I posed the a Title question, What is Fairtrade all about?, on Yahoo Answers recently and got a couple of answers. Thought I should share. I will however appreciate your opinion too.
QUESTION
What is Fair Trade all about?
In relation to farmers (cocoa) in developing nations and chocolate producers/consumers in developed nations. What ever your opinion/answer is, it will be appreciated.
ANSWERS
1.
Fair trade is where a person selling the coffee or whatever charges more but promises to pass on the increase back all the way to the grower working with the plants, who typically don't get much for their labor.
2.
Fair trade is all about marketing. It is a way to charge more for a product and have a customer actively want to pay more.
That's the cynical answer. Behind that is the concept that a farmer gets pais an agreed fair price. While that superficially looks good, if the price of the commodity goes up, the farmer may find the fair trade deal means he is being paid less than the non fair-trade farmers.
Wednesday, March 4, 2009
Friday, December 19, 2008
Akrad (The Richest Man In Babylon)
"I say to you that just as weeds grow in a field wherever the
farmer leaves space for their roots, even so freely do
desires grow in men whenever there is a possibility of their
being gratified. Thy desires are a multitude and those that
thou mayest gratify are but few.
farmer leaves space for their roots, even so freely do
desires grow in men whenever there is a possibility of their
being gratified. Thy desires are a multitude and those that
thou mayest gratify are but few.
Wednesday, December 3, 2008
Interesting Quote
"I write when I'm inspired, and I see to it that I'm inspired at nine o'clock every morning." -- Peter De Vries.
IT'S A CHOICE, REALLY.
IT'S A CHOICE, REALLY.
Thursday, July 10, 2008
Preserving Financial Value In Ghana (Short term)
For the first half of the year 2008, I have being considering and trying out some of the avenues one can preserve, if not increase, financial value in the short term through short term financial instrument (Government of Ghana Treasury Bills).
Local Market watch will attest to the fact that interest rate on the local money market, here I am refering mainly to Treasury Bills, have been rising at an increasing rate. This seemly presents a profitable way to preserve value, financially, in the short term (3 mths, 6 mths and 1 yr).
Investors have adopted a variety of ways to benefit from this trend in order to maximise their gains. What do I mean? I will discuss one that came to my notice recently. Let's take the following scenario. Mr. Mensah invests GH¢1,000.00 in a 91 day GoG T/Bill at an interest rate of about 16.84% p.a. on 7 July 2008 to mature perhaps somewhere in October 2008.
First, Mr. Mensah did not buy a longer tenor 6mths or 1 yr, for instance, but rather 3mth(91day). What this means is that, if he is rolling over his investment (principal + interest) at the end of every three months for the full year, he will be better off instead of investing in a 6mth or 1yr Bill, given they all bear the same interest rate.
Second, with this understanding, let us escalate the idea. This is not just fantasy, people are doing it. Instead of waiting for the full 3mths, Mr. Mensah will break/discount the Bill and reinvest it in a new 3mths Bill (Principal + accrued interst). Why? Because of the rationale explained above and again because the interest rates are hiking on the weekly basis. So with a little knowledge of Compound Interest, just do the math.
Lastly, because the Government T Bill is risk free, Mr. Mensah will probably disinvest/liquidate all or some of his equity (high risk) investments and channel such funds into T Bills. Thus optimising his fortunes.
From the above scenario, it may seem very rosy for Mr. Mensah, but it is far from that. Currently, there is a financial value depreciating agent in the Ghanaian economy that is much stronger than the rate of interest. This agent is the RATE OF INFLATION. It affects Mr. Mensah, and people like him, in a couple of ways. I will be brief here.
First. The current inflation rate (May 2008) stands at 16.88% p.a. Please take not of the reporting period. A clear month ago. Let me mention that the highest interest rate for the 91 day T Bill in May 2008 was 14.00% p.a. What this means is that in the month of May 2008 Mr. Mensah's GH¢1,000.00 would have appreciated 14.00%p.a., but would have depreciated 16.88% p.a. You know what this means right? He did not preserve value at all.
Secondly, this problem is compounded because although Mr. Mensah, from the 7 July scenario above, is preserving the value of his GH¢1,000.00, the rate of depreciation(inflation) for that same month of July 2008 will not be known till the month is exhausted.
From the above discussion it is apparent the GoG TBill is not a safe haven for financial value preservation.
I am still considering the best possible way to at least preserve financial value. I have just one option left. The Foriegn Exchange (Currency) Market. However, I am open to ideas.
Local Market watch will attest to the fact that interest rate on the local money market, here I am refering mainly to Treasury Bills, have been rising at an increasing rate. This seemly presents a profitable way to preserve value, financially, in the short term (3 mths, 6 mths and 1 yr).
Investors have adopted a variety of ways to benefit from this trend in order to maximise their gains. What do I mean? I will discuss one that came to my notice recently. Let's take the following scenario. Mr. Mensah invests GH¢1,000.00 in a 91 day GoG T/Bill at an interest rate of about 16.84% p.a. on 7 July 2008 to mature perhaps somewhere in October 2008.
First, Mr. Mensah did not buy a longer tenor 6mths or 1 yr, for instance, but rather 3mth(91day). What this means is that, if he is rolling over his investment (principal + interest) at the end of every three months for the full year, he will be better off instead of investing in a 6mth or 1yr Bill, given they all bear the same interest rate.
Second, with this understanding, let us escalate the idea. This is not just fantasy, people are doing it. Instead of waiting for the full 3mths, Mr. Mensah will break/discount the Bill and reinvest it in a new 3mths Bill (Principal + accrued interst). Why? Because of the rationale explained above and again because the interest rates are hiking on the weekly basis. So with a little knowledge of Compound Interest, just do the math.
Lastly, because the Government T Bill is risk free, Mr. Mensah will probably disinvest/liquidate all or some of his equity (high risk) investments and channel such funds into T Bills. Thus optimising his fortunes.
From the above scenario, it may seem very rosy for Mr. Mensah, but it is far from that. Currently, there is a financial value depreciating agent in the Ghanaian economy that is much stronger than the rate of interest. This agent is the RATE OF INFLATION. It affects Mr. Mensah, and people like him, in a couple of ways. I will be brief here.
First. The current inflation rate (May 2008) stands at 16.88% p.a. Please take not of the reporting period. A clear month ago. Let me mention that the highest interest rate for the 91 day T Bill in May 2008 was 14.00% p.a. What this means is that in the month of May 2008 Mr. Mensah's GH¢1,000.00 would have appreciated 14.00%p.a., but would have depreciated 16.88% p.a. You know what this means right? He did not preserve value at all.
Secondly, this problem is compounded because although Mr. Mensah, from the 7 July scenario above, is preserving the value of his GH¢1,000.00, the rate of depreciation(inflation) for that same month of July 2008 will not be known till the month is exhausted.
From the above discussion it is apparent the GoG TBill is not a safe haven for financial value preservation.
I am still considering the best possible way to at least preserve financial value. I have just one option left. The Foriegn Exchange (Currency) Market. However, I am open to ideas.
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