Profile – What is Fair Trade?

The concept of fair trade has existed as a commercial idea since the 1940s and 50s. Ten Thousand Villages sold fairly traded goods in churches, mainly as a symbol for a donation.

No universally acknowledged definition of ‘fair trade’ exists; but FINE, a gathering of four fair-trade networks, says:

Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers – especially in the South. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising, and in campaigning for changes in the rules and practice of conventional international trade.

Fair Trade Producers

Fair Trade organisations and networks have a central principle of fostering development and tackling poverty through trade. They work with businesses, NGOs and individuals alike.

Quinoa farmers

The main methods through which the concept of Fair Trade is spread, at least in the eyes of the public, is through certification and product labelling. Fair Trade has two defining characteristics which have helped in its success – the Fair Trade minimum price and the Fair Trade premium.

A Fair Trade Community in Guatemala

The minimum price is, simply, the minimum price that the buyer should pay for the product. Producers and traders decide this price, based on their market conditions and what they believe to be a price on which they can feed their family and sustain themselves and their trade.

It usually covers the cost of sustainable production; when the market price increases, the minimum price reflects this. It’s built to adapt and respond to positive changes in the markets.

In areas of the world where the markets depend on primary products like agriculture, markets are volatile and prone to severe changes. This price is meant to ensure that even in times of struggle, producers are taken care of.

The premium is a part of the price that is given for the social, economic and environmental needs of the communities where the products come from. It is decided by the community of producers, within organisations or by the workers in the fields. It is meant to ensure that money is invested back into the community – completing a circle of sorts.

The unofficial Fair Trade charter defines its principles in broader, humanist terms. They say “Fair Trade is, fundamentally, a response to the failure of conventional trade to deliver sustainable livelihoods and development opportunities to people in the poorest countries of the world; this is evidenced by the two billion of our fellow citizens who, despite working extremely hard, survive on less than $2 per day. Poverty and hardship limit people’s choices while market forces tend to further marginalise and exclude them. This makes them vulnerable to exploitation, whether as farmers and artisans in family-based production units or as hired workers within larger businesses.”

Fair Trade Products

A Fair Trade Coffee Farmer

Fair Trade products are mainly seen on our shelves and supermarkets in the form of food – coffee, cocoa, sugar, tea, fruit, honey, wine and chocolate. Fair Trade flowers and cotton is readily available; handicrafts from various communities across the world are also some of the more lucractive niche markets in the Fair Trade sector of the global economy.

Fair Trade Coffee, one of the most common Fair Trade products available

FINE estimates that Fair Trade sales were around €2.9 million in 2008; it is a sector of international trade growing at a pace of around 22% each year.

Some Fair Trade products account for around 20-50% of the sales in their sectors.

Fair Trade Labelling Organisations International (FLO) says that 7.5 million producers and their families have been positively affected by the introduction of Fair Trade production and a Fair Trade livelihood, within the past decade.

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