"Free" and "fair" are two powerful words often confused and abused especially when applied to the concept of international trade. By definition, Free trade in the international market arena refers to a general open boarder exchange of goods and services plus information across nations with limited, if at all there are, barriers-to-trade. With Free trade, anyone is at liberty to trade with anyone else depending on free consent of the parties involved. Fair trade on the other hand, refers to the exchanges mentioned above but with certain demands of justice. That is to say, a trade whereby the main actors reap commensurately with the amount of input injected for the desired outcomes. The fairness of international trade depends on the amount of competition brought about by the interaction of buyers and sellers in a market kind of situation.
A market with many buyers and few sellers results into increased prices. Sellers gain undeservedly bigger shares of what they offer for sale due the "market power" they wield. In contrast, fewer buyers with many sellers in a market situation results into reduced prices. In this case, buyers use the market power advantage they have to gain from the price reductions to other services offered to cultivate customer loyalty. Therefore, it is clear from the foregoing arguments that whether in the hands of buyers or sellers, excessive market power can tilt fortunes and ultimately to asymmetric division of the pie on both sides.
There has to be a balance between free, fair trade to enable the consumers, and the service or product providers gain equally. In other words, free and fair trade should engender policies that are cross cutting as they benefit both the workers and the communities rather than the corporations bagging all the gains and vice versa. For the business operating on an international scale, fair trade demands:
- Payment of fair wages in the local context
- Open opportunities for employees’ advancements
- Equal opportunities for all
- Engagements in environmentally sustainable practices
- Openness to public scrutiny and accountability
- Long-term trade relationships with the locals
- Adherence to healthy and safe working conditions
The difference between Free Trade and Fair Trade
Free Trade and Fair Trade are distinct terms with a fairly margin in between them. On one hand, Fair Trade in international trade context guarantees producers fair prices for their products based on the wages provided in the local context. This ensures price stability despite economic cycles leading to price fluctuations, thereby promoting job security for the employees of these international corporations. Fair Trade focuses on building long-term trade relationships with the locals as it tries to encourage practices that are environmentally sustainable.
On the other hand, Free Trade occurs within and between nations without restrictions imposed by the government. In free-trade model, the trade that involves goods and services plus information is allowed to cross boarders without taxes, tariffs or other trade barriers for instance trade policies, subsidies, and laws. Free Trade focuses on free access to markets where they exist and subsequently allows free labor and capital movements between and within the countries pinpointed as viable business destinations. Free Trade between the developed and developing nations are usually operated at the expense of the local farm workers where laws that regulate wages and working conditions are either nonexistent or not upheld with due professionalism required, and so to avoid frequent protests, Content Cow Dairy the balance mentioned above should strictly be adhered to.
Sample products that are fairly trade in an international scale
Coffee is one example of the products being traded internationally. The conventional international coffee trade usually operates with a long chain of brokers, buyers, exporters, processors, and distributors in between the “local farmer” and the final consumer, all taking their share of the price of the final product. In this model, local coffee farmers are often left with meager returns, which at times do not cover the production costs as well as the farmers’ living expenses. Fair trade eliminates the chain of the intermediaries just mention above to help farmers receive gains that are proportionate to their work. It not only allows the local farmers to earn a stable and fair price for their produce, but the system also translates to fair prices to the final consumers. Under the standard principles of fair trade, importers commit to buy only from the farmer cooperatives by establishing direct but long-term purchasing relationships with the cooperatives. Indeed, sustainable agriculture can only thrive under such support systems.
Local small-scale farmers do market their produce the cooperatives, which help identify potential clients in the international markets, develops, and maintains relationships with the foreign distributors, navigate through the export and import laws on behalf the farmers, understand, and digest foreign business practices and customs for them, and develop a long-term expansion strategy overseas on their behalf. Through such cooperatives, specialists capable of preparing the necessary export documentation can easily be provided. Transportation and shipping of farmers produce is never a problem.
Milk and milk products in international trade
In spite of milk and milk, products being that accompany coffee in daily menus, they rarely cross borders. The international dairy market is extremely distorted by numerous barriers, which includes tariffs and quotas. These restrictions effectively block certain markets for dairy exports. The high-trade restrictions together with support for domestic dairy production are common in international dairy markets. Because of the trade restrictions, only 7 percent of dairy products traded globally. Even so, local markets do fair well by giving better returns to the corporations doing business in this industry, yet the local dairy farmers are not getting proportionate value of what they produce. Milk and milk products are thus not traded products given the huge gains made by large companies leaving the real producers with peanut benefits.
The preferred corporate management strategies
Considering that milk and dairy products are risky goods from production, consumption, as well as trade itself, Cow Dairy investments should consider applying a number of strategies to keep its business fortunes alive. The perceived risks are often linked with the health status of the farm dairy herd, handling as well as the processing of raw milk by the employees into certain dairy products such as butter (FAO, 2004).). If left unmonitored, these products may pose major threats to food safety, and as a business venture, this is the last and the most critical issue that should kill the business aspirations. Staying afloat in the industry will require management to:
- Diversify its products with better proceeds
- Pay its suppliers of milk internationally accepted rates
- Develop good relationship with the suppliers for sustainability
- Pay wages that are worth the services provided
- Appreciate and rewards well performing employees
- Adherence to healthy and safe working conditions
- Be Open to public scrutiny and accountability to quell any protests
- Consider opening a ranch to cut down the costs
Problems of the international Dairy ventures
Analysis suggests that trade impediments to dairy products arise from three main sources namely: regulatory differences; difficulties in achieving compliance; and temporary calamities. Although food safety standards are internationally recognized under OIE and Codex, national regulations still differ and become one of the greatest impediments to trade in the dairy industry. Henson and Loader did recorded differences in regulations spelling out the compositional and labeling standards required for milk and other dairy products across as well as cross cutting sanitary requirements. Some do relate to microbiological quality standards, permitted additives, milk hygiene standards, among other simple rules that are not hard to follow. Indeed, trading under these circumstances will depends in part on the firm’s capacity to comply in relation to costs therein.
Another problem relates to outbreaks of infectious animal diseases, which can severely disrupt the produce, thereby affecting volumes of the products together with their prices for the duration of the outbreaks. Exports usually cease or are decreased by regulations enforced. The restrictions may well be prolonged for unknown periods.
With such a risky investment, the company needs to put in place long-term measures that will ensure business continuity even after an epidemic. As mentioned above, sustainability of the business depends on diversification strategies. Opening ranches in more than one place will not only build trust in it product supplies but will also cultivate customer loyalty. Cow Dairy investments should also equip itself with rules and regulations in its intended expansion destinations to help in its choices of the most productive and profitable destinations.