What is Fair Trade?
In “The Economics of Fair Trade,” Harvard scholars characterize the goals and practices of Fair Trade in the following way:
“Fair Trade is an initiative that aims to improve the living conditions of producers in developing nations. It attempts to achieve higher prices for producers, greater availability of financing for producers, longer-term and more sustainable buyer-seller relationships, the creation and/or maintenance of effective producer or worker organizations, improved social goods and community development, and the use of environmentally friendly production processes.
“Fair Trade works through a certification process that requires that producers and suppliers adhere to a set of requirements that aims to achieve Fair Trade’s objectives. The Fair Trade label that is displayed on certified products informs consumers that the product was produced in a socially and environmentally responsible manner.”
The conclusion of the Harvard study is that “Fair Trade, if it is implemented successfully, holds the possibility of being a market-based tool that can improve the welfare of consumers, the lives of producers, and the local environment.”
How Fair Trade Benefits Workers
The intended benefits to workers from Fair Trade are the centerpiece of the initiative. The workers are “producers,” that is, they are the people who create the goods, sometimes individually and sometimes as part of a cooperative.
Through Fair Trade agreements, these producers from developing areas:
- obtain higher prices for their products,
- are better able to obtain financing,
- have a more stable income base through a system of minimum prices, reducing some of their risk,
- establish longer and more sustainable relationships with buyers, and
- experience a sense of empowerment.
Benefits of Fair Trade Go Beyond Workers
Additional benefits of Fair Trade may not be as well-known. These benefits extend beyond the individual to their communities, the environment and back to us, the consumer. Here are five ways Fair Trade benefits extend beyond the workers:
- the creation and maintenance of effective worker organizations, that is, cooperatives,
- community development,
- encouragement of environmentally friendly practices,
- the existence of a recognized system of providing credible information, and
- consumers who can feel good about the products they purchase.
A 2009 survey (Hertel, Scruggs, and Heidkamp) reported that “75% of coffee buyers report that they would be willing to pay 50 cents extra for a pound of coffee (approximately 15% of the sales price) if it was Fair Trade certified. Over half would be willing to pay one dollar more.”
Fair Trade certified makes it easy for you, as a consumer, to know you are doing something to make the world a better place!