What Is Fair Trade/Fair Labor

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Fair Trade is a system of exchange that honors producers, communities, consumers, and the environment. It is a model for the global economy rooted in people-to-people connections, justice, and sustainability. Businesses such as Equal Exchange and Ten Thousand Villages pioneered this model of connecting consumers to producers and supporting worker-owned co-ops. They are the leaders of Fair Trade, and many of them are members of Green America's Green Business Network.

When you make Fair Trade purchases you are supporting:

A Fair Price for Products
The rise in interest in Fair Trade led to the development of Fair Trade certification. Certifications like Fairtrade America and Fair Trade USA (formerly known as TransFair USA) certify parts of a company's supply chain/product line to ensure that minimum standards related to labor, sustainability, and more are met. Fair Trade prohibits forced labor, child labor, and discrimination, and protects freedom of association and collective bargaining rights. If child labor should surface, remediation guidelines are in place. Certified farmers are guaranteed a Fair Trade floor price for their cocoa beans as well as a social premium. Individual farmers In order to use the Fair Trade label, 100% of the primary ingredient must be certified. Although a helpful tool for responsible shoppers, it is important to note that certification alone is not enough to solve all fair labor issues within a supply chain.

Investment in People and Communities
Many Fair Trade producer cooperatives and artisan collectives reinvest their revenues into strengthening their businesses and their communities. In addition, for each Fair Trade product sold the cooperative also receives a set amount of money, called the social premium, which is invested in community development projects democratically chosen by the cooperative. Examples of projects funded through Fair Trade include the building of health care clinics and schools, starting scholarship funds, building housing and providing leadership training and women's empowerment programs.

Environmental Sustainability
Fair Trade farmers and artisans respect the natural habitat and are encouraged to engage in sustainable production methods. Farmers implement integrated crop management and avoid the use of toxic agrochemicals for pest management. Nearly 85% of Fair Trade Certified™ coffee is also organic.
Learn more about Fair Trade's environmental standards »

Economic Empowerment of Small Scale Producers
Fair Trade supports small scale producers, those at the bottom of the economic ladder or from marginalized communities, that otherwise do not have access to economic mobility. Fair Trade encourages and supports the cooperative system where each producer owns a portion of the business, has equal say in decisions and enjoys equal returns from the market.

Direct Trade

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Importers following the Fair Trade model try to purchase from Fair Trade cooperatives as directly as possible, eliminating unnecessary middlemen and empowering farmers to develop the business capacity necessary to compete in the global marketplace. Ideally, the certification also secures long-term, stable relationships between producers and importers; however, as Fair Trade certifications expand to include larger companies, some supply chains contain more steps than as described in the ideal chart (above).

Recently, Direct Trade companies have started becoming an alternative to Fair Trade certification, primarily within the artisinal coffee and chocolate markets. These smaller businesses work directly with farmers and cooperatives to source their ingredients. Due to their relatively recent entry into the American market, there isn't a Direct Trade certification body.

Fair Labor Conditions
Workers are guaranteed freedom of association and safe working conditions. Fair Trade also encourages women's participation in and leadership of cooperatives. Human rights and child labor laws are strictly enforced.

Learn about Fair Trade products and the farmers that produce them »

Promote Fair Trade in your community!