ALL ABOUT FAIR TRADE

IN ESSENCE...

• The Fair Trade movement is a social response to the conventional trading system by which many farmers and workers have been deprived or disparaged.


• Fair Trade products, which range from agricultural products to crafts, are made in environments where workers are guaranteed fairer prices, improved working conditions, and fair terms of trade so that the working and living environment of their communities will be supported in their development and protection.


• Fair Trade labels signify that consumers are purchasing goods that are socially- and environmentally-responsible.


• A company can place a Fair Trade seal on its products only after it has met the Fair Trade requirements and been certified by an authorized certifying body.

WHAT DOES “FAIR TRADE” MEAN?

The Fair Trade movement is a social response to the conventional trading system by which many farmers and workers have been deprived or disparaged. Compared to traditional charitable donations and aid, buying Fair Trade products is a more effective way of facilitating supportable development, as it allows better trading conditions and sustainable farming for workers and farmers in developing countries. By contrast, traditional trade practices are reputed to treat the most underprivileged producers unjustly and discriminately; hence, Fair Trade seeks to empower these producers to enhance and advance their stations by helping to bring them out of poverty through increased wages, as well as by further developing their skills, reforming their societies, and protecting local resources to save the environment for posterity.

A Fair Trade product, which includes agricultural products and crafts, is made in an environment wherein the producers are guaranteed better – fairer – prices, improved working conditions, and fair terms of trade so that the working and living environment of their communities will be supported in their development and protection. The standard for Fair Trade products is that they must not be produced through forced labor, child labor, or in conditions that are disadvantageous to workers, as they must feel empowered to develop businesses that are competitive and prosperous. A Fair Trade label signifies that consumers are purchasing goods that are socially and environmentally responsible.

The ISEAL Code of Good Practice on Standard Setting is the guide against which Fair Trade standards are established, and the Fairtrade International Standards Committee decides the decrees regarding the standards. Additionally, buyers and suppliers must both act in accordance with the basic values and ethics outlined by organizations, such as Fair Trade USA and the Fair Trade Federation, that are involved in Fair Trade.

By trading directly with producers, Fair Trade importers do not have to deal with middlemen, which allows farmers to receive a greater cut of the income earned from the amount that the products will ultimately make when they are being sold in stores. To further entrench fair practices among the collectives that the Fair Trade importers collaborate with, these small-scale farms that are known for not having any hired help at all or for having only minimal hired help, must be operated democratically; this means that each farmer is given the chance to vote – on the prospects of their crops or other decisions that must be made collectively – and that all proceeds are equally allotted to each member.

Regardless of market price fluctuations and decreases, no matter how steep the decline, Fair Trade ensures that farmers receive a sensible minimum amount for their harvests. This means that particular crops must not be sold below specified prices. Purchasers commit to paying producers punctually for their products and may even offer them advance payment before the time of harvest, in order to guarantee that producers will have all the resources required to deliver their goods at the appointed time. In turn, producers commit to compensating their workers with fair pay.

To supplement the regular prices that they receive for their products, farmers also earn a Fair Trade Premium that allows them to develop and thus ultimately invest in their communities. The way it works is that goods earn an additional several pence per pound (and more if the products are organically-grown). This extra income may then be put toward such things as the farming business itself with a focus on using it to obtain organic certification or to irrigate the fields, both of which lead to the potential to earn more for their upcoming goods. Alternatively, the money may be invested in school-building and well-digging projects or to contribute to scholarships, to advance healthcare, to develop plans for better nutrition, to replace traditional energy sources with energy-saving systems, or to replant trees in order to optimize soil health. Producers may opt to put the money toward ecological strategies that address the factors contributing to climate change, and this ultimately works to the global advantage. The Free Trade Premium also helps growers and producers when their crop yields are low and in situations where the climate becomes inconducive to their existing farming methods and thus necessitates the cultivation of different crops.

Fair Trade not only mandates that farmers implement and maintain safe and secure working conditions that will not jeopardize the workers’ health and well-being, but it also prohibits any forced labor or child labor, both of which are common practices in several regions around the world. Furthermore, the regulations of Fair Trade prohibit any kind of harassment, exploitation, and discrimination, such as intolerances to workers’ political views or their affiliation with a trade union.

Fair Trade helps develop and strengthen the long-term relationships between producers, purchasers, and patrons by encouraging them to engage in the transparent and respectful exchange of insightful information regarding farming practices, general technical assistance, and market trends. This allows traders and distributors to join forces with farmers to resolve any issues.

Despite Fair Trade products not always being organic, the farming practices that growers are obligated to employ are still sustainable and ensure the protection of the land, the water, and plant life. This means that there is a controlled and limited list of fertilizers and pesticides that are permitted to be used, genetically modified organisms are entirely prohibited, energy is used in the most economical and ecologically-friendly ways, and waste management applies the philosophy of reusing and recycling in order to reduce waste as often as possible.

In keeping with the principle of respect, Fair Trade suppliers avoid coercing growers to implement the newest, most modern technology and procedures in place of their traditional methods for growing and producing. Instead, they grant them the right to continue their time-honored systems, thus acknowledging the unique customs of their individual cultures. While the growers are still educated about more current and contemporary practices, maintaining the techniques and customs of their ancestral backgrounds allows them to boost their productivity, which helps keep pace with buyer demands.

THE HISTORY OF FAIR TRADE PRODUCTS

Late 1940s: The Fair Trade movement began; it is believed that, at this time, North American and European churches began the initiative of helping support disadvantaged communities and refugees by importing their artisanal creations, such as embroidery.

1950s: In Europe, Oxfam shops began selling the handcrafted artistry of refugees from China.

1958: America’s first Fair Trade shop was set up.

1964: Oxfam formed the first ever official Fair Trade Organization. In the Netherlands, a similar action was being taken.

1967: Fair Trade Original, another importing organization, was established in the Netherlands.

1969: Europe’s first Fair Trade shop was set up.

1960-70s: The founding principle of Fair Trade was formed; non-governmental organizations and people from places like Latin America, Africa, and Asia partnered up to address the necessity of having marketing associations that would do more than just promote and sell products – they sought to develop organizations that also informed, guided, advocated for, and generally supported underprivileged producers in impoverished communities – and they did. With their mission set to achieving fairness in global trade, they established several Southern Fair Trade organizations based on their unified vision of an alliance that implemented the values of equity, cooperation, open discussion, negotiation, honesty, respect, and transparent practices.

WHAT ARE FAIR TRADE PRODUCTS?

The following products can have Fair Trade standards applied to them and can be certified Fair Trade:

MYTHS ABOUT FAIR TRADE PRODUCTS

MYTH: Fair Trade products are always organic.

REALITY: Although the standards for the Fair Trade movement do ordain that farming processes be sustainable, Fair Trade products are not automatically “organic;” however, the Fair Trade Premiums paid to farmers may support them in implementing organic methods through training processes that can help them change and potentially align their practices with techniques required for organic production.

MYTH: The goal of Fair Trade is to compensate developing countries with wages that are paid in developed countries.  

REALITY: The wages that Fair Trade growers and producers earn are not founded on the pay standards set out by a developed country, rather they are paid on the basis of accurate production costs. Production factors that influence the amount of compensation received include the following: the time commitment, the competence and exertion required, the local costs of living, minimum wages in the area of production, as well as the value of money and the community’s spending ability in the area of production.

MYTH: Fair Trade is essentially charity.

REALITY: While the Fair Trade revolution does help support constructive and lasting change for underprivileged workers by empowering them to be self-sustaining, their success is achieved through their own independent efforts in running their farms, groups, and businesses, rather than on donations. The main objective of Fair Trade organizations is trade. This means that they earn their wages fairly for their accomplished work and do not depend on receiving aid. The Premium sum that they receive goes into a collective fund for the community to share for their environmental, social, and economic benefits; it is not used by individuals for personal gain.

MYTH: Fair Trade products are more expensive.

REALITY: Compared to the prices of regular products, most Fair Trade prices are not expensive for the same or similar products. Due to the elimination of middlemen, Fair Trade organizations are able to do business directly with producers, which allows them to offer customers the most affordable prices and which makes it easy for producers to receive larger portions of the prices.

MYTH: Fair Trade products are always completely free of GMOs.

REALITY: Fair Trade outlines specific farming guidelines must be followed, but environmental pollutants and banned substances like GM seeds might not be entirely possible to avoid at all times, as there is always the possibility of neighboring fields inadvertently causing the contamination of smaller farms. For this reason, Fair Trade products are not labeled with the claim of being 100% GMO-free.

FAIR TRADE CERTIFICATION PROCESS

A company that wants to become Fair Trade certified must begin by submitting an application to an agency that is authorized by Fairtrade International to enforce Fair Trade standards and to be a certifying body. Next, an on-site audit of the company is conducted based on a checklist that is specific to the business. 

This inspection serves to confirm the company’s adherence to Fair Trade standards and involves reviewing documentation, such as financial documents, as well as consulting with employees, executives, committees, and union members. This process helps to ascertain that the logistics network – from the producer all the way to the packaging of the final product – is supervised and inspected.

For the next step in the evaluation process, the assessor sends a report of the audit to a certification analyst, who then evaluates the outcome. In this phase, if the company’s practices are not already aligned with Fair Trade standards, it will receive a chance to make the changes necessary for conforming to regulations. If all required changes have been made and if the company is qualified to become certified, a certificate is issued. Each year, organizations that are certified must pay the certifying body an annual fee to maintain the certified status.

THE IMPORTANCE OF ACCREDITATION AND CERTIFICATION FOR FAIR TRADE PRODUCTS

A Fair Trade label indicates that the labeled product has met international Fair Trade standards and that the farmers and workers associated with its production received fair treatment and wages. The label is not meant to ratify the professional practices of the company that is selling the product. NDA is new to Fair Trade products and is in the process of adding several more to its current range.

There is a misconception that it is easy for any company to apply a Fair Trade logo to its products and claim to be certified or even ethical. The reality is that, in order for goods to be labeled and marketed as Fair Trade, a company must first earn certification, which confirms that the products have been handled and produced according to the regulations and precise standards set out by Fair Trade International. Only after these requirements have been met can a company place a Fair Trade logo on its products. If a company claims that their products are certified but lacks the official certification to prove it, or if it infringes the Fair Trade regulations, the penalty would involve undergoing a thorough inspection and potential prosecution.