THE ROLE OF TRANSNATIONAL RETAIL ON FAIR TRADE DEVELOPMENT - DOI (http://dx.doi.org/10.17800/2238-8893/aos.v1n1p109-118)

Abstract

The growth of Fair Trade (FT) market has an important impact on developing countries business environment, where multinationals companies replace the public sector improving the welfare of small producers. The paper addresses to the question: How the fair trade system, as a GVC, is organized to provide market access in the context of an emerging country? How these different chain members perceive sustainable standards set by a FT certification? This paper focuses on Global Value Chains (GVC) to discuss governance and inclusion or exclusion of smallholders in global markets. The GVC typology useful to understand FT relationships, which move from market, where price is the main requirement, to tighter relationships, where trust and knowledge transfer may evolve. However, they also state that this system is co-coordinated not only by economic reasoning but also by the role of external agents and institutions. In this paper, the role of multinational retail is highlighted. Empirical evidence is provided by a case study from a FT fruit supply chain, where producers are located in Brazil and the buyer (a retailer) in the United Kingdom. In our study, the power asymmetry existent between buyer and supplier is clear but there is interdependence due to the lack of certified producers. In this sense, the retail fills an institutional void on setting sustainable standards for the small producers in an emerging country context.