What is Fair Trade?
Fair Trade is an alternative to unfair systems of world trade -- a way of seeking justice for producers through right trading relationships.
One of the principles of Fair Trade is that producers are paid a fair price -- which covers sustainable production and the costs of living -- for their goods. But while that's the best known aspect of Fair Trade for consumers, it's only a small part of the whole.
A working definition agreed in 2001 by four of the largest Fair Trade networks reads:
"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, marginalised 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."1
What does this mean in practice? In their book, "Fair Trade," Dr. Alex Nicholls and Charlotte Opal list generally accepted factors in a Fair Trade relationship as including:
- Agreed minimum prices, usually set ahead of market minimums
- Focus on development and technical assistance via the payment to suppliers of an agreed social premium . . .
- Direct purchasing from producers
- Transparent and long-term trading partnerships
- Co-operative, not competitive, dealings
- Provision of credit when requested
- Provision of market information to producers
- Farmers and workers are organised democratically
- Sustainable production is practised
- No labour abuses occurred during the production process .2
In a genuine Fair Trade relationship all of these factors work together for good.
- The provision of credit in advance means that producers don't start their work already in debt and facing crippling repayments.
- Over a period of time -- the result of the long-term partnerships -- freedom from debt, the provision of a fair price and the additional premium for development remove the primary impetus for child labour (extreme poverty within families), give producers the capital to undertake sustainable development practices and improve their products, help them to diversify their incomes, and give the means to improve the living conditions for the local area
- In addition, the improved nature of the products, the direct relationships Fair Trade encourages, the capacity-building it gives to producer organisations and the market information it offers enable producers to function better in the conventional global markets. This is very important, as few producer groups actually sell all of their goods on the Fair Trade market. With their increased awareness of how markets work, however, they can generally negotiate better contracts in the conventional markets as well -- further increasing their incomes.
So that's Fair Trade in general terms. To find out more about two specific groups of standards for Fair Trade relationships, go to the page called "How to identify fairly traded goods"
Oh, and by the way -- you may have wondered why this page refers to "Fair Trade" rather than "Fairtrade." That's because the general concept is covered by the two word term. The use of the term ‘Fairtrade' (one word) is reserved by the Fairtrade Foundation as a description of "products and transactions involving products that meet international Fairtrade standards, and of related activities such as the Fairtrade Towns campaign". . . . more about that in the page noted above.
1 Definition agreed by FLO, IFAT, NEWS and EFTA.
2 Alex Nicholls and Charlotte Opal, "Fair Trade: Market-Driven Ethical Consumption" (Sage Books, 2005)
All photographs courtesy of the Fairtrade Foundation, www.fairtrade.org.uk.