Fair Trade

I. Executive Summary

II. Problem Statement

How can the key players in the coffee industry participate in reducing the over production of coffee and at the same time protect and promote the welfare of its supply chain?

III. Alternative Courses of Action

1. Limiting Supply

This can be done by having equal demand and supply or having equilibrium between them and to settle prices at more thriving point. This solution would involve stock obliteration, production power or control, and export retention by all coffee-producing countries. A collective action should be built on a reconstruction of mutual trust between producer countries and a secured financial support from consumer countries. To facilitate the implementation of export retention programs, governments and donor agencies should terminate current policies favoring the expansion of coffee production, such as subsidies for land clearing, fertilizer use, and the introduction of higher-yielding hybrid trees.

2. Empowering Farmers

Coffee producing countries must enact measures to enhance the power of farmers who manage to stay in the coffee market. One way to do this is by building basic market infrastructure and providing market intelligence. Small farmers in remote areas of poor countries are not well placed to observe international market situations and are in a weak position next to traders who have that information. It is often difficult for farmers to question a price offer and to negotiate effectively, putting them in the position of price takers. Telephone, radio, and Internet are all possible ways of transmitting this information to farmers. In addition, extension advice can enhance farmers' position in the market by providing them with technical information about harvesting and tending of crops and advice about market opportunities. More and easier access to credit and inputs should be provided to farmers so that they can rely less on traders for financing.

3. Partnership investment on High quality coffee beans with production Quota bought fixed fair price

In this strategy, key players collaborate with suppliers to come up with a production quota to be bought at a fixed price. This strategy will help the farmers to come up with a limit to how many tons are to be produced and they will be purchased at fair price. Companies will have to invest on these communities of farmers for them to be able to produce not the regular kind of coffee but more on the high quality coffee. This strategy will help limit the amount of supply being produced and at the same time produce quality coffee beans that can be sold at a higher price.

4. Creating an Ethical Supply Chain System

The key players in the coffee industry undertakes the responsibility of managing and monitoring social or economical and environmental performances and issues in their supply chains especially at the lower end like the primary producers who are coffee farmers. We know that these key players are amongst the world best coffee brands. They are popular and well known global brand that has stemmed primarily from the global consumer culture that is characteristic of the twenty-first century and also boasts a wide range of worldwide and regionally marketed brands of coffee. It really shows the power and favorable positions of these sorts of firms. It is important that these key players undertake this responsibility, because of the major role they play in the coffee industry they account for what happen to more than half of the commodity share. What and how they do will have a great impact and influence on the production of the commodity. More example we can see where they can relatively chose which suppliers they want to use and their capability to charge the customers with the premium prices. So as a major player in this industry they should use ethical trade practice in managing the social and environmental perspective of their supply chains as well as contribute to benefiting developing countries.

IV. Analyzing Alternative Courses of Action

1. Limiting Supply

Pros:

This can guarantee approximately-optimal revenue

Cons:

This can increase competition

2. Empowering Farmers

Pros:

Cons:

3. Partnership investment on High quality coffee beans with production Quota bought fixed fair price

Pros:

Control over production

Purchasing at fair price promotes welfare