Extent of fair trade market and China potential for a bigger fair trade market

2.3 Distribution channel of agriculture products in China

The distribution channel of agricultural product in China is organized around a 3-4 pattern^11(*). But this scheme seems to be quite dense in fact. Along the distribution channel intervene the collectors, the wholesalers and the retailers (Xiaoyong Zhang, 1999). A typical structure of distribution can be observed in the domain of citrus fruits where products pass from farmers to specialized cooperatives or associations, to State-owned trading enterprises, or to private-owned enterprises, to middleman before reaching the final consumer. The role of middlemen is sometimes controversial: «Middlemen play a very important role in fruit marketing but bring negative impacts on the sound development of the fruit market. For example, middlemen try to lower the buying price from farmers and to raise selling price to buyers so as to maximize the profits which might be several times more than that of farmers.»^12(*) The same observation has been made in the domain of fruit and vegetable the distribution marked by «[...] the markups charged by a superabundance of middlemen often leave Chinese produce with few price advantages over that from competitors»^13(*). Of course some aspect of this scheme can be at a certain extent out of date due to the ongoing reforms in the agricultural sector, it presents some advantages (organizational behavior) but small farmers are somehow harmed by the small return they get due to the multiple actors in the distribution channel.

The fair trade system plan is to provide the market with safe products whose production put more attention to human and environmental values. The fair trade system can indorse the official efforts and contribute to get solution to the issues raised above as China has potential to develop a big fair trade market.

2.4 Elements encouraging the establishment of fair trade market in China

We will focus here on the infrastructures and facilities that can favor the establishment of fair trade in China

2.4.1 Transport and energy infrastructures

China has developed, and is still developing transportation infrastructures for all kinds. Road, air, water, rail transportation networks are enough dense to ease transactions, on the one hand among Chinese cities, and on the other hand between China and Asian countries even with non Asian countries. The rural communication system is under continual improvement, to the existing 1.5 to 3 millions km of rural roads, the Government plans to build, by 2010 more than 2.4 millions km of rural paved roads in the eastern, western, and central rural regions (Asian Development Bank, 2006). Fair trade products can easily be transported from producing regions to big cities where the purchasing power is higher.

In term of energy, China is the second energy producer in the world; the authorities report that the «Construction of the electrified wire netting has entered into the fastest stage of development in history, with all major electrified wire nettings covering all cities and most rural areas in the country»^14(*). In 2006 the number of rural people living without electricity estimated to 1.4 million households or 6 million people out of hundreds of millions of people; this figure is certainly high but considering the total number of rural residents it induces high rate of rural electrification.

* ¹¹ Joon-Keun Park et all 2007 explained that trade pattern by citing producers middlemen and/or processor, and finally exporters.

* ¹² FAO 2001, Marketing and Distribution for Citrus Fruit in China: Present Situation and Future Prospects

* ¹³ Hardasset investors.com , 2008, China Now a Major Player in Fruits and Vegetables

* ¹⁴ http://www.cabc.org.cn/news