strategy in place to
give farmers the instruments to face this problem. Firstly, farmers, producers and workers have the
possibility to spend the Fairtrade Premium on projects that focus on sustainability, such as clean
energy, irrigation and tree planting, having the freedom to choose which approach is better suited
for their needs since they can decide for themselves how to spend the extra money. Furthermore, the
Fairtrade Climate Standard was developed to combat climate change in collaboration with Gold
Standard: local farmers communities implement environmentally friendly and sustainable projects,
such as tree planting. These lead them to protect their environment and reduce even more their
carbon footprint, which qualifies them to receive Fairtrade carbon credits. These credits can then be
sold to companies who want to take responsibility and compensate for their carbon emissions;
farmers not only receive a minimum price for the credits sold, but also a Fairtrade Premium.

Covid
In the last couple of years, the COVID-19
pandemic has had an impact on everybody,
including farming communities and workers
in the most poor and rural areas of the world.
Fairtrade was able to support their workers
through a 15 million euros relief and recovery
fund, to provide masks and other protective
equipment, to provide healthcare and support
the struggling communities. 
An example of success: the Fairtrade bananas 
There is an enormous variety of products covered by the Fairtrade
Standards. Each purchase of a Fairtrade product can make a real
difference for farmers and workers around the world.
Fairtrade products are widely available. The blue countries and territories
on the map below have Fairtrade organisations that promote Fairtrade
products.

Bananas are one of the most popular fruits in the world, a staple
food for millions of people and are also a major export that forms
the cornerstone of many countries’ economies. Bananas are grown
on both small-scale farms as well as large plantations.
The banana industry is labour-intensive and demanding. Unlike
many other food products, demand for bananas is fairly predictable
throughout the year and not so greatly affected by changes in
weather. Moreover, a highly competitive market creates price
pressure on bananas, ultimately putting the squeeze on banana
growers. 
Climate change and plant diseases threaten yields, while large multinationals wield considerable
influence in a sector that requires significant
infrastructure to harvest and transport the
quick-ripening fruits. Retailers often offer
deep discounts on bananas, sometimes
selling below cost to attract customers.
Fairtrade banana producers are paid a Fairtrade Minimum Price and plantation workers and small-
scale banana farmers also receive a Fairtrade Premium. Banana workers have often used the
Premium to improve their housing, build schools and clinics, or offer other benefits they see a need
for. An interesting use of the Premium by the plantation in Ecuador was to support a local college to
train students in the cultivation of short cycle organic crops. The objective was to promote food
security and sovereignty in an area where mono cultivation of bananas dominated.
Trading bananas is the cornerstone of many countries’ economies, with an estimated global export
value of $7 billion. It is believed that for more than 450 million people in developing countries,
bananas (and plantains) are essential staple crops.
Fairtrade bananas help fund life-changing projects for communities. For instance, in 2020 sixteen
banana companies contributed financially to set up an emergency COVID-19 diagnostic test centre.
Over the past five years, banana producers have received more than €193 million in Fairtrade
Premium money.
The benefits that developing countries can reap from exporting bananas depend to a large extent on
the value chain within which their growers and exporters operate and who controls it. The
international trader can be a multinational fruit company or a large national company such as Noboa
in Ecuador or Uniban in Colombia.
The global market for conventional bananas is strongly concentrated both geographically and in
terms of firms. Geographically, industrialised countries account for over 80% of world banana
imports, with the European Union and North America capturing some 60% and Japan and the
former USSR countries another 12%.
The benefits of Fairtrade bananas to developing country growers are built in the FLO system
(global certification body offering verification and supply chain services to ensure social and
environmental standards), which guarantees the Fairtrade Minimum Price and pays an additional
premium. The minimum prices for Fairtrade bananas established by FLO vary from one country to
the next, according to differences in costs of production.
Fairtrade may also have affected local pricing of bananas. During periods of high prices,
intermediaries and exporters in Ecuador apparently used the FLO minimum price as a floor when
trying to attract producers to sell their fruit to them, making sure they offered more than the FLO
price. During periods of low prices this was not the case, as supply outstripped demand by more
than the total output of Fairtrade producers. In the Dominican Republic, Fairtrade had helped
develop a failing banana industry into a major exporter of premium bananas. In 2007 it became the
world’s biggest exporter of Fairtrade bananas and until 2006, when it was overtaken by Ecuador, it
was the leading exporter of organic bananas.
The additional revenue brought by Fairtrade equated to approximately 0.004% to 0.3% of GDP in
each country. In the Windward Islands and the Dominican Republic, bananas were an important
agricultural export and Fairtrade had played an important role in sustaining and  developing the
sector. In Ghana and Ecuador the relatively small size of Fairtrade exports meant that impacts on
the national economy were marginal.

Within Fairtrade generally, recognise and raise awareness of the challenges of workers’
empowerment given the power dynamics created by the economic relationship between employers
and employees, especially in contexts of poverty, high unemployment and antipathy or hostility
towards worker organisations. It is essential to ensure that all policy decisions related to workers are
taken with these realities in mind.

Fairtrade and businesses

Unfortunately, Fair trade is still competing with big organisations that exploit their workers and
offer cheaper prices. Businesses need to see that Fairtrade is not only ethical, but also economically
viable and profitable, for more than one reason. Firstly, it benefits corporations and brand image,
attracting more consumers and creating more brand loyalty: customers have become more aware of
their environmental and social impact and they conduct more research on brands. As a result, they
are more likely to buy from companies that align with their personal beliefs and morals.
Furthermore, since one of the core aspects of Fair trade is sustainability, it guarantees longevity for
the business. It also aligns with the SDGs (sustainable development goals) set by the United Nations
in 2015, which encourages everybody, businesses included, to be more sustainable. 
Criticisms
With all of this said, there has been some criticisms brought up about Fair trade. The main one
revolves around certification costs: it is the responsibility of the local farms to reach out for the Fair
Trade certification, which includes an annual fee that can range from 500 to 4000€ and continuous
inspections that also come with their own costs. This leads to ask which poor countries can actually
afford these types of expenses and consequently benefit from Fair Trade; the criticism is that this
benefit goes to the countries on the “richer” end of developing countries, such as Mexico, leaving
behind the poorest and the ones that need it the most, but that cannot afford the certifications costs.
Others also are sceptical of the numbers and their lack of a proper recording to actually understand
which goals Fairtrade has really achieved. Another issue is related to the impact that Fairtrade has
on consumers: often, customers are led to buy Fairtrade products because they use them as a way to
show to their friends and family how ethical and sustainable they are. The problem is that
consumers are all focused on showing that they are doing a nice action for humanity, but they do
this without actually consulting data and reports about achieved goals. With this pointed out, would
it be better to invest in companies directly bringing money, food and drugs in less developed
countries?

To sum up, Fairtrade is a network that certainly has some limits and issues to address, but that can
still be considered as a valuable resource to ensure better future achievements. Its main future goals
have been clearly defined by Marike de Pena, president of the productors’ network in South
America. She pointed out that the aims Fairtrade is intended to reach in the next future years are
strictly connected to the SDGs. The issues that Sustainable Development Goals want to address are
extremely urgent, interconnected and ambitious. However, according to de Pena, the biggest
priority is that of providing more attention and care to those people growing the land: it is farmers
that actually take care of our planet and drive the rural development in those countries which used
to be part of the third world to lead to a sustainable worldwide population growth. Fairtrade’s main
aim is then that of taking advantage of 2030 Sustainable Development Agenda to reinforce its
collaboration with governments. De Pena promised that in future years Fairtrade will be working to
ensure that SDGs can actually lead to an inclusive international trade which poorer farmers and
workers can benefit from.
 

References
Fair World Project, n.d. Fair World Project. [Online]
Available at: https://fairworldproject.org/get-informed/movements/fair-trade/history/
[Accessed 2023].
Great Big Story, n.d. Youtube. [Online]
Available at: https://youtu.be/iwuQbmLCTEc
[Accessed 2023].
H. Joyce, 2023. Lecture slides, the economic problems of developing countries. s.l.:s.n.
Marike de Pena, n.d. Fairtrade: UNO strumento per raggiungere gli obiettivi di sviluppo sostenibile delle
nazioni unite. [Online]
Available at: https://www.fairtrade.it/wp-content/uploads/2017/10/Fairtrade_Report-SDGS.pdf
[Accessed 2023].
Peter Griffiths, n.d. Youtube. [Online]
Available at: https://youtu.be/TzzXijnICKY
[Accessed 2023].
Victor Claar, n.d. Youtube. [Online]
Available at: https://youtu.be/4HcUUD_PXrk
[Accessed 2023].

Dragusanu, Raluca, et al. “The Economics of Fair Trade.” Journal of Economic Perspectives, vol.
28, no. 3, Aug. 2014, pp. 217–236, pubs.aeaweb.org/doi/pdfplus/10.1257/jep.28.3.217,
https://doi.org/10.1257/jep.28.3.217.

Fairtrade Labelling Organization (Fairtrade International). “Fairtrade International.” Fairtrade

International, 12 Sept. 2019, www.fairtrade.net/.

Trade Fair. “Living Wage.” Fairtrade International, www.fairtrade.net/issue/living-wage.

Anker Research Institute. “The Anker Methodology for Estimating a Living Wage.” Global Living
Wage Coalition, www.globallivingwage.org/about/anker-methodology/.

Fairtrade Ireland. (n.d.). What is Fairtrade? [online] Available at: https://www.fairtrade.ie/what-is-

fairtrade/.

Md Nazmus Sadekin, M., Asikha Aktar, M. and Alam (2021). Contribution of Fair Trade in
Sustainable Development. [online] Springer International Publishing. Available at:
https://hal.science/hal-03520078/document [Accessed 3 Mar. 2023].

Conard, B. (2015). Fair Trade: A Just World Starts with You | Benjamin Conard |
TEDxSUNYGeneseo. YouTube. Available at: https://www.youtube.com/watch?v=xT6TQSxlDOY.

Sustainable Development Goals and Fairtrade: the case for partnership. (n.d.). Available at:
https://www.fairtrade.ie/wp-content/uploads/2015/01/15-10_Sustainable_Development_Report.pdf.

Reflections
Marta Giachello

Before the beginning of this experience, I was a little bit afraid of group works because I was
sceptical about bringing different minds together. What I mean is that everyone has his own
interests, thoughts, writing styles and working methods. Therefore, I was scared we would not be
able to find an agreement and provide a cohesive and coherent document. On the contrary, we
managed to put together everyone’s contributions, beliefs and searches to actually get the best from
each member’s work. I therefore realised the power of the work group, which basically means
cooperating and collaborating, so that everyone can offer his key skills to the rest of the group to
improve work efficiency and results. 

Moreover, I particularly appreciated this assessment because it gave me the possibility to find out
more about a topic that I am really interested in : Fairtrade. We had already talked about it during
lectures, so it had already stimulated my curiosity. That is why I appreciated doing some more
research and analysing some aspects in a deeper way. For example, I really appreciated the fact of
coming up with some concrete examples and results about which goals Fairtrade actually achieved.
I was also very interested in analysing the criticism that has been made about this system since I
believe that developing a critical approach and understanding is fundamental both in academic and
every day’s life. 

Vittoria Balangione

As a student of international economics, I have always been fascinated by market forces and
government policies. This semester, I went through one of the most pressing issues in global trade:
how fair trade is helping developing countries. When I heard the term "fair trade," I was thinking of
products such as coffee, and chocolate with the Fairtrade label. However, fair trade is much more: I
have discovered that it is a complex system of standards and relationships that seeks to promote
social justice in the global South. We discussed a lot before choosing this topic but this was really
close to us as consumers that when going to the supermarket try to buy in a sustainable way.

First, we analysed different sources by reading articles to select which sub-arguments to include in
the research. We try to organise the work in a coherent way as we couldn’t include all the aspects
misleading the aim. An introduction with explanations of the mechanism was required but then, the
focus was on the subjects connected to developing countries. At the end of the work, an effective
example of an important product such as bananas was crucial as it provides an in-depth
understanding of the impact on the GDP of a country.

In conclusion, I learned that fair trade is not just a logo but involves the lives of families and the
economy of whole nations. It was also useful to work with people that are far from my culture
because they enriched me with different points of view. dI really appreciate the cohesion created
with the other participants of the group as everyone has put effort doing the work trying to help one
another. 

Marta Rubiola 
Our group recently worked on a project about fair trade. In this report, I will be discussing our
experience working together and the significance of collaboration in achieving our project goals.
From the start, I felt that our group had great chemistry. We all worked well together and were able
to communicate effectively. We made sure that everyone had a chance to voice their opinions and
ideas. This allowed us to have a diverse range of viewpoints, which in turn enriched our project.
We met regularly to discuss the topic of fair trade and how we could approach it in our project. We
found that there were many different aspects of fair trade to explore, such as the economic, social,
and environmental impacts. Through our discussions, we were able to narrow down our focus and
come up with a clear plan for our project.
Throughout the project, we discovered that teamwork was essential to our success. By working
collaboratively, we were able to share our workload and ensure that all aspects of the project were
covered. Each member of the team brought different skills and strengths, which we were able to
capitalize on. This allowed us to create a well-rounded and comprehensive project.

Overall, our group had a positive experience working together on our fair trade project. We found
that teamwork was crucial in achieving our goals and creating a successful project. We all learned a
lot about fair trade and how it can impact the lives of people in developing countries. We hope that
our project will help to raise awareness about this important issue and inspire others to learn more
about fair trade.
Mahboobeh Ghorbani

This research was intriguing to me from two perspectives. Firstly, working with an international
group provided a valuable learning experience. I was concerned that language and communication
would affect my ability to contribute effectively to the group. Being the only international
groupmate with a different native language than the others had caused me anxiety. Although I know
both English and Italian, it was still challenging for me to express my ideas clearly and understand
others' perspectives. However, I quickly acclimated.

Furthermore, researching the topic of international Fairtrade was very insightful. It provided me
with a deeper understanding of a topic to which I had not previously paid attention. Through this
research, I learned about the Fairtrade logo and how it represents products that promote
sustainability and fair working conditions. This newfound knowledge will help me to be more
mindful of the products I purchase and support a more equitable global marketplace. Now, I have a
better understanding of how adding Fairtrade-certified products to my shopping cart can make a
significant impact on the lives of farmers and workers in developing countries.

Laura Giorcelli

Even though the subject of International Economics interested me, I was a bit sceptical about the
particular topic of Fairtrade. In the end, I had to admit that it was stimulating to research something
that I was not very knowledgeable about. I knew about some basic facts, but I was not aware of how
it actually works and operates, and so I found doing this research very insightful.

Working with the group was a pleasant experience, because everybody was equally involved in the
project. I am not particularly fond of group projects, as I work better alone, but from the very
beginning everybody participated and had initiative, sharing ideas and discussing suggestions. We
had some difficulties halfway trough the project, but everybody was available and willing to help.
We did not agree on everything, but we came together and compromised to obtain the best result.
Ultimately, we all put equal effort in this project and through communication and collaboration we
successfully applied team work to write this assignment.