What Is Fair Trade, How Does It Work, And Why Is It Important?
What Is Fair Trade?
The idea is simple. We trade goods and services fairly so everyone can live a decent life. Hopefully a happy and productive one. Full of surprises. But fair, first and foremost.
How Does Fair Trade Work?
Defining fairness is always a challenge. So many people involved: production, logistics, you name it. Which is why fair trade has always looked beyond commerce. Human dignity is a fair trade issue. And so is sustainability. Fair trade has always been about fairness. Plain and simple. All around and in every direction.
Why Is Fair Trade Important?
Fair trade is a market-based approach that helps producers and creators access better deals, credit, and guaranteed minimum prices. Fair trade is also about empowering producers, artisans and crafters to take control of their own lives and livelihoods.
Training programs, community building initiatives and flexible working arrangements are the norm at fair trade companies. Embedded in fair trade principles. There to help people thrive. As many as possible. Through ways and means that suit them best. And all while making treasure that doesn't harm people or planet.
Ok... But What Are The Principles Of Fair Trade?
Fair Trade / Fairtrade certifiers + member organizations agree on these principles
- Long-Term Direct Trading Relationships
- Payment of Fair Prices
- No Child, Forced or Otherwise Exploited Labor
- Workplace Non-Discrimination, Gender Equity, and Freedom of Association
- Democratic & Transparent Organizations
- Safe Working Conditions & Reasonable Work Hours
- Investment in Community Development Projects
- Environmental Sustainability
- Traceability and Transparency
So... How Does Fair Trade Reduce Poverty, Exactly?
At its simplest, Fair Trade puts people first
It enables farmers and workers in developing countries to receive a fair price for their produce, so they can make a decent living and improve their lives and livelihoods. Fair Trade also promotes sustainable farming practices, so that farmers can protect their environment for future generations.
The movement advocates the payment of higher prices to exporters, as well as improved social and environmental standards. So it also ensures fair labor conditions and transparency in supply chains.
Fair Trade companies must also adhere to strict environmental standards. So when you buy Fair Trade, you're not just helping farmers earn a living wage. You're supporting sustainable practices that protect our planet, too.
To this day, many commodity supply chains are unfair to farmers
Commodities are typically grown by farmers for a very low price and sold to a network of players along the pipeline before they get to you.
They often pay very low prices for crops, which makes it difficult for farmers to make a living. And because these supply chains are often controlled by a few large companies, farmers have little power to negotiate better prices.
Fair trade is an alternative system that attempts to put more money in the hands of the farmers by cutting out some of the middlemen. Giving farmers more power and control over their crops, and ensuring they receive a fair price.
Fair trade certified products cost more because the certifying organizations collect a fee, but proponents argue that the extra cost is worth it because it ensures that farmers are paid a fair price for their products.
Wait... what's a commodity?
A commodity is a raw material or agricultural product that can be bought and sold. The price of commodities is determined by traders, who may be thousands of miles away from where the commodity is grown. Popular commodities include coffee, tea, sugar, cocoa, and bananas.
I think I see. Tell me how Fair Trade works again. One more time...
The Fair Trade price is set by taking into account the costs of sustainable production, so farmers can make a decent living from their crops. When you buy a product that carries the Fair Trade logo, you can be sure that the farmers who produced it have been fairly compensated.
The Fair Trade certification process makes a difference in two spots along the supply chain
1. At the market level prices farmers receive for their goods
2. After the goods leave the farmers to get to consumers, providing traceability and fair pay.
At the market level, Fair Trade certifiers audit operations in many different ways. Regularly over years. And ongoing after that. Fair Trade certification isn't one and done. You have to keep earning it. But one of the most significant jobs is making sure farmers and artisans and small scale producers are paid a fair price for their products. So they can earn a reliable, living wage, rather than being at the mercy of volatile prices on a stock market across the world.
After the goods leave the farmers to get to consumers, Fair Trade certification provides much-needed transparency in global supply chains. Certifiers track fair trade goods through every stage of processing and distribution, making sure everyone along the way is paid fairly.
The Fair Trade movement has had a profound impact on global commerce
Fair Trade has helped millions of small-scale producers improve their lives and build better futures for their families. In an increasingly globalized economy, Fair Trade provides a powerful model for how businesses can operate responsibly and sustainably. As more companies adopt Fair Trade practices, we can create a fairer, more equitable world for all. And when you buy Fair Trade products, you are voting with your dollars for a more just and sustainable planet. For all of us.