Frequently Asked Questions

What are the core fundamentals of Fair Trade?

Fair trade aims to empower marginalized producers to improve their own living conditions. With the proper resources, capacity, and access to key relationships, disadvantaged producers are able to earn their own means to a better life for themselves and their communities. It aims to

  • ensure farmers and producers are paid a fair price that accounts for a number of factors including cost of production and adequate living standards
  • build stronger relationships between producers, consumers, and businesses—streamlining supply chains to reduce inefficiencies and create more direct trading relationships
  • support producer organizations to improve their access to markets, tools, resources, and industry knowledge
  • support communities by creating the means to invest in infrastructures such as health and education
  • ensure proper standards for working conditions, environmental sustainability, and respect for cultural identity

Are fair trade products more expensive?

In some cases yes, but it doesn’t need to be. There are many factors that can affect the price of a product. Goals for fair trade include streamlining supply chains, which can help bring costs down. In fact, many fair trade products are at par, or even cheaper than their conventional alternatives.

Higher prices are often based on quality. Many fair trade products represent a higher quality than lower quality conventional items.

Many fair trade products are offered by small companies that need to maintain higher margins to remain profitable. However, as companies grow and volumes increase, achieving better economies of scale, this allows businesses to lower their prices, as profits are earned more through volume.

Do producers actually benefit from fair trade?

In many cases, they do. In some cases no. There are a number of factors that can influence how a producer benefits from fair trade.

Due to limited demand for fair trade products, many producers can only sell a fraction of their product at fair trade prices, despite producing their product at fair trade standards. This means that they don’t receive any additional income from their increased costs for production. As demand for fair trade products increases, fair trade certification will become more viable for producers, ensuring higher returns and greater impact.

Co-ops vary in capacity, size, scope, etc. Some represent as few as 20 producers. Others represent as many as 60,000. These factors will affect the ability of a co-operative to produce and export quality goods. As these organizations grow, they are also able to adopt more value additions to their production. Rather than sell only raw materials, producers can wash, pack, and transport goods themselves, increasing the value of their products and earning them more benefits. Typically, larger organizations are able to co-ordinate more producers, produce more high-quality goods, and therefore, see the most benefit.

Is fair trade perfect?

Fair trade isn’t perfect, but it is continually evolving. The fair trade of today won’t be the fair trade of tomorrow. It’s important that we support the efforts of those who are helping the system evolve and adapt the needs of producers, businesses, consumers, and other industry stakeholders.

While fair trade standards will evolve, the principles will remain the same. That is, fair trade is about enforcing transparency and accountability in supporting social sustainability.

Fair trade is about a process of social change. It offers consumers a way to support better business practices in supporting developing communities around the world.

How is fair trade different from charity?

Fair trade is about addressing systematic inequalities in the terms of trade. It aims to empower producers and reduce barriers so that they can better their own lives, as they’re the ones to understand and address their own needs.

Many charitable donations programs use the rhetoric of “helping” or “giving back.” While there are many programs that provide valuable aid to developing countries, these notions are often based on foreign perspectives, and in some cases, may also be geared towards the interests of foreign entities.

Rather than source products under unequal terms of trade, and then offer to “give back” some of the profits for community development, fair trade encourages businesses to pay producers what they deserve in the first place.

Is fair trade the opposite of free trade?

In short, it isn’t. Fair trade is a market-based system based on supply and demand – much like free trade is. The difference is that fair trade attempts to address the inefficiencies of world trade to make it more mutually beneficial for producer communities. Much like the guaranteed minimum wages, workers’ rights, and access to health care that we enjoy in Canada, fair trade encourages businesses to support these safeguards for producers in developing communities.

Some would argue that fair trade supports more open markets than currently exist, as our current global trading systems are heavily imbalanced. Wealthy nations use protectionist measures in the form of trade tariffs, quotas, and industry subsidies to protect their own industries, while developing nations are often prohibited from these as part of agreements made with the World Bank and the International Monetary Fund. Fair trade aims to create more equitable rules for trade that no country should be excluded from.

What are the current limitations of fair trade?

Due to a lack of consumer demand for fair trade products, many fair trade producers are only able to sell a portion of their overall products at fair trade prices. This limits the impact, as the small gains aren’t enough to balance the increased production costs of certification.

According to Fairtrade International’s 2012 Monitoring The Scope And Benefits Of Fairtrade, in the 2010-11 reporting year, the portion of products that small producer organizations sold at Fairtrade Prices, by product, were:

  • bananas: 72%
  • cane sugar: 54%
  • cocoa: 61%
  • coffee: 45%
  • seed cotton: 60%
  • tea: 7%

For hired labour organizations, these numbers were

  • bananas: 70%
  • flowers and plants: 22%
  • tea: 8%

Do fair trade producers benefit at the expense of conventional producers?

When producers in a particular region sell their products at fair trade prices, this often benefits non-certified producers in region as well. This is because other producers in the region will take notice of the higher prices being paid and will demand similar prices from their buyers. The presence of certified co-operatives will also encourage other producers to join or form their own networks to earn similar benefits.

Often, the social premiums earned by certified organizations will go towards community development in education, health facilities and general infrastructure—which can benefit entire communities (and not just those in the Fairtrade system).

This program was made possible with financial support of the Government of Manitoba,
and was undertaken with the financial support of the Government of Canada provided through Global Affairs Canada (GAC)

Government of ManitobaGlobal Affairs Canada