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The Basics
Shopping Fair Trade
Impacts For Producers
The basics
What is Fair Trade?
Fair Trade is an alternative way of doing business - one that builds equitable, long-term partnerships between consumers in North America and producers in developing regions. Fair Trade businesses commit to:
- Paying a fair wage in the local context.
- Offering employees opportunities for advancement.
- Providing equal opportunities for all people, particularly the most disadvantaged.
- Engaging in environmentally sustainable practices.
- Being open to public accountability.
- Building long-term trade relationships.
- Providing healthy and safe working conditions within the local context.
- Providing financial and technical assistance to producers whenever possible.
- These Fair Trade criteria were established by the Fair Trade Federation.
What does “fair” really mean?
The word “fair” can mean a lot of different things to different people. Fair Trade is about more than just paying a fair wage. It means that trading partnerships are based on reciprocal benefits and mutual respect; that prices paid to producers reflect the work they do; that workers have the right to organize; that national health, safety, and wage laws are enforced; and that products are environmentally sustainable and conserve natural resources.
What Fair Trade products are available?
In North America, there are many Fair Trade craft products available–decorative home accessories, jewelry, clothing, toys, etc. Fairly traded coffee, tea, and chocolate are also widely available, as well as these goods: bananas, wine, olive oil, sugar, flowers, body care items, spices, rice, and sports balls.
Shopping Fair Trade
How do I know that a product is Fair Trade?
Some Fair Trade products, like coffee and chocolate, are third-party certified Fair Trade and carry a label or “seal.” For other products, like handcrafts, there is not a certification system. Non-certified products are sold by Fair Trade Organizations, businesses approved by a third-party.
 * The only major label, mostly for food products, is show at right. The Fair Trade Certified ™ logo is an independent certification that adheres to monitoring criteria and standards set out by the Fairtrade Labeling Organization. Since 1997, FLO has established common principles, procedures and specific certification requirements for Fair Trade. Currently FLO certifies around 10 items. The reasons are numerous and complex, but in general relate to the fact that “The very variety of handcrafted items are their strength…unique handcrafted items are not subject to direct comparisons with regard to price and performance.” (Fair Trade Yearbook, p. 159)
 * Fair traders of handcrafts work directly with artisans to guarantee Fair Trade standards (see What is Fair Trade?). Fair Trade Organizations (FTOs) work with low-income artisans to market their products and build their businesses. FTOs, many of whom are members of organizations like the Fair Trade Federation (FTF) or the World Fair Trade Organization (WFTO), adhere to Fair Trade criteria including workers’ pay, environmental practices, and good working conditions. When you purchase home furnishings, clothing, or crafts from FTOs, you know you have purchased a unique item representing not only the talent of the artisan–often a woman from a developing country–but also the culture and traditions of the source country.
Consumers in search of Fair Trade products have a vast array of products to choose from. Certified Fair Trade labels and membership in associations like FTF and WFTO help identify Fair Trade products that are produced according to Fair Trade standards. Looking beyond the label to the trading relationship, consumers can identify Fair Trade standards that meet their values.
Do Fair Trade goods cost more than comparable non-Fair Trade goods?
Generally, fairly traded crafts don’t cost more than other goods because the large percentage taken by middle people is removed from the equation. The cost remains the same as traditionally traded goods; however, more of the sale price goes to producers.
In the case of agricultural goods, is the quality comparable to commercial products?
In some cases the quality is actually higher because Fair Traders factor in the environmental cost of production. For instance, in the case of coffee, fairly traded coffee is often organic and shade grown, which results in a higher quality coffee.
The impact for producers
What is a fair wage?
Producers receive a fair wage when they are paid fairly for their products. This means that workers are paid at least that country’s minimum wage. Since the minimum wage is often not enough for basic survival, whenever feasible, workers are paid a living wage, which enables them to cover basic needs, including food, shelter, education and health care for their families. Paying fair wages does not necessarily mean that products cost the consumer more. Fair Trade Organizations bypass exploitative middlepeople and work directly with producers.
How much money (percent of sale price) do the artisans make?
Given the different regions of the world, production circumstances, and Fair Trade intermediaries involved in delivering a product to the consumer, it is difficult to say with certainty. An informal survey of Fair Traders seems to indicate about 15% of the sale price goes to artisans. What is certain is that Fair Traders are obliged not to exploit producers and to guarantee that the trading relationship is a true partnership, allowing all to make a fair profit margins.
Because Fair Trade sales are still low compared to other sectors in northern markets, is Fair Trade’s impact significant?
First, sales are no longer small: retail sales of Fair Trade items passed $2 billion in the U.S. in 2008. That generated additional income paid to producers, beyond normal market rates, of $35 million. Further, for a Peruvian weaving cooperative making only a few hundred dollars a year, a $1,000 craft sale to a Fair Trade Organization is a significant increase in income. In some parts of the world, Fair Trade earnings are turned over to the community to improve quality of life. The money may fund a potable water system or provide health education or bring an adult literacy program to the community.
Why do Fair Trade Organizations support cooperative workplaces?
Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshop conditions, where unprotected workers earn below minimum wage and most of the profits flow to foreign investors and local elites who have little interest in ensuring the long term health of the communities in which they work. Fair Trade Organizations work primarily with small businesses, worker-owned and democratically run cooperatives and associations which bring significant benefits to workers and their communities. By banding together, workers are able to access credit, reduce raw material costs and establish higher and more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably and often reinvested in community projects such as health clinics, child care, education, and literacy training. Workers learn important leadership and organizing skills, enabling self-reliant grassroots-driven development.
How do Fair Trade Organizations offer financial support to producers?
Small-scale farmers and artisans in the developing world lack access to affordable financing, impeding their profitability. Fair Trade Organizations that buy products directly from producers often provide financial assistance either through direct loans, pre-payment, or by linking producers with sources of financing. Unlike many commercial importers who often wait 60-90 days before paying producers, many Fair Trade Organizations ensure pre-payment so that producers have sufficient funds to cover raw materials and basic needs during production.
How do Fair Trade Organizations offer technical support to producers?
Fair Trade Organizations provide critical technical assistance and support such as market information, organizational development and training in financial management. Unlike conventional importers, Fair Trade Organizations establish long term relationships with their producers and help them adapt production to changing trends.
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