Definition of Fair Trade

What Is Fair Trade?

A social movement focused on creating a fairer market for producers in developing countries, fair trade aims to address social, economic, and environmental conditions. By providing better prices (that never fall below market price) for commodities, fair trade practices hope to provide an alternative market system for those who have been traditionally disadvantaged by conventional trade practices.

Today, there are several reputable fair trade organizations working around the world to help indigenous farmers and crafts people create and sell their wares in order to improve their economic position. These organizations work with local producers and large companies to negotiate fair prices and then certify the producers’ work, the finished products, and the mechanisms that are used for trade. This system allows consumers to buy fair trade certified products with confidence that more money has gone to the producers rather than into the pockets of large corporations.

The following are the most well-known and verifiable fair trade organizations:

Though the primary aim of these fair trade organizations is to create more equitable market conditions, there is usually a strong environmental component as well. Understanding that a clean local environment will help to ensure long-term sustainability for producers, most certified products must be produced in an environmentally-preferable manner – conserving water and energy and using fewer toxins.

The following are common principles applied by fair trade organizations:

  • Community improvements: A healthy community helps to generate great sustainability and long-term success for local producers, and so many fair trade organizations work to improve the community through development, medical, environmental, and educational projects.
  • Credit assistance: Fair trade organizations help local producers become self-sufficient by helping them gain access to credit markets. This makes it possible for producers to become independent.
  • Cultural protection: Many cultural traditions are lost as big corporations get involved in local economies, but fair trade organizations work to preserve the cultural heritage of a community.
  • Guaranteed fair pricing: Conventional markets, by nature, have fluctuating prices as supply and demand ebb and flow. This type of system leaves small producers very vulnerable to factors beyond their control, especially if the price for their commodity suddenly drops below their costs. Selling below cost leaves farmers and other makers with little hope and no options. But fair trade associations guarantee fair prices, which provides security and long-term sustainability.
  • Leaving out the middle man: Direct trade systems like those encouraged by fair trade organizations help to keep as much of the profit from a given sale in the pocket of the producer. Fair trade organizations ensure this will happen by helping producers work together in cooperatives that give them bargaining power and stability.
  • Market and production education: Many fair trade organizations aim to provide education to their members to help them improve their products, learn about environmental concerns, and acquire skills for working within the market so that they can gain independence, confidence, and higher prices for their products.
  • Safe working conditions: Above all, one of the most important things fair trade organizations address are working conditions. They ensure that laborers – either the producers themselves or those they hire – work under safe, healthy conditions that reward their time with fair wages. Child labour is strictly prohibited with most certification systems.

Here is a sample of the types of products you can buy with some sort of fair trade certification:

  • Clothing
  • Cocoa and chocolate
  • Coffee
  • Cosmetic and beauty products
  • Cotton
  • Cut flowers
  • Dried and fresh fruit and vegetables
  • Gold
  • Handcrafts
  • Honey
  • Jewelry
  • Juices
  • Molasses
  • Nuts, seeds, and their oils
  • Olive oil
  • Ornamental plants
  • Quinoa
  • Rice
  • Spices
  • Sports balls
  • Sugar
  • Tea
  • Vanilla
  • Wine

Fair Trade Articles

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