What is “Fair Trade”?

Fair Trade is an organised social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability.

Author Sarah-Indra Jungblut:

Translation Rima Hanano, 06.30.10

Fair Trade is an organised social movement and market-based approach that aims to help producers in developing countries obtain better trading conditions and promote sustainability.

The movement advocates the payment of a higher price to producers as well as social and environmental standards. It focuses in particular on exports from developing countries to developed countries, most notably handicrafts, coffee, cocoa, sugar, tea, bananas, honey, cotton, wine, fresh fruit, chocolate and flowers.

Why? Not all trade is fair! Farmers and workers at the beginning of the chain don’t always get a fair share of the benefits of trade. Fair Trade enables consumers to put this right.

Fair Trade in India

Official Fair trade has not had much resonance in India till now however the principles of the fair trade system have been functioning for hundreds of years in some urban and rural areas.

The concept, which currently exists domestically as part ofnormal trading, allows the buyers to purchase the product directly from the manufacturers without any other service charges. In this case, both the producers and the buyers are benefitting. This kind of trade works independently of any trade organisation, symbols and standards. The popularity of these kinds of goods is dependant upon the person-to-person verbal advertisement in rural areas and in the cities.

There are a number of organisations which are functional to help producers who are not benefitting from the fair trade schemes. These organisations work under specific standards and logos. The Fair Trade Forum – India (FTF-I) is a national network for Fair Trade in India. Through 75 member partners, FTF-I is reaching out to more than 100,000 grassroots level producers.

The biggest market for Indian fair trade products in terms or fair-trade is Europe, UK and USA. Fair trade products — from cotton and coffee to cane baskets and candles are produced for European market under the Fair trade standard and exported.

Fair Trade: How it works

Fair trade or let us say fair buy is functional under some specific principles. The main aim of fair trade is poverty alleviation and improvement of producers’ lives in poor and developing countries. The standards are eligible for both producers and traders.

The main goals of Fair Trade/Fair Buy are to:

  • ensure that producers receive prices that cover their average costs of sustainable production;
  • provide an additional Fairtrade Premium which can be invested in projects that enhance social, economic and environmental development;
- enable pre-financing for producers who require it;
  • facilitate long-term trading partnerships and enable greater producer control over the trading process;
  • set clear minimum and progressive criteria to ensure that the conditions of production and trade of all Fairtrade certified products are socially, economically fair and environmentally responsible.

A key part of the Fairtrade Labelling Organizations International (FLO) is to develop and review the Fairtrade standards. These standards apply to all Fairtrade producers. They also apply to the companies who market fair trade products, such as importers, exporters and licensees.

Sources and links:

  • Fairtrade Labelling Organizations International: flo-cert.net
  • World Fair Trade Organization: wfto.com
  • Fairtrade International: fairtrade.net
  • Overview of all current Fairtrade standards: PDF
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