Supply chain of the Fair Trade products

Controlling an international supply chain is a difficult process. To manage all the stages of the supply requires a good management in order to pursue specific aims (Nicholls et al., 2005, p.59). The range of fair traded goods is wide, they are traded worldwide. But not all people today are aware about the existence and meaning of such commodities. So that good marketing is needed too, due to long distance between producer and consumer. Their relationship is based on equity, openness and mutual benefit (Golding & Peattie, 2005, p.157).

The biggest part of Fair Trade products takes tropical one. According to Hilson, it was achieved thanks to marketing campaigns, as they depicted a clear image of impoverished Third World producers and this played on the consciences of consumers (Hilson, 2014, p.63). Farmers in developing countries often live in isolated areas with few or no roads. They are unable to deliver the product to the buyer, thus small farmers received only one price offer (Nicholls et al., 2005, p.34). So that every week middleman in Central America, also known as coyote, arrives to the farm and offers a price for the farmers crop (Jaffee, 2007, p.37).

There are four ways of Fair Trade products distribution: street shops (supermarkets, small shops), catering (restaurants, workplace canteens), mail order and the internet (shopping portals) (Nicholls et al., 2005, p.197). The most tradable food products are coffee, bananas and sugar. Non-food : flowers, cotton, sports balls (Litvinoff et al., 2006, p.47).

Coffee is the oldest and best selling Fair Trade product, representing about 30% of Fair Trade sales in North America and Europe. It provides best information on Fair Trade distribution (Lee & Vihinen, 2005, p.4). There are five monopolistic companies of the global coffee industry: Kraft, Nestle, Sara Lee, Procter & Gamble and Tchibo, buying almost half of the global of green coffee beans (Nicholls et al., 2005, p.81). Nearly all the coffee is grown in developing countries, such as Brazil, Vietnam, Colombia and Indonesia (Jaffee, 2007, p.55). Supply chain is controlled by transnational coffee exporters rather than by farmers who grow the beans. After coffee cherries are picked, they are milled to remove the beans from surrounding cherry, dried and then milled again to remove the dry parchment from the coffee beans. Then they are selling their coffee to coyotes who visit their farms. After that coyotes consolidate small farmer's production and sell directly to transnational-owned mils, who process cherries and then sell to transnational brokers and exporters (Nicholls et al., 2005, p.82).

Developing countries rely heavily on exports to developed countries. Trade between developed and developing countries is more complicated than for example trade between both developed. Developed and developing countries gains from tariff reduction (Love & Lattimore, 2009, p.63).

As an instrument used to improve trade was trade liberalization which can be considered from positive and negative sides. First advantage is that by opening markets goods can be demanded not only domestically, but on the foreign markets as well (Stiglitz & Charlton, 2005, p.25).. Firms gains from economies of scale by expanding the amount of production. It is an opportunity to increase export revenue (Love & Lattimore, 2009, p.64). Also it may lower costs of production, hence the final prices are lower too. In contrast to these arguments trade liberalization leads to more competition that may badly influence the domestic producers (Stiglitz & Charlton, 2005, p.25). Reduction of barriers in the result played against millions of the poor and reinforced poverty. According to Litvinoff and Madeley, developing countries have lost ground under trade liberalization. The reason was that small-scale farmers could not compete with imported products that emerged into bankruptcy. In a free trade, in the world without barriers, poor countries stands in the same conditions with developed one, which is not fair (Litvinoff et al., 2006, p.23). In the result of trade liberalization more than 2 billion people living on less than a dollar a day, moreover it leads to loss of national sovereignty and growing unemployment (Stiglitz & Charlton, 2005, p.13). Such kind of globalization has put developing countries at a disadvantageous position. If trade agreements were supposed to had been truly free, anyway not all countries will benefit and gain. Without trade barriers not everyone can get advantage of the opportunities, because for developing countries, in contrast with the developed one, it is harder to bring their goods to the market. Satisfaction of high standards of the advanced countries may take long time (Stiglitz, 2006, p.62).