What is Fair Trade?
Fair Trade is a system of international commerce based on dialogue,
transparency and respect. It is a system that ensures a decent standard
of living for everyone involved, from producer to consumer. By ameliorating
working conditions, empowering and educating farmers and ensuring the
best quality for the consumer, Fair Trade contributes to sustainable
development. Therefore, this movement is an efficient tool to overcome
poverty and to meet the Millennium
Development Goals. It gives producers
a fair deal, not only by paying a stable price for their products but
also by helping partners to get better market access, to protect the
environment, and to comply with ILO standards.
Long-term trading relationships and pre-financing are other important
pillars of the Fair Trade system.
All in all, Fair Trade is a variant of the producer-consumer relationship
that connects production and consumption via a modified supply chain
model which distributes its revenues more between all stakeholders
than the conventional model.
Fair Trade’s mission is to offer the most disadvantaged producers,
foremost in the South, the opportunity to raise their living standards
through creating market access, foremost in the North, under beneficial
not under exploitative terms.
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These mechanisms are central to the working of Fair Trade:
Fair Trade Standards
- A minimum price agreed upon by the Fair
Trade Labelling Organization (FLO).
This price floor is paid
to the producer in case the world market price falls below the
minimum that would still cover
cost of production
as well as provision for the family members and farm maintenance.
This guarantees producers a living, allows them to plan for
the future, and invest in long-term business strategies.
- Payment of an agreed social premium.
This premium is paid to
the supplier and is usually around 10% of the cost price
of goods. This
allows suppliers to concentrate on development.
- Small scale farmers are nearly always organized into co-operatives
that work strictly democratically, one person, one vote.
Collectively they are enabled to implement larger projects
focused on technology,
education and the enhancement of their living standard.
This approach maintains the dignity of producers and empowers
them to actively
ameliorate their situation instead of being dependend
on outside help.
- Fair Trade prefers co-operative dealings instead of the
more common competitive approach.
- The production process cannot include any labor abuses
such as child or slave labor.
- Products are purchased directly from producers
which means the influence of middlemen is limited.
the system but allows for a greater share of the
final price to be redistributed to the producer.
- Long-term trading partnerships must be transparent
and accountable at all times.
allows for greater
flexibility of the producer with a risk on the
side of the company buying the product.
- Market information will be shared with suppliers.
- Sustainable production is tied together with
the Fair Trade concept.
Although obtaining certifications is a
due to an overload of
work for the respective agencies, many farmers obtain
This makes them eligible for
a higher Fair Trade floor
price and increases the quality of their
products. Moreover, it
is imperative for all Fair Trade farmers to abstain
from the use
of certain pesticides
and to work with resource management plans in
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Photographed by Marcia C. Schenck in South Africa 2006