An Ethical supply chain solution for the supply of a luxury beverage: the case of 'Fair Trade' coffee

Suppliers of commodity products such as coffee, traditionally sourced from developing nations, tend to have low power in supply chains compared to global retailers. Over the past few decades a more ethical management solution for these supply chains has shifted some of these dynamics. The 'Fair Trade' Movement has emerged as an institution that positively impacts some coffee agri-businesses and their communities in the developing world; as well as the end-consumer. This has been facilitated by a combination of institutional power and the ‘voice’ of smaller retailers and end-consumers demanding more ethical supply. This participatory involvement by customers is in response to increased transparency and information about the supply chain and the desire for improved corporate social responsibility (CSR) in their purchase of what has historically been a ‘luxury’ food product. Fair Trade has positively impacted the producers in some of the poorest nations in the world in a number of ways. The most immediate result is the increased payment for their product, often coupled with education and training in sustainable business practices; aid to help to the reduction of some (negative) environmental impact of farming; along with solutions for poor labour conditions, child employment and other associated community issues. This movement is an anomaly in a world where power in the value-chain lies with global organisations and large national retailers. This paper examines the issues that contributed to the re-organization of this supply chain.