Fair trade is an organized social movement whose stated goal is to help producers in developing countries achieve better trading conditions and to promote sustainability. Members of the movement advocate the payment of higher prices to exporters, as well as higher social and environmental standards. The movement focuses in particular on commodities, or products which are typically exported from developing countries to developed countries. but also consumed in domestic markets (e.g. Brazil and India) most notably handicrafts. coffee. cocoa. sugar. tea. bananas. honey. cotton. wine. [ 1 ] fresh fruit. chocolate. flowers. gold [ 2 ] and 3D printer filament. [ 3 ] The movement seeks to promote greater equity in international trading partnerships through dialogue, transparency, and respect. It promotes sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers in developing countries. [ 4 ]

Fairtrade labeling organizations most commonly use a definition of fair trade developed by FINE. an informal association of four international fair trade networks — Fairtrade Labelling Organizations International. World Fair Trade Organization (WFTO), Network of European Worldshops and European Fair Trade Association (EFTA) —: fair trade is a trading partnership, based on dialogue, transparency, and respect, that seeks greater equity in international trade. Fair trade organizations, backed by consumers, are engaged actively in supporting producers, awareness raising, and in campaigning for changes in the rules and practice of conventional international trade. [ 5 ]

There are several recognized Fairtrade certifiers, including Fairtrade International (formerly called FLO, Fairtrade Labelling Organizations International ), IMO and Eco-Social. Additionally, Fair Trade USA. formerly a licensing agency for the Fairtrade International label, broke from the system and is implementing its own fair trade labelling scheme, which has resulted in controversy due to its inclusion of independent smallholders and estates for all crops. In 2008, Fairtrade International certified approximately (€3.4B) of products. [ 6 ] [ 7 ] The World Trade Organization publishes annual figures on the world trade of goods and services.

The movement is especially popular in the UK where there are 500 Fairtrade towns, 118 universities, over 6,000 churches, and over 4,000 UK schools registered in the Fairtrade Schools Scheme. [ 8 ] In 2011, over 1.2 million farmers and workers in more than 60 countries participated in Fair Trade, and €65 million in Fairtrade premium was paid. According to Fairtrade International, nearly six out of ten consumers have seen the Fairtrade mark and almost nine in ten of them trust it. [ 9 ]

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§ The fair trade system [ edit ]

There are a large number of fair trade and ethical marketing organizations often employing different marketing strategies. [ 10 ] Most Fair Trade products are sold by those Fair Trade organizations that believe it is necessary to market through supermarkets to get sufficient volume of trade to have any real impact on the Third World. [ 10 ]

The Fairtrade brand is by far the biggest of the fair trade coffee brands. Packers in developed countries pay a fee to The Fairtrade Foundation for the right to use the brand and logo, and nearly all the fee goes to marketing. Packers and retailers can charge as much as they want for the coffee. The coffee has to come from a certified Fairtrade cooperative, and there is a minimum price when the world market is oversupplied. Additionally, the cooperatives are paid an additional 10c per lb premium by buyers for community development projects. [ 11 ] [ pages needed ] The cooperatives can, on average, sell only a third of their output as Fairtrade, because of lack of demand, and sell the rest at world prices. [ 12 ] [ pages needed ] [ 13 ] [ 14 ] [ 15 ] [ 16 ] [ 17 ] [ 18 ] [ 12 ] The exporting cooperative can spend the money in several ways. Some go to meeting the costs of conformity and certification: as they have to meet Fairtrade standards on all they produce, they have to recover the costs from a small part of their turnover, [ 14 ] sometimes as little as 8%, [ 17 ] and may not make any profit. Some meet other costs. Some is spent on social projects such as building schools, clinics and baseball pitches. Sometimes there is money left over for the farmers. The cooperatives sometimes pay farmers a higher price than farmers do, sometimes less, but there is no evidence on which is more common. [ 19 ]

The marketing system for Fairtrade and non-Fairtrade coffee is identical in the consuming countries, using mostly the same importing, packing, distributing and retailing firms. Some independent brands operate a virtual company, paying importers, packers and distributors and advertising agencies to handle their brand, for cost reasons. [ 20 ] In the producing country Fairtrade is marketed only by Fairtrade cooperatives, while other coffee is marketed by Fairtrade cooperatives (as uncertified coffee), by other cooperatives and by ordinary traders. [ 12 ] [ 21 ] [ 14 ] [ 17 ] [ 15 ]

To become certified Fairtrade producers, the primary cooperative and its member farmers must operate to certain political standards, imposed from Europe. FLO-CERT, the for-profit side, handles producer certification, inspecting and certifying producer organizations in more than 50 countries in Africa, Asia, and Latin America. [ 22 ] In the Fair trade debate there are many complaints of failure to enforce these standards, with producers, cooperatives, importers and packers profiting by evading them. [ 23 ] [ 24 ] [ 25 ] [ 26 ] [ 27 ] [ 28 ] [ 15 ] [ 29 ] [ 30 ] [ 31 ] [ 32 ] [ 33 ]

There remain many Fair Trade organizations that adhere to a greater or smaller degree to the original objectives of Fair Trade, and that market products through alternative channels where possible, and market through specialist Fair Trade shops, but they have a small proportion of the total market. [ 34 ]

§ General structure of the movement [ edit ]

Most fair trade import organizations are members of, or certified by one of several national or international federations. These federations coordinate, promote, and facilitate the work of fair trade organizations. The following are some of the largest:

• The FLO International (Fairtrade International), created in 1997, is an association of three producer networks and twenty national labeling initiatives that develop Fairtrade standards, license buyers, label usage and market the Fair trade Certification Mark in consuming countries. The Fairtrade International labeling system is the largest and most widely recognized standard setting and certification body for labeled Fair trade. Formerly named Fairtrade Labelling Organizations International. it changed its name to Fairtrade International in 2009, when its producer certification and standard setting activities were separated into two separate, but connected entities. FLO-CERT, the for-profit side, handles producer certification, inspecting and certifying producer organizations in more than 50 countries in Africa, Asia, and Latin America. [ 22 ] Fairtrade International, the non-profit arm, oversees standards development and licensing organization activity. Only products from certain developing countries are eligible for certification, and for some products such as coffee and cocoa, certification is restricted to cooperatives. Cooperatives and large estates with hired labor may be certified for bananas, tea and other crops. [ 35 ]
• Fair Trade USA [ 36 ] is an independent, nonprofit organization that sets standards, certifies, and labels products that promote sustainable livelihoods for farmers and workers and protect the environment. Founded in 1998, Fair Trade USA currently partners with around 800 brands, as well as 1.3 million farmers and workers across the globe. [ 37 ]
• World Fair Trade Organization (formerly the International Fair Trade Association) is a global association created in 1989 of fair trade producer cooperatives and associations, export marketing companies, importers, retailers, national, and regional fair trade networks and fair trade support organizations. In 2004 WFTO launched the FTO Mark which identifies registered fair trade organizations (as opposed to the FLO system, which labels products).
• The Network of European Worldshops (NEWS!), created in 1994, is the umbrella network of 15 national worldshop associations in 13 different countries all over Europe.
• The European Fair Trade Association (EFTA), created in 1990, is a network of European alternative trading organizations which import products from some 400 economically disadvantaged producer groups in Africa, Asia, and Latin America. EFTA’s goal is to promote fair trade and to make fair trade importing more efficient and effective. The organization also publishes yearly various publications on the evolution of the fair trade market. EFTA currently has eleven members in nine different countries.

In 1998, the first four federations listed above joined together as FINE. an informal association whose goal is to harmonize fair trade standards and guidelines, increase the quality and efficiency of fair trade monitoring systems, and advocate fair trade politically.

• Additional certifiers include IMO (Fair for Life, Social and Fair Trade labels), Eco-Social and Fair Trade USA.
• The Fair Trade Federation (FTF), created in 1994, is an association of Canadian and American fair trade wholesalers, importers, and retailers. The organization links its members to fair trade producer groups while acting as a clearinghouse for information on fair trade and providing resources and networking opportunities to its members. Members self-certify adherence to defined fair trade principles for 100% of their purchasing/business. Those who sell products certifiable by Fairtrade International must be 100% certified by FI to join FTF.

Student groups have also been increasingly active in the past years promoting fair trade products. [ 38 ] Although hundreds of independent student organizations are active worldwide, most groups in North America are either affiliated with United Students for Fair Trade (USA, the Canadian Student Fair Trade Network (Canada), or Fair Trade Campaigns [ 39 ] (USA), which also houses Fair Trade Universities [ 38 ] and Fair Trade Schools. [ 40 ]

The involvement of church organizations has been and continues to be an integral part of the Fair Trade movement:

• Ten Thousand Villages [ 41 ] is affiliated with the Mennonite Central Committee [ 42 ]
• SERRV [ 43 ] is partnered with Catholic Relief Services [ 44 ] and Lutheran World Relief [ 45 ] [ 46 ]

• Village Markets [ 47 ] is a Lutheran Fair Trade organization connecting mission sites around the world with churches in the United States [ 48 ] [ 49 ]
• Catholic Relief Services has their own Fair Trade mission in CRS Fair Trade [ 50 ] [ 51 ]

§ History [ edit ]

The first attempts to commercialize fair trade goods in Northern markets were initiated in the 1940s and 1950s by religious groups and various politically oriented non-governmental organizations (NGOs). Ten Thousand Villages. an NGO within the Mennonite Central Committee (MCC) and SERRV International were the first, in 1946 and 1949 respectively, to develop fair trade supply chains in developing countries. [ 52 ] The products, almost exclusively handicrafts ranging from jute goods to cross-stitch work, were mostly sold in churches or fairs. The goods themselves had often no other function than to indicate that a donation had been made. [ 53 ]

§ Solidarity trade [ edit ]

Fair trade goods sold in worldshops

The current fair trade movement was shaped in Europe in the 1960s. Fair trade during that period was often seen as a political gesture against neo-imperialism: radical student movements began targeting multinational corporations and concerns that traditional business models were fundamentally flawed started to emerge. The slogan at the time, Trade not Aid, gained international recognition in 1968 when it was adopted by the United Nations Conference on Trade and Development (UNCTAD) to put the emphasis on the establishment of fair trade relations with the developing world. [ 54 ]

The year 1965 saw the creation of the first Alternative Trading Organization (ATO): that year, British NGO Oxfam launched Helping-by-Selling, a program which sold imported handicrafts in Oxfam stores in the UK and from mail-order catalogues. [ 55 ]

By 1968, the oversized newsprint publication, the Whole Earth Catalog. was connecting thousands of specialized merchants, artisans, and scientists directly with consumers who were interested in supporting independent producers, with the goal of bypassing corporate retail and department stores. The Whole Earth Catalog sought to balance the international free market by allowing direct purchasing of goods produced primarily in the United States and Canada, but also in Central and South America.

In 1969, the first worldshop opened its doors in the Netherlands. The initiative aimed at bringing the principles of fair trade to the retail sector by selling almost exclusively goods produced under fair trade terms in underdeveloped regions. The first shop was run by volunteers and was so successful that dozens of similar shops soon went into business in the Benelux countries, Germany, and other Western European countries.

Throughout the 1960s and 1970s, important segments of the fair trade movement worked to find markets for products from countries that were excluded from the mainstream trading channels for political reasons. Thousands of volunteers sold coffee from Angola and Nicaragua in worldshops, in the back of churches, from their homes, and from stands in public places, using the products as a vehicle to deliver their message: give disadvantaged producers in developing countries a fair chance on the world’s market. [ citation needed ]

§ Handicrafts vs. agricultural goods [ edit ]

In the early 1980s, Alternative Trading Organizations faced major challenges: the novelty of some fair trade products began to wear off, demand reached a plateau, and some handicrafts began to look tired and old fashioned in the marketplace. The decline of segments of the handicrafts market forced fair trade supporters to rethink their business model and their goals. Moreover, several fair trade supporters during this period were worried by the contemporary impact on small farmers of structural reforms in the agricultural sector as well as the fall in commodity prices. Many of them came to believe it was the movement’s responsibility to address the issue and remedies usable in the ongoing crisis in the industry.

In the subsequent years, fair trade agricultural commodities played an important role in the growth of many ATOs: successful on the market, they offered a much-needed, renewable source of income for producers and provided Alternative Trading Organizations a complement to the handicrafts market. The first fair trade agricultural products were tea and coffee, quickly followed by: dried fruits, cocoa, sugar, fruit juices, rice, spices and nuts. While in 1992, a sales value ratio of 80% handcrafts to 20% agricultural goods was the norm, in 2002 handcrafts amounted to 25.4% of fair trade sales while commodity food lines were up at 69.4%. [ 56 ]

§ Rise of labeling initiatives [ edit ]

Early Fairtrade Certifications Marks

Sales of fair trade products only really took off with the arrival of the first Fairtrade certification initiatives. Although buoyed by ever growing sales, fair trade had been generally contained to relatively small worldshops scattered across Europe and to a lesser extent, North America. Some felt that these shops were too disconnected from the rhythm and the lifestyle of contemporary developed societies. The inconvenience of going to them to buy only a product or two was too high even for the most dedicated customers. The only way to increase sale opportunities was to start offering fair trade products where consumers normally shop, in large distribution channels. [ 57 ] The problem was to find a way to expand distribution without compromising consumer trust in fair trade products and in their origins.

A solution was found in 1988, when the first Fairtrade certification initiative, Max Havelaar. was created in the Netherlands under the initiative of Nico Roozen. Frans Van Der Hoff. and Dutch development NGO Solidaridad. The independent certification allowed the goods to be sold outside the worldshops and into the mainstream, reaching a larger consumer segment and boosting fair trade sales significantly. The labeling initiative also allowed customers and distributors alike to track the origin of the goods to confirm that the products were really benefiting the producers at the end of the supply chain .

The concept caught on: in the ensuing years, similar non-profit Fairtrade labelling organizations were set up in other European countries and North America. In 1997, a process of convergence among labelling organizations – or LIs (for Labeling Initiatives) – led to the creation of Fairtrade Labelling Organizations International (FLO). FLO is an umbrella organization whose mission is to set the Fairtrade standards, support, inspect and certify disadvantaged producers, and harmonize the Fairtrade message across the movement. [ 58 ]

In 2002, FLO launched for the first time an International Fairtrade Certification Mark. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, facilitate cross border trade, and simplify procedures for both producers and importers. At present, the certification mark is used in over 50 countries and on dozens of different products, based on FLO’s certification for coffee, tea, rice, bananas, mangoes, cocoa, cotton, sugar, honey, fruit juices, nuts, fresh fruit, quinoa, herbs and spices, wine, footballs. etc.

§ Product certification [ edit ]

Note: Customary spelling of Fairtrade is one word when referring to the FLO product labeling system, see Fairtrade certification

Fairtrade labelling (usually simply Fairtrade or Fair Trade Certified in the United States) is a certification system designed to allow consumers to identify goods which meet agreed standards. Overseen by a standard-setting body (FLO International ) and a certification body (FLO-CERT ), the system involves independent auditing of producers and traders to ensure the agreed standards are met.

For a product to carry either the International Fairtrade Certification Mark or the Fair Trade Certified Mark. it must come from FLO-CERT inspected and certified producer organizations. The crops must be grown and harvested in accordance with the international Fair trade standards set by FLO International. The supply chain must also have been monitored by FLO-CERT, to ensure the integrity of the labelled product.

Fairtrade certification purports to guarantee not only fair prices, but also the principles of ethical purchasing. These principles include adherence to ILO agreements such as those banning child and slave labour. guaranteeing a safe workplace and the right to unionise, adherence to the United Nations charter of human rights. a fair price that covers the cost of production and facilitates social development, and protection and conservation of the environment. The Fairtrade certification system also attempts to promote long-term business relationships between buyers and sellers, crop prefinancing, and greater transparency throughout the supply chain and more.

The Fairtrade certification system covers a growing range of products, including bananas, honey, coffee, oranges, Cocoa bean|cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea, and wine. Companies offering products that meet the Fairtrade standards may apply for licences to use one of the Fairtrade Certification Marks for those products.

The International Fairtrade Certification Mark was launched in 2002 by FLO, and replaced twelve Marks used by various Fairtrade labelling initiatives. The new Certification Mark is currently used worldwide (with the exception of the United States). The Fair Trade Certified Mark is still used to identify Fairtrade goods in the United States.

There is widespread confusion because the fair trade industry standards provided by Fairtrade International (The Fairtrade Labelling Organization) use the word “producer” in many different senses, often in the same specification document. Sometimes it refers to farmers, sometimes to the primary cooperatives they belong to, to the secondary cooperatives that the primary cooperatives belong to, or to the tertiary cooperatives that the secondary cooperatives may belong to [ 59 ] but “Producer [also] means any entity that has been certified under the Fairtrade International Generic Fairtrade Standard for Small Producer Organizations, Generic Fairtrade Standard for Hired Labour Situations, or Generic Fairtrade Standard for Contract Production.” [ 60 ] The word is used in all these meanings in key documents. [ 61 ] [ 62 ] [ 63 ] [ 64 ] [ 65 ] [ 66 ] In practice, when price and credit are discussed, “producer” means the exporting organization, “For small producers’ organizations, payment must be made directly to the certified small producers’ organization”. [ 67 ] and “In the case of a small producers’ organization [e.g. for coffee], Fairtrade Minimum Prices are set at the level of the Producer Organization, not at the level of individual producers (members of the organization)” which means that the “producer” here is half way up the marketing chain between the farmer and the consumer. [ 67 ] The part of the standards referring to cultivation, environment, pesticides and child labour has the farmer as “producer”.