Market research is of great significance in business activities especially with regard to investment and profit making. Many businesses and business people who have exponentially moved and reached the peak of achievement have always considered market research and conclusive understanding of prevailing market forces to be very essential. These forces determine strategies to be employed by any investor be it corporate or single business investment. Similarly, government policies and agreements are very important in shaping business environment. As a result, it is of paramount need for one to thoroughly familiarize with the environment. Considerably, trade of any nature is adversely influenced by the kind of prevailing policies and agreements. This influence is usually felt on both international and domestic business.
Based on these facts, Gonzalo Gomez and Gabriel need to clearly study and conclusively understand the coffee market in Mexico before entering into a production investment. This will go far beyond in augmenting the understanding of NAFTA, North American Free Trade Agreement in which their home country entered in recent years. It is notable that NAFTA has recently changed the panorama for doing business in Mexico (Dugger, 8). This analysis further focuses on the impact of fair trade on coffee market in Mexico including opportunities and challenges which await coffee production investors
The North American Free Trade Agreement came into effect almost a decade ago after somber deliberations took place. However, the agreement is currently far beyond being a politically charged issue and has continued to be a representation of hope and brighter future for coffee producers and other investors with a tangible threat to free trade.
The agreement led to the existence of three varying economies namely the striving Mexico, the average Canada and the known rich United States. Because of these existing disparities among the three parties, NAFTA turned out to be a significant player in underscoring the fact that free trade was aimed at benefiting every party involved regardless of their economic status. During its launch, many people including political leaders had hopes and conviction that NAFTA would greatly mark a turning point in different ways. Most specified areas included but not limited to elevation of living standards, controlling of illegal immigration and creation of millions of job opportunities to many Americans who lived under unemployment. However, many strong cohorts of the famous accord agree that free trade is not independently enough in promoting the achievement of these goals; it is a collective depended package. Nevertheless, NAFTA's effects have been directly linked to many economic changes which continue to occur (Hufbauer and Schott 206). One of these is the economic recession whose effects have been felt worldwide. Although it led to what many analysts considered as harsh path of development, it ultimately commenced with a staggering progressive momentum. The accord also faces future debate challenges especially from Congress members who believe that what has been achieved is not enough and convincing since very minimal attention has been given to workers who are key players in coffee industry.
It is also important for Gonzalo Gomez and Gabriel to note there are several achievements attained by NAFTA especially with regard to investing opportunities and widening of the market. The accord led to cancellation of levy that was initially charged on agricultural products (White 1).
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This move was warmly welcomed and influenced economic growth in the three nations because of low production costs which were expected. On the other hand, NAFTA created export related jobs for many jobless people who have not only played a role towards economic growth in their nations but also in promoting their living standards. As a key trade agreement in export trade, many Mexicans believe that numerous people still remain jobless, giving an opportunity for investors in Mexico. The increase in job opportunities especially for majority of Mexicans would play a mega role in curbing illegal immigration of many people into the United States.
For new investors like Gonzalo Gomez and Gabriel, it is quiet promising to note that the United States greatly benefits from NAFTA which has exponentially led to an increase in the exports taken to Mexico; a prove that there are investing opportunities in Mexico which are ready to be tapped (White 1). Importantly, fair trade has created many opportunities for marginalized coffee producers in Mexico by challenging marketing based and ensuring that good revenue which comes from coffee production is enjoyed by producers themselves. This has led to improvement in coffee prices since greater production returns is meant for producers by eliminating the notion of intermediaries. As a result, Mexico is among the leading nation in production of Fair Trade coffee with main focus of over 70% being diverted to organic production. Additionally, the growth of Fair Trade has been on the increase especially after the certification of many producers in Mexico. As a result, there is floor of prices in coffee market which aim at giving a substantial return to most producers. Such an opportunity would greatly play a major role in Gonzalo's investment plan especially in profit making and cutting down of expenditure. Labor investment costs are also considerably low in fair trade making it more comfortable for investors to venture in great profit making coffee production.
There are indeed investment opportunities in Mexico especially for Gonzalo and his wife who are planning to join coffee production market. The emphasis on increasing the returns for coffee producers is essential in promoting the growth of small investors. Regarding the certification system, fair trade has significantly led to an improvement in salaries and promotion of reasonable coffee prices. Unlike free trade, fair trade promotes a healthy production environment with an aim focusing on its efforts on the welfare of workers and producers (Calo and Wise 12). This is highly recommendable in improving the living standards of not only those people involved in the coffee industry but to improve the living standard of every Mexican.
The most recommended option for Gonzalo's investment plan is to consider fair trade as opposed to free trade. This is due to the fact that free trade ensures that every person involved in the production process receives a fair share of the earnings (Gavin 63). The whole concept of fair trade goes beyond making profits but creation of an all round production environment. There are several opportunities for Mexican investors, having in mind that many people greatly rely on American imports which in the long ran do not play any major role in improving the lives of workers. What would be the need of running a company that has no future growth signs?
It is also important to note that coffee production under fair trade relates to the United Nation's Millennium Development Goals for eradicating poverty.
This is due to the fact that fair trade greatly focuses on the interests of workers and producers by checking production prices and the overall coffee price. Improving the wages for coffee workers and ensuring stable and sustainable prices improves the living standards of people. Coffee workers are able to meet their family needs like food and clothing courtesy of fair trade. As a result, poverty lowering and eradication is guaranteed making it a suitable production path that promotes UN's Millennium Development Goals of eradicating poverty and alleviating people's living standards by 2015. Based on this coverage and analysis, it is clear that Gonzalo and his wife should go ahead and invest in coffee production in coffee under fair trade plan.