Brief 1

Group members:

1. Nguyen Thi Thuy Duong

2. Pham Thanh Huyen

3. Mai Thanh Loan

4. Bui Thi Minh Hien

5. Bui Kim Thoa

- Group topic for presentation:

“Establishing a Fair-trade Organic products firm”

- Summary of background information on the factory:

Our group wants to focus on establishing an fair-trade organic-products firm which will sell
organic products achieving the fair-trade standard. In detail, our products are organic; they
contain no chemical inside in terms of planting and processing the raw materials, which is really
advanced and healthy for buyers. Moreover, they also get the fair-trade standard that is set by
Fair-trade Labeling Organizations International (FLO). Our purpose of establishing this kind of
enterprise is to set up a close and fair relationship between producers (farmers) and us –
entrepreneur. We as the buyer of raw materials supplied by farmers, who are mainly ethnic
minority, will give farmers techniques to produce the plain products and pay the fair price for
them. In return, they have to make sure that products are made following the right process with
the given technical support. Then, our company will make the finished products. Finally,
products will be sold with the prices are also fair for both our company and the consumers.
Although the prices may be a little bit higher than normal products, consumers can also gain
from trading, because they can consume high quality products that are good for their health and
protect our environment as well. These are fundamental characteristics of fair-trade enterprise.
 - Who are your target customers?

Our target customers will be ranged from middle-income to high income inside and outside
Vietnam especially foreigner who are living here.

- What are your main products?

Our main products are Vietnamese organic tea, coffee and roasted cashew.

- What factors affect your demand and supply of your products?

Demand: On special occasions or holidays, people tend to consume more our products; they
often buy tea, coffee and cashew to eat or to give their friends as the presents.

Supply: Because our major products are tea, coffee and cashew so climate changes will
substantially affect our supply.

- The equilibrium condition of the market for our products:

+ The equilibrium price:

• Tea: 250000vnd per kg

• Coffee: 225000vnd per kg

• Roasted cashew: 225000vnd per kg

+ The equilibrium quantity demanded:

• Tea: 50kg/month

• Coffee:250 kg/month

• Roasted cashew: 200 kg/month

- The government should not introduce any price floor or price ceiling.

Because these kinds of product achieve the standard of fair-trade, which is the international price
and quality standard. Thus, the FLO will give the price ceiling and floor. The minimum price
paid to Fair-trade producers is determined by the Fair-trade standards. It applies to most Fair-
trade certified products. This price aims to ensure that producers can cover their average costs of
sustainable production. It acts as a safety net for farmers at times when world markets fall below
a sustainable level. Without this, farmers are completely at the mercy of the market. When the
market price is higher than the Fair-trade minimum, the buyer must pay the higher price.
Producers and traders can also negotiate higher prices based on quality and other attributes.

- What is the elasticity of your goods?

Because our products are organic, so among Vietnamese consumers it is relatively luxury goods,
because price of organic products are more expensive than normal products like normal tea or
coffee. Therefore, when the price increases, people will be elastic about our products because
they will switch to normal products.

- Example:

International Market Development and Investment JSC (MDI) - a social entrepreneurial

company.