Social Sciences

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GEOGRAPHY Learner's Book • Grade 6 Term 2

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Trade

Why people trade

Trade as buying and selling goods for moneyForeign trade

Trade is the voluntary exchange of goods and services by people. It is the exchange of one thing for another. Trading has been around for centuries. ‘Voluntary’ trade means that people make a decision to exchange goods or services without being forced to do so and of ‘their own free will’. People trade in order to benefit from it. When people believe they can no longer reap the benefits of trading, then trading comes to an end. Economically, people judge their trade success by weighing the benefits of the purchase against the costs of their trade.

Long ago, people exchanged goods amongst east other for new and interesting commodities in a barter system without using money. They traded raw materials as well as manufactured materials. Some examples were spices, gold and silk.

Trade would not exist if humans had equal qualities because each person would have the same needs and circumstances. It is because humans are unequal with different needs and circumstances that trade happens. Trade is inclined to reduce inequality and to ease the consequences of the different circumstances in which humans live.

In this module you will:

• Understand why people trade

• What people trade

• Understand resources and their values

• Understand fair trading

People trade with each other to find goods or services which they want and which they cannot produce or get for themselves. Trade is one of the four ways generally accepted as lawful, that people can purchase goods; the other three being producing it personally, by receiving a gift and by inheritance.

Trade is made for the mutual benefit of parties. The outcome of a trade is that everyone involved is better off. Most economists accept that trade is the seal of prosperity.

Money has made trading much simpler and effective compared to earlier practices of bartering. Trade can be described as a financial transaction or ‘barter’. A network that allows trade is called a ‘market’. Modern traders generally trade with money by buying, selling or earning. Money can be credit, paper and non-physical money. Trade between two buyers is called ‘bilateral trade’, while trade between more than two buyers is called ‘multilateral’ trade.

Internal trade is trade that is conducted within a country. It is the involvement of wholesale and

retail trade. Wholesale trade involves buying in large quantities from producers or manufacturers and selling to retailers. A wholesaler is the middle man between the manufacturer and retailer. Retail trade involves buying from wholesalers to sell to consumers. A retailer is the last link in the chain of distribution.

Buying and selling between two or more countries is called ‘International, Foreign Trade’. International Trade is the exchange of capital goods and services across geographical/international borders. International trade represents a major share of a country’s GDP (Gross Domestic Product) and can be sub-divided into three categories:

• Export Trade: Sale of goods and service from home country to a foreign country; when a trader sells his goods to a trader in another country. For example: a trader from South Africa sells his goods to a trader in China.

• Import Trade: Purchase of goods and service from a foreign country to home country; when a trader buys goods from a trader in another country. For example: a trader from South Africa buys goods from a trader in England.

• Entrepot Trade: This is when goods are imported from one country to home country, processed and then re-exported to another country. For example: an Indian trader (from India) imports spare parts from a Chinese trader (from China), then converts them into finished goods and then exports the spare parts to an American trader (in USA).

Activity 1: Reasons for Import and ExportList the reasons in your class workbook, why a country would import goods or services and export goods or services.

Reasons for Importing Reasons for Exporting

Total: (10)

Activity 2: EssayWrite an essay of no more than 200 words explaining how trade has changed from the early 1800s until now. Total (20)

Since the end of apartheid, foreign trade in South Africa has increased. International trading partners of South Africa include other African Countries, the European Union, United States, China and Japan. Exports are mainly mining and agriculture , fore example maize, diamonds, fruit, gold, metals, minerals, sugar, and wool. Imports include transportation equipment and machinery, chemicals, manufactured goods and petroleum.

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What people trade

Skills

Services

Activity 3: Trade Read the questions and write the answers in your class workbook.

1. Import trade means the___________________of goods from one country to another.

2. Entrepot means the _________________________of goods.

3. Foreign trade is also referred to ________________________trade.

4. Voluntary trade means ______________________________________.

5. The name referred to as a network that allows trade. ____________________

6. Trade between two buyers is called _________________________________.

7. What are the three categories of international trade called? ________________________.

8. Write the full meaning of GDP ________________________________________.

9. Name the system that was used for trading long ago _______________________.

10. Why do people trade? _______________________________________________.

Total: (10)

Raw materials are the primary products or basic materials from which a product is made and sold. Raw materials are ‘factors’ of production along with labour and capital and are very important to the production process. A country that has lots of natural resources does not need to import many raw materials and has the opportunity to export their raw materials to other countries. Raw materials are often natural resources such as oil, iron and wood. Before being used in the manufacturing process, raw materials are often changed to be used in different processes. Raw materials are also referred to as ‘commodities’, which are bought and sold on commodities exchanges around the world. ‘Manufactured goods’ are goods that have been processed and are the ‘secondary’ product to the ‘primary’ (raw material) product.

tradestats.thedti.gov.za

Activity 4: Raw materials Look at the examples of raw materials below. List two secondary products each raw material can be processed/manufactured into. Record your answers in your class workbook.

1. Wood 2. Crude oil

3. Gold 4. Glass

5. Iron

Total: (10)

A skill is defined as the ability, using knowledge, practise and aptitude to do something well. Skills have three key features:

Productive: using skill is productive of value.

Expandable: skills are enhanced by training and development.

Social: skills are socially determined.

A service is the process of providing customer satisfaction with a product or service. This can be done in the form of direct or indirect contact. Service is fundamental to service management. Service allows both the customer and the service provider what to and what not to expect from a service. Services that are clearly defined, help customers to understand the service offering, including what the service provides, includes, eligibility, limitations, costs, requests and how to get assistance. A well-defined service also identifies internal processes necessary to provide and support the service.

Activity: 6a Good Service and Bad ServiceLook at the list of words below and tabulate in your class workbook, which words suggest good service and which words suggest bad service. Add five more descriptive words for each service.

Total: (10)

sincere inconsiderate surly understanding smart reluctant indifferent helpful positive welcoming distant cold abrupt polite rude

Activity 6b: Paragraph writingWrite a colourful paragraph in your class workbook explaining the reasons why is it important to an organisation that its customer’s return and / or speak positively about their experience.

Total: (20)

Activity 5: PowerPoint PresentationCreate a PowerPoint Presentation highlighting South Africa’s top 5 imports (measured in gross expenditure) and top 5 exports (measured in gross income). Include the top 5 export destinations and the top 5 countries from which South Africa imports products.

Total: (20)

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were first tasted by the French after the royal marriage of King Louis XIII to the Spanish Princess Anne of Austria in 1615.

In 1650, chocolate beverages appeared in England at the same time that tea arrived from China and coffee from the Middle East. The consumption of the drink was only a privilege for the upper classes and for soldiers during battle. In 1659 the first chocolate-confection maker opened in Paris. In 1720, Italian chocolate-makers received prizes in recognition of the quality of their products.

Chocolate developed quickly across Europe and around the world. Spain, the first exporter of chocolate, opened the first chocolate factory in 1780, followed shortly thereafter by Germany and Switzerland. The cacao tree was introduced into West Africa by the Europeans and a new cocoa empire emerged on African soil. New chocolate products were made as it became more popular, including chocolate with dried fruits, liqueurs, nuts, spreads, frostings, pastes, and many others.

DID YOU KNOW?

The cocoa bean was commonly used as a currency throughout Mesoamerica;

Cocoa powder was originally produced by the Dutch in 1828;

The chocolate bar originated in Great Britain in 1830;

In 1830, Daniel Peter and Henri Nestlé from Switzerland, developed milk chocolate and during the same period, Rodolphe Lindt developed the chocolate fondant (fondue).

In 1847 in England, solid chocolate is offered to the general public for the first time by the English company Fry and Sons;

Europeans brought the first cocoa trees to Africa;

The cacao plant was given its botanical name by Swedish natural scientist Carl Linnaeus, who called it “Theobroma” cacao meaning “food of the gods”;

Since the start of the 20th century, Africa has become the biggest cocoa producer;

Chocolate has changed from a delicacy reserved only for royals, to a widely available treat for many!

Activity 9: Case StudyGhana has been a massive producer of cocoa beans for the world market and this has been the backbone of Ghana’s economy for a long time. Research the factors that affect cocoa farmers in Ghana.

Total: (10)

Cocoa is grown in plantations in West Africa, Asia and South and Central America with the largest producing countries being Ghana, Indonesia and the Ivory Coast. Africa is the biggest cocoa supplier providing 75% of the world’s crop. For many, cocoa cultivation represents an important source of income.

Resources and their value

The origin of chocolate

From cocoa to chocolate

Natural resources such as oil, gas, minerals, metals and timber can contribute to job creation, government revenues and long-term economic growth for a country. Use of these resources determine their importance to a country as well as the supply. If there is a small supply of a resource, it is given a greater value. The value of a resource can also change over time. For example, before the development of nuclear energy, uranium had few uses. Today it has more value as it is needed for the process of nuclear fission. The natural distribution of resources greatly influences how countries relate to one another. Countries trade with each other in order to get the resources they need.

Activity 8: Research and oral presentationChoose one of the energy resources below and research its economic value and environmental impact. Use this research to present an oral to the class.

Coal, oil, gas, hydro-power, nuclear power.

Total: (20)

Historians believe that the Olmec (1500-400 BC) were the first humans to eat chocolate by crushing cocoa beans (also known as cacao) and mixing them with water and spices to drink.

It was in 1502 when Columbus discovered cocoa beans during a stopover in Nicaragua. The true value of the cocoa bean was not known until Hernán Cortés drank it with the Aztec emperor. Until then, its ultimate worth was not yet recognised.

After the collapse of the Aztec civilization, Cortés grew a profitable trade with Spain.

The first shipment of cocoa beans arrived on the Iberian Peninsula from New Spain in 1585, which started the trading of cocoa and the founding of the first chocolate shops. During the 17th century, cocoa began arriving in other ports throughout Europe. Chocolate beverages

Activity 7: Mind MapCreate a mind map in your class workbook using the topics below to expand on the information provided. The mind map should include other key words, associations, images, symbols or codes to make it visually interesting and informative.

My skills My values My Interests My Strengths Possibilities

Total: (20)

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takes a remarkable transformation once it has been mined, to reaching the hands of the consumer as jewellery. During this transformation, it is changed from unprocessed ore, to a valuable metal which is recognised for its intrinsic value and cultural significance. Over the last decade, the value of gold has increased massively.

The supply chain for gold has four distinct phases: mining, extraction & refining, manufacturing and retailing. As pure gold is soft, it is usually mixed with alloys to make it harder for the jewellery making process.

China is at present, the fastest-growing market for gold jewellery in the world but the United States is one of the world’s most significant consumer markets. South Africa is the world’s 5th largest producer of gold. Gold mining in South Africa has been the biggest driving force behind the country’s participation in the global economy.

Activity 10: Flow DiagramGold to Jewellery process

Research and create a flow diagram that explains the process form “ore to store” .

Total: (10)

Activity 11: Case StudyCompile a case study on one operating mine in South Africa. Research the estimated value of gold it produces as well as the impacts of mining on the environment.

Total: (30)

Fair trade is an approach to business and development to support the practice of fair trade and transparency during international trade.

It is a system that supports fair labour practice in developing countries who lack economic opportunity and markets in which to sell their goods. It is an open, supportive and profound association between buyers and sellers that ensures the principles of fair trade remains at the fore.

Unfair trade policies prolong inequality. The term ‘Unfair Trade Practice’ broadly refers to any deceptive or corrupt trade practice of products or services and includes unfair competition, false advertising, misleading information, fraud, prejudice and criticism.

The cocoa bean comes from the fatty bean of Theobroma Cacao tree, where cocoa solids and cocoa butter is extracted to form the chocolate base. The cocoa tree starts to bear fruit when it is 3-4 years old and bears two harvests per year. Very few flowers are fertilized and developed into cocoa pods. Each tree yields approximately 20-30 pods a year and a cocoa pod normally contains between 20-40 seeds.

After approximately six months when the cocoa pods are fully grown, they are then harvested. The pods are collected in baskets and the seeds removed from the pods and left to ferment and dry. Fermentation is important as this process naturally removes any fruit pulp that sticks to the beans.

After drying, the beans are graded.

The manufacturing process:The cocoa beans are cleaned and removed of any stones and sand leaving only the kernel behind;

The cocoa nibs are roasted and put into grinders to be ground coarsely;

They are then ground to fine cocoa liquor using heat to melt the cocoa butter present in the liquor;

This now becomes a liquid when the liquor melts and the cocoa liquor is now ready to use as an ingredient of chocolate;

It can also be processed into cocoa powder and cocoa butter.

What are the raw materials used to make chocolate?Cocoa liquor, cocoa butter, sugar, powdered milk and vanilla are the raw materials which make all the different types of chocolate;

Dark chocolate is made with cocoa liquor, cocoa butter and sugar;

Milk chocolate is made by adding milk powder;

White chocolate does not include cocoa liquor;

Vanilla is added to all types of chocolate to enhance the taste.

By the time of recorded history, gold was considered sacred and a symbol of wealth and social rank and since then, its relationship with human society has grown. Gold mining remains a key global industry as gold is a backbone of economies worldwide.

Gold is malleable (soft) which makes it easy to work with and it is resistant to corrosion. It

From gold to jewellery

Concepts of fair and unfair trade

In South Africa, the Consumer Affairs (Unfair Business Practices) Act, 1988 defines “unfair business practice” to mean any business practice which, directly or indirectly, has or is likely to have the effect of:

• Harming the relations between businesses and consumers;

• Unreasonably prejudicing any consumer;

• Deceiving any consumer;

• Unfairly affecting any consumer.

Activity 12: Case StudyRead the story and answer the questions that follow in your class workbook.

Jacob earns a living by growing and harvesting cocoa beans on his smallholding. It is hard work because cocoa trees only bear two harvests a year. He only manages to collect 100kg of beans after each harvest, which he sells to the trading company once they have dried. Jacob earns R100.00 for each 100kg he sells. This money has to last him 6 months until he can sell the next harvest. Jacob has to feed his family with this money as he is the only breadwinner. The trader then sells Jacobs harvest to the producer for R1000.00, making a massive profit out of trading.

What is ‘unfair ‘ about this story? Validate your answer with facts about unfair trade. (4)

Design a ‘fair trade’ logo for South African products in recognition of fair trade. (6)

Total: (10)

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