Fair Trade is a partnership between consumers in developed countries and producers in developing countries.
Many of the products that we buy in supermarkets or shops are grown or produced by people who are not paid a fair price for their work and produce and as a result are forced to live in poverty. The Fair Trade movement was set up to ensure they are paid a fair price, and to offer producers an opportunity to participate in global markets without exploitation.
'Fairtrade' refers to the mark or certification label given by the Fairtrade Foundation (in the UK) to products they can verify as adhering to their standards. The standards are overseen globally by Fairtrade International.
'Fair Trade' refers to the wider Fair Trade movement to secure better prices, decent working conditions, local sustainability and fair terms of trade for farmers and workers in the developing world. This incorporates other approaches and certification schemes, such as that run by the World Fair Trade Organization.
'fair trade' is a broader term that refers to the general act of buying, selling or exchanging commodities in a way that is fair. It doesn't necessarily imply the strict standards of Fair Trade.
The three terms are not generally interchangeable.
The familiar blue and green Fairtrade mark is the most common certification scheme for Fair Trade products in the UK. Its standards are set by Fairtrade International (of which the Fairtrade Foundation is the UK representative), and all products bearing this mark will have been judged to have met these standards. Traditionally, the Fairtrade mark has been awarded to commodity products, although that is now starting to change with the introduction of Fairtrade-certified footballs.
The Fairtrade standards ensure socially responsible production and trade, and in addition seek to support the development of disadvantaged and marginalised small-scale farmers and plantation workers. Fairtrade standards relate to three areas of sustainable development: social development, economic development and environmental development.
In summary the key objectives of the standards are to:
ensure a guaranteed Fairtrade minimum price which is agreed with producers
provide an additional Fairtrade premium which can be invested in projects that enhance social, economic and environmental development
enable pre-financing for producers who require it
emphasise the idea of partnership between trade partners
facilitate mutually beneficial long-term trading relationships
set clear minimum and progressive criteria to ensure that the conditions for the production and trade of a product are socially and economically fair and environmentally responsible.
See here for more information on Fairtrade standards.
The Fairtrade minimum price defines the lowest possible price that a buyer of Fairtrade products must pay the producer. The minimum price is set based on a consultative process with Fairtrade producers and traders and guarantees that producers receive a price which covers the cost of sustainable production. When the market price is higher than the Fairtrade minimum price, the market price is payable. (www.fairtrade.org.uk)
The World Fair Trade Organization (WFTO) also runs a certification scheme. This is awarded to organisations (rather than individual products) which demonstrate 100% adherence to their ten Fair Trade principles in all their activities:
creating opportunities for economically disadvantaged producers
transparency and accountability
fair trading practices
payment of a fair price
ensuring no child labour and forced labour
commitment to non discrimination, gender equity and women’s economic empowerment and freedom of association
ensuring good working conditions
providing capacity building
promoting Fair Trade
respect for the environment
In 2013, the WFTO also launched its first Fair Trade product label.
More information on labels can be found here.
When you see the words 'Fair Trade', you may think of bananas and coffee, but in fact there are over 4,500 Fair Trade products on the market. For example, did you know that you can buy Fair Trade ice cream, footballs, beauty products, even Fair Trade and Fairly mined gold? And in recent years, there has been a big increase in sales of Fair Trade cotton goods, supporting a crucial cash crop in many developing countries.
The Fairtrade Foundation website has an extensive section on the sorts of Fairtrade products you can buy, where you can buy them from, and the difference buying Fairtrade makes to producers all over the world.
According to the Fairtrade Foundation there are over 4,500 Fairtrade certified products. In 2011, UK consumers have spent over £1.2billion on Fairtrade-certified goods, a rise in consumption by 12% from the previous year. For more information see this press release and figures for individual countries from Fairtrade International.
Producers are guaranteed a minimum price on their product regardless of fluctuations in market price and independent of the retail price of the final manufactured product. This ensures that producers receive a stable and agreed upon price every time. This is scrupulously monitored and audited by international Fairtrade systems to ensure that producers, farmers, workers and local communities are getting a fair deal.
The amount producers receive is negotiated between the producers and the exporter or importer. The retail price of a product is agreed upon between the product manufacturer and retailer,
For more information, read the Fairtrade Foundation's paper on Retail pricing of Fairtrade products (.doc).
In addition to the minimum price, farmers and producers receive a social premium to enable them to invest in their communities.
This money is used to support building community centres, schools, roads and many other community projects. Crucially, it is the farmers and workers themselves who decide what to spend this money on.
'For a product to carry the FAIRTRADE Mark on the front of its packaging, any ingredient that can be Fairtrade must be traded on Fairtrade terms. For a chocolate bar this means 100% of the volume of cocoa and sugar (and any other eligible ingredient) must have been purchased on Fairtrade terms, which includes additional Fairtrade premiums paid to farmers of $200 per tonne of cocoa and $60 per tonne of sugar, which they invest in programmes to improve their own lives and local communities.'
See here for more information.
'For most Fairtrade products including bananas, other fresh fruits, coffee, flowers, nuts, rice, spices and more, a review of UK trading standards in 2009 introduced new, stronger rules into the Fairtrade system, requiring these products to be physically traceable. This means they must be labelled and kept separate at every stage of their journey from the farmers groups to the shop shelves.
The Fairtrade Foundation's trading standards have stipulated strong rules to require products to be physically traceable from their point of origin to the shop shelves. The rules stipulate that they must be clearly labelled and kept separate from other non-fair trade products during their journey.
This is easily done for such items as bananas, coffee and flowers, to name but a few.'
See here for more information.
'Traceability of ingredients in a finished manufactured product, such as chocolate can be a lot trickier than tracing items such as bananas. This is because these products are often mixed locally in mills, factories or at shipping points.
It is also too expensive to trace separate ingredients used in the manufacture of chocolate, because of the complex manufacturing process. According to the Fairtrade Foundation, the introduction of rules requiring physical traceability of cocoa beans may have adverse impact on farmers, preventing them from selling their products through Fairtrade channels.
Nevertheless, The Fairtrade Foundation is working on finding alternative solutions to this issue and has conducted a consultation with farmers' groups and traders on Fairtrade standards. As a result of the consultation, sugar and cocoa beans were exempt from physical traceability. Instead, these products are now monitored through 'mass balance', whereby their volumes are tracked and audited during the manufacture process and throughout the supply chain.'
See here for more information.