Photo: Somka-ne Emawat/Shutterstock

Fair Trade for Beginners

by Voralak Suwanvanichkij Mar 25, 2009

Associated with socially conscious consumption, the fair trade label is gracing a number of products, from bananas to soccer balls, entering mainstream retail outlets.

You may know fair trade’s basic premise–paying producers in developing nations a fair price for their goods–but what else does fair trade entail? What else should you know about what’s behind the label?

1. Fair trade represents a movement.

Fair trade began in the 1940s as a form of charity when religious groups in the West set up specialized stores to sell crafts from developing nations.

As fair trade developed in the ensuing decades, the movement politicized its approach: targeting international trade practices that favored rich nations, including dumping subsidized produce on poor countries (thereby driving down the price of local produce); imposing high duties on imports from developing nations; and forcing bilateral trade deals that flood third world markets with cheap products.

2. Without access to markets or the means of competing on fair grounds, third world producers remain mired in poverty.

Oxfam estimates that if Africa, East Asia, South Asia, and Latin America increased their share of world exports by just one percent, the resulting gains could lift 128 million people out of poverty.

In Africa alone, a one percent increase in exports would generate about $70 billion USD, about five times what the continent currently receives in aid.

3. Fair trade is also a brand.

The name “fair trade” is owned by the Fairtrade Labeling Organization (FLO), a Bonn-based association of 23 member groups that develop fair trade standards, confer certification, and monitor compliance.

Each member organization also helps traders and wholesalers in its country access fair trade-certified products from around the world. Cutting out middlemen, the process is more streamlined and cost-efficient than conventional trade channels.

FLO members include TransFair in the US; Comercio Justo in Mexico; the Fairtrade Foundation in the UK; and Max Havelaar in Switzerland.

4. Fair trade certification standards vary, depending on the product.

Producers must meet labor standards regarding working conditions, worker organization, and child labor. In some cases, sustainable environmental practices may also be included.

Pricing is determined by calculating a sustainable living wage in the source country; families must be able to afford adequate housing, clean water, food, and basic education. Farmers are guaranteed a minimum price for their produce, regardless of the fluctuation of commodity prices in global markets. Producers can also access credit at fair rates.

5. Coffee makes up the bulk of the fair trade market…

Coffee is a significant exportable product for more than 60 developing nations.

Though fair trade coffee comprises less than 5% of the total coffee consumed in the US, demand is growing. Starbucks recently announced it would double its fair trade coffee purchases to about 40 million pounds this year, making it the largest buyer of fair trade coffee.

6. But fair trade isn’t just about coffee, produce, and handcrafts.

You can find the fair trade label on flowers, sports equipment, wine, cocoa, chocolate, tea, rice, honey, sugar, spices, and many other products. Check the Fair Trade Resource Network to learn what products are covered and where you can find them.

You can also check Ten Thousand Villages,one of the original fair trade craft retailers, which has hundreds of retail shops in the US and Canada. Other large sales and resource networks include ;Equal Exchange and SERRV International.

7. Fair trade does have its critics.

Fair trade has been compared to farm subsidies, in which artificial price setting encourages market inefficiencies and overproduction, hurting producers elsewhere.

Other contentious issues include the rigidity of certification rules (coffee growers, for example, must be part of a small family farm that is part of a larger cooperative), fees that small producers can’t afford, and poor enforcement of standards.

FLO member groups have been criticized for liberally granting the use of the fair trade label to corporations without considering their overall business practices. For this reason, several American coffee importers have pulled out of the TransFair system, opting to use an alternative label.


As an end consumer it may be difficult, if not impossible, to trace the origins of the products you buy back to their sources. Some consumers, though, are interested in doing just that. Read Matador’s interview with author Kelsey Timmerman, who tried to trace his clothes back to the factories where they were made.

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