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Basic Principles of Fair Trade

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Fair trade is an organized social movement and market-based approach that aims to help producers in developing countries and promote sustainability. The movement advocates the payment of a higher price to producers as well as social and environmental standards in areas related to the production of a wide variety of goods. 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.

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Fair trade’s strategic intent is to work with marginalized producers and workers in order to help them move towards economic self-sufficiency and stability. It also aims to allow them to become greater stakeholders in their own organizations as well as play a wider role in international trade.

Fair trade guarantees the following principles and practices are present in trading relationships:

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Basic Principles of Fair Trade

The World Fair Trade Organization (WFTO)– outlines 10 key principles that are essential to fair trade.

  • Creating opportunities for economically disadvantaged producers
    Fair trade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers who have been economically disadvantaged or marginalized by the conventional trading system.
  • Transparency and accountability
    Fair trade involves transparent management and commercial relations to deal fairly and respectfully with trading partners.
  • Capacity building
    Fair trade is a means to develop producers’ independence. Fair trade relationships provide continuity, during which producers and their marketing organizations can improve their management skills and their access to new markets.
  • Promoting Fair Trade
    Fair Trade Organizations raise awareness of Fair Trade and the possibility of greater justice in world trade. They provide their customers with information about the organization, the products, and in what conditions they are made. They use honest advertising and marketing techniques and aim for the highest standards in product quality and packing.
  • Payment of a fair price
    A fair price in the regional or local context is one that has been agreed upon through dialogue and participation. It covers not only the costs of production but enables production which is socially just and environmentally sound. It provides fair pay to the producers and takes into account the principle of equal pay for equal work by women and men. Fair traders ensure prompt payment to their partners and, whenever possible, help producers with access to pre-harvest or pre-production financing.
  • Gender equity
    Fair trade means that women’s work is properly valued and rewarded. Women are always paid for their contribution to the production process and are empowered in their organizations.
  • Working conditions
    Fair trade means a safe and healthy working environment for producers.
  • Child labour
    Fair Trade Organizations respect the UN Convention on the Rights of the Child, as well as local laws and social norms in order to ensure that the participation of children in production processes of fairly traded articles (if any) does not adversely affect their well-being, security, educational requirements and need for play. Organizations working directly with informally organized producers disclose the involvement of children in production.
  • The environment
    Fair trade actively encourages sound environmental practices and the application of responsible methods of production.
  • Trade relations
    Fair Trade Organizations trade with concern for the social, economic, and environmental well-being of marginalized small producers and do not maximize profit at their expense. They maintain long-term relationships based on solidarity, trust, and mutual respect that contribute to the promotion and growth of Fair Trade. An interest free pre-payment of at least 50% is made if requested.
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What is Fair Trade certification?

Fair Trade certification is a market-based model of international trade that benefits over one million farmers and farm workers in 58 developing countries across Africa, Asia and Latin America. Fair Trade certification enables consumers to vote for a better world with their dollars, simply by looking for the Fair Trade Certified label on the products they buy.

Fair Trade Certified agricultural products including coffee, tea and herbs, cocoa and chocolate, fresh fruit, sugar, rice, flowers, honey and spices (vanilla) are currently available at over 35,000 retail establishments in the U.S.

Fair Trade empowers farmers and farm workers to lift themselves out of poverty by developing the business skills necessary to compete in the global marketplace. By guaranteeing minimum floor prices and social premiums, Fair Trade enables producers to invest in their farms and communities and protect the environment.But Fair Trade is much more than a fair price.
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Fair Trade principles include:

  • Fair prices: Democratically organized farmer groups receive a guaranteed minimum floor price and an additional premium for certified organic products. Farmer organizations are also eligible for pre-harvest credit.
  • Fair labor conditions:Workers on Fair Trade farms enjoy freedom of association, safe working conditions, and living wages. Forced child labor is strictly prohibited.
  • Direct trade:Importers purchase from Fair Trade producer groups as directly as possible, eliminating unnecessary middlemen and empowering farmers to strengthen their organizations and become competitive players in the global economy.
  • Democratic and transparent organizations:Fair Trade farmers and farm workers decide democratically how to use their Fair Trade premiums.
  • Community development:Fair Trade farmers and farm workers invest Fair Trade premiums in social and business development projects like health care, new schools, quality improvement trainings, and organic certification.
  • Environmental sustainability:The Fair Trade certification system strictly prohibits the use of genetically modified organisms (GMOs), promotes integrated farm management systems that improve soil fertility, and limits the use of harmful agrochemicals in favor of environmentally sustainable farming methods that protect farmers’ health and preserve valuable ecosystems for future generations.
    NOV2005-14

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