8 Things You Need To Know About Fair Trade

Fair Trade LogoWell, we find ourselves at October once more, which many of you know is National Fair Trade Month.  And while sales of Fair Trade Certified tea have never been higher (Fair Trade tea sales more than doubled worldwide in 2008), there are many – both consumers and professionals alike – who still have only a vague (and often inaccurate) understanding of how Fair Trade Certification works.  In an over-simplified nutshell, the Fair Trade program seeks to use market forces to improve the standard of living for producers in the developing world.  While one could write volumes on the ins and outs of Fair Trade, we’ve outlined some key points below that (hopefully!) help give a reasonable understanding of how Fair Trade works.

  1. Two primary organizations are responsible for operating the Fair Trade program in America.  The first, Fairtrade Labelling Organizations International (FLO), provides the international oversight for Fair Trade efforts across the globe.  FLO is responsible for establishing the internationally-recognized Fair Trade standards, and then certifying those producers who operate in accordance with them.
  2. The primary components of FLO’s Fair Trade standards are (excerpted from TransFair’s website):
    Fair price: Democratically organized farmer groups receive a guaranteed minimum floor price and an additional premium for certified organic products. Farmer organizations are also eligible for pre-harvest credit.
    Fair labor conditions: Workers on Fair Trade farms enjoy freedom of association, safe working conditions, and living wages. Forced child labor is strictly prohibited.
    Direct trade: With Fair Trade, importers purchase from Fair Trade producer groups as directly as possible, eliminating unnecessary middlemen and empowering farmers to develop the business capacity necessary to compete in the global marketplace.
    Democratic and transparent organizations: Fair Trade farmers and farm workers decide democratically how to invest Fair Trade revenues.
    Community development: Fair Trade farmers and farm workers invest Fair Trade premiums in social and business development projects like scholarship programs, quality improvement trainings, and organic certification.
    Environmental sustainability: Harmful agrochemicals and GMOs are strictly prohibited in favor of environmentally sustainable farming methods that protect farmers’ health and preserve valuable ecosystems for future generations.

    Together, these standards intend to make sure that farmers and workers in developing countries receive compensation and benefits that are commensurate with the market value of the products they produce, and that they are provided a safe and just work environment.

  3. The primary way Fair Trade products are tracked and identified in the marketplace is through the use of the Fair Trade logo.  Only those products that have been made by certified producers in accordance with FLO’s Fair Trade standards, and then sold by appropriately licensed sellers (see below), can bear the Fair Trade logo.
  4. The second organization responsible for running the Fair Trade program in America is TransFair USA.  TransFair is primarily responsible for tracking the purchase and sale (within the United States) of products made by Fair Trade Certified producers abroad.  They are the sole organization in the USA that licenses wholesalers and retailers to legitimately use the Fair Trade logo (one of 20 member-organizations of FLO around the world).
  5. In addition to being able to yield a higher market rate for their products, Fair Trade Certified producers benefit from the Fair Trade program by receiving a premium that is assessed on every pound of Fair Trade Certified product purchased by importers/resellers.  This money goes directly back to the producers, who (as mentioned above) democratically decide how it is to be invested in social welfare programs (health care, education, infrastructure, etc.) benefitting their community.
  6. On the international side, FLO inspects Fair Trade producers on an annual basis, not only to check work conditions, wages, use of Fair Trade premiums and the like, but also to make sure they have a viable plan for selling their product.
  7. On the domestic side, TransFair performs quarterly audits of all companies licensed to sell Fair Trade Certified products.  These audits ensure that the quantities of all Fair Trade imports into the USA are properly accounted for through the whole supply chain.  In doing so, they aim to prevent the fraudulent sale of non-Fair Trade products as “Fair Trade,” and to make certain that producers receive all Fair Trade premiums that they are due.
  8. The Fair Trade program only applies to the developing portions of the world.  Because Japan’s existing trade practices are considered fair, no products from that country are included in the Fair Trade program.  This is noteworthy to tea lovers because so many tea varieties hail from Japan.  Japanese teas bearing the Fair Trade logo are either erroneous-labeled or fraudulent.

If this seems like a lot of red tape, rigmarole and paper chasing to bring socially-responsible goods to market, you’re right.  It’s not easy, and that’s one of Fair Trade’s biggest criticisms.  That said, there is no other program around that can fairly and accurately account for goods made in a socially-responsible fashion all the way from the field or factory to a shopping cart half-way around the world.  It’s an evolving process, one that we hope will continue to make an bigger and bigger impact on the lives of those who make so many marvelous – even essential – products for the rest of the world to enjoy… like Fair Trade Certified tea!

October 03 2009 03:38 pm | Fair Trade

3 Responses to “8 Things You Need To Know About Fair Trade”

  1. Jason Witt on 04 Oct 2009 at 3:47 pm #

    This overview has inspired me as to just what Fair Trade actually offers. I’ve heard it before but it occurs to me now that these efforts express what sets the West apart from the rest of the world in offering opportunity to its people. And there’s no reason tea producers shouldn’t enjoy such rights like people in America and Europe. –Teaternity

  2. Fair Trade Fair | EWB Regina on 23 Nov 2009 at 7:05 pm #

    [...] is a great summary of what Fair Trade is: http://www.arborteas.com/teablog/fair-trade/8-things-you-need-to-know-about-fair-trade/ CHECK IT [...]

  3. Fair Trade, Tea, and How We're Going to Change the World | SustainabiliTEA on 20 Oct 2010 at 10:32 pm #

    [...] What all Fair Trade certification systems have in common is that the farmer groups earn a fair price for their product (which is often above market price). They also enjoy freedom of association, safe working conditions, and a living wage.  To allow these producers to be competitive in the global marketplace, efforts are made for importers to purchase directly from the producers in order to cut out middlemen, and support the development of their business. Genetically modified organisms (GMOs) are disallowed in most Fair Trade initiatives (and always disallowed in certified organic products), and pesticides and fertilizers are prohibited if found to be unsafe for workers. For more information on these standards, be sure to check out an article we wrote during last year’s Fair Trade Month, “8 Things You Need to Know About Fair Trade.” [...]

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