The Fair Trade Approach
The conventional strategy in international trade is based on the lowest-price business model, in which the lowest possible price is paid at every level of business to keep prices competitive. Unfortunately, with this approach, there is usually little regard for the social, economic, and/or environmental devastation that can result. For many farmers in developing countries, it has meant a life sentence to poverty. Farmers have had no other alternative but to take what they were offered, even when it meant they were paid less for their crop than it cost to raise it.
The Fair Trade Certified™program seeks to change that business model so that concern for people is considered right alongside concern for profitability. Fair Trade enables farmers to reap a greater share of the profits, not only to provide an adequate income for their families, but also to have a source of revenue that they can invest in development projects for their businesses, communities, and regions, thereby reducing or eliminating their reliance on foreign aid development funds.
» Fair Trade and Frontier
Democratic organization: Small producers organize as a democratic group -- often a co-op -- to work together to reduce costs of production and transportation, to set and receive a guaranteed price on the crops, and to collectively decide where to invest their profits. The strength of the co-ops also allows the farmers to resist the pressure of local middlemen, often called "coyotes," who typically pay farmers a low price for their crop and then resell it at a much higher price.
Fair and safe working conditions: Workers on FLO-registered Fair Trade farms are ensured a living wage and safe working conditions. Forced child labor is strictly prohibited.
Sustainable development: Fair Trade farmers and farm workers reinvest a portion of their profits in sustainable development projects that will build and strengthen their communities and set the foundation for a stable economic future. Projects include building schools, hospitals, community wells, roads and bridges, as well as providing training in organic and sustainable farming methods, crop diversification, and skills development. In the Kuapa Kokoo cooperative in the Ashanti region of Ghana's cocoa belt, these development premiums were used to build wells in the center of the village. Women and children previously had to walk for miles to collect water from rivers and waterholes -- water sources that were shared with animals and which often resulted in outbreaks of disease. In addition, many children missed school because of the amount of time required to gather water. The co-op's investment in the wells now mean that families have a safe, clean water supply close by -- and the children can spend their days in school, getting their education.
Coffee, tea, cocoa, vanilla, chocolate, sugar, herbs, fresh fruit and rice that are produced under Fair Trade guidelines provide farmers who are raising crops or producing products in these poor countries a fairer, higher price when they go to market. So far, sales of Fair Trade have brought about nearly $94 million in additional income to farmers, farm workers, and their families. As a result, 1.2 million farmers and farm workers in 58 countries across Africa, Asia, and Latin America have been able to enjoy an improved standard of living within their families and their entire communities.
Paul Rice, president and CEO of TransFair USA (the certifier of Fair Trade products in the United States), encourages consumers to support Fair Trade with the money they spend on food and other purchases. "Fair Trade empowers poor farmers by giving them the opportunity to trade directly with buyers and earn a better price for their products. By purchasing goods with the Fair Trade Certified™ label, the consumer is making a real, positive, sustainable difference in the lives of small farmers around the world."
While sales of Fair Trade-labeled products around the world have shown strong, rapid growth in recent years -- more than 42% between 2005 and 2006, according to the Fairtrade Labelling Organization (FLO) -- there is still a long way to go before sales are considered equitable with non-Fair Trade products. Of the $3.6 trillion spent on goods around the world, Fair Trade accounts for only .01%, reports the Fair Trade Federation (FTF).
Principles of Fair Trade
The FLO Fair Trade standards are created with the input of producers, workers, alternative trade organizations, conventional traders, national labeling initiatives (such as TransFair USA), and independent consultants specializing in Fair Trade and labor issues. This democratic process allows all viewpoints to be considered when setting and reviewing Fair Trade standards. Fair Trade is defined by several guiding principles, including:
Direct trade: With Fair Trade, importers work as directly as possible with the grower organizations, eliminating layers of middlemen and increasing the organization's share of the profits. In addition, direct trade allows the co-op members to gain direct experience in many other facets of their business, such as accounting, marketing, and product development, thereby developing the skills necessary to become more self-sufficient and compete effectively in a global market.
Environmental sustainability: With Fair Trade, a focus is kept on building for the future -- and that includes protecting the land today. The Fair Trade certification system strictly prohibits the use of genetically modified organisms (GMOs) and harmful agrochemicals. Instead, farmers are trained to utilize sustainable farming techniques that will protect the health of the farmers and preserve the health of the land for future generations. While Fair Trade certification does not necessarily mean that a product is organic, Fair Trade products often are, because farmers are paid a premium price for organic products. Additionally, producer groups or co-ops often use Fair Trade revenues to train members on organic farming techniques and to finance the cost of organic certification.
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