Fair Trade FAQs
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What is Fair Trade?(more)
Fair trade is an approach to international trade that is based on a more equitable and sustainable form of exchange among producers, traders and consumers than conventional forms of trade and exchange that now dominate the market.
Fair trade is an approach to international trade that is based on a more equitable and sustainable form of exchange among producers, traders and consumers than conventional forms of trade and exchange that now dominate the market.
In the conventional market, a buyer of a product or a service is usually looking for quality goods but at the lowest possible price. This applies to individual consumers and companies, from small businesses to multinational corporations. For producers in developing nations, the lowest price usually means exploitation and intolerable working conditions.
Under fair trade, alternative trading organizations and fair traders pay honest prices and provide a range of other supports to small producers in developing countries. The prices recognize the true cost of labour and production. The supports provide a basis for worker input into / control over decision making related to production, social investment in the community, and a stronger role in the market. By selling food and other products in Canada, these organizations ensure that the producers make a sufficient income to keep a decent roof over their heads, feed their families, and send their children to school, as well as to follow more environmentally sustainable means of production.
Consumers who choose to purchase fairly traded products consciously value the well being of the people and communities who produce the products they have come to enjoy. Exploitation is a common component of everyday low prices of products from developing countries, but it is something that fair trade consumers choose to not support.
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Do fair trade products cost more?(more)
Yes, fair trade products cost, on average, 10% more than conventional products of comparable quality.
Yes, fair trade products cost, on average, 10% more than conventional products of comparable quality.
This premium doubles or often triples the income that producers in developing countries would receive under conventional trade. Consumers buy fair trade products because they care about people in the world’s poorest countries who work hard to produce the goods we enjoy.
Fair trade products also tend to be specialty and gourmet products. Prices for fair trade products reflect differences in economies of scale relative to conventional trade; Shipping, importing and packaging costs are often higher per unit for products traded in relatively low volumes.
Unlike conventional goods, the full social and environmental costs of producing fair trade products are found in the price tag.
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When did fair trade begin?(more)
Fair trade was practiced long before the term was formalized. Originally associated with handicrafts and supported by faith-based groups, it reflected commitments to both charity and social justice.
Fair trade was practiced long before the term was formalized. Originally associated with handicrafts and supported by faith-based groups, it reflected commitments to both charity and social justice. For example, in North America, both Ten Thousand Villages (formerly Self-Help Crafts) and SERV International began buying handicrafts from European war survivors after World War II. Since that time, both these groups have changed their focus to artisans in the developing world and have evolved toward a model of economic empowerment.
In Europe, the Dutch division of OXFAM opened its first shops in the 1960’s, selling products from co-operatives in developing nations. Over one thousand “third world” shops were operating in the UK and Switzerland by the mid-1980s. The fair trade movement has grown considerably since then, both in Europe and North America.
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Does fair trade really make a difference?(more)
Yes, fair trade makes a very real difference. In 2005, there were 548 fair trade certified producer organizations from over 50 countries in Africa, Asia and Latin America which represented over a million farmers and workers, totalling over five million people, including dependants.
Yes, fair trade makes a very real difference. In 2005, there were 548 fair trade certified producer organizations from over 50 countries in Africa, Asia and Latin America which represented over a million farmers and workers, totalling over five million people, including dependants.
These people received 25 % to 33% of the total revenue from fair trade purchases, versus 7% to 15% for the same goods under conventional trade.
These five million people embraced novel ideas, like the notion that democratic work places, healthy environments, and healthy communities are intrinsic to human dignity and are possible. They entertained notions that their children should be in school, maybe even that their children should expect to live as full participants in a common human journey. The success of fair trade entrenches these values.
Stories from Producers
“A bite of fair trade chocolate means a lot to farmers in the South. It opens the doors to development and gives children access to healthcare, education, and a decent standard of living.”
— K. Ohemeng-Tinyase, Managing Director of Kuapa Kokoo cocoa cooperative, Ghana“Thanks to the fair trade market, our standard of living has substantially increased. With your support, we look forward to a more promising future.”
— Miguel Trigoso, Marketing Manager, APARM coffee cooperative, Peru“The worker at Ambootia [tea garden] is visualized as an involved contributor rather than a mere input. We strive to bring about a cohesive system where opinions from all quarters are solicited, entertained and put to good use. The idea is suffused with vigor by the funds made available by those who believe in us.”
— Member, Ambootia Tea Garden, India“With fair trade we have an incentive to invest in social programs that benefit producers and the community. We also receive higher incomes to sustain ourselves. If it weren’t for fair trade, we wouldn’t exist as banana producers since the amount we receive for a box of conventional bananas does not cover our expenses.”
— Edinson Cabana Zapata, co-op member, ASOPROBAN banana cooperative, Colombia“In our country there was no tradition of fermenting cocoa. With fair trade income we were able to implement a fermentation program to improve the quality of our cocoa and to convert our production to certified organic. This improved our position in the export market. The fair trade market is a very important market for the survival of our associates.”
—Isidoro de la Rosa, Executive Director of CONACADO cocoa cooperative, Dominican Republic -
How do I know that a product is really a fair trade product?(more)
The term “fair trade” is not copyrighted or regulated in Canada, so any company can use it to describe their products. So as they say, “consumer, beware.”
The term “fair trade” is not copyrighted or regulated in Canada, so any company can use it to describe their products. So as they say, “consumer, beware.”
There only three ways for you to be sure that a product is really fair trade.
- The product has been certified as fair trade by a reliable third-party, usually indicated by a licensed logo or label on the product.
- The company or store selling the product is a member of an established fair trade organization that requires and monitors for compliance with fair trade principles.
- The company that distributes or is selling the product and is making the claim that the product is ‘fair trade’ has an established and highly reputable track record in working on social justice issues.
A Product Certified by a Third Party with a Licensed Label
Consumer and fair trade organizations have shared an interest in ensuring that there is a convenient and reliable way to identify those products that meet fair trade standards. In 1988, this shared interest led to special labels that could be placed on such products, the first being the Max Havelaar label for coffee in 1988. This represented the first set of generic standards guaranteeing fair trade production and trading practices behind a product.
The fair trade certification process has come along way since the creation of Max Havelaar. An international network of national certification organizations has now operated since 1997. The network is called the Fair Trade Labelling Organizations International (FLO) and now has 19 member organizations. FLO sets international norms with respect to the production and trade of fair trade products. FLO and its national members serve as a third party to ensure that the standards set for certified fair trade products are met by producer groups, traders, processors, wholesalers and retailers.
TransFair Canada is Canada’s member to the FLO. Only products that are certified by FLO and Transfair Canada are licensed to carry the label.
Over the mid-1990s a number of other umbrella organizations aimed at administering specific activities within the world of alternative trade were formed. However, FLO remains the only umbrella organization specifically devoted to the development and administration of fair trade standards and verification.
So if a product carries this “Fair Trade Certified” logo, you can be sure that it has met internationally established fair trade standards.
Company or Store Member of Established Fair Trade Organization
Parallel to the development of labeling for products, the World Fair Trade Organization (WFTO) developed a monitoring system for Fair Trade Organizations. In order to strengthen the credibility of these organizations towards political decision-makers, mainstream business and consumers, the WFTO Fair Trade Organization Mark was launched in January 2004. The FTO Mark is available to member organizations that meet the requirements of the WFTO monitoring system and identifies them as registered Fair Trade Organizations. WFTO is working with FLO on a Quality Management System for Fair Trade and on finding a way to provide an “on product” Mark for handcrafts of all kinds.
Ten Thousand Villages, with a series of stores located throughout Manitoba, is a prominent member of WFTO.
It is important to note that WFTO requires it members to adopt and practice fair trade principles throughout their organizations. So any product sold by a member meets these criteria.
In 2009, the International Fair Trade Association (IFAT) will be transitioning to the WFTO logo. The old logo, shown here, will be replaced with the one above.
The labeling of a product by the Fair Trade Certified label (see above), on the other hand, means that the particular product meets fair trade principles. An organization may sell a variety of products, some of which meet the principles, others that do not.Established and Highly Reputable Track Record
There are also some organizations that market fairly traded coffee without certification. These groups say their established reputations in the field of international development and fair trade are enough to satisfy their customers. Because they purchase products directly from producers with whom they have an ongoing relationship, and because their primary motivation is not profit, but improving the quality of life for these farmers, artisans and workers, they feel that certification is unnecessary.
Sources that can be trusted when they say their products are fair trade include:
- CoDevelopment Canada (a BC-based non-profit company that markets Café Etico coffee)
- Level Ground Trading (a BC-based company that markets San Miguel coffee)
- Manitoba Council for International Cooperation
- The Marquis Project (based on Brandon)
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What are the standards that products have to meet to be certified as fair trade?(more)
The fair trade standards used by the Fair Trade Labelling Organizations International (FLO) are developed by its Standards & Policy Committee, in close cooperation with relevant stakeholders, including fair trade organizations, producer organizations, traders and external experts.
The fair trade standards used by the Fair Trade Labelling Organizations International (FLO) are developed by its Standards & Policy Committee, in close cooperation with relevant stakeholders, including fair trade organizations, producer organizations, traders and external experts.
Under FLO, standards are set for both producers and traders. While some are product-specific, the following are the general standards which a product must meet to be certified.
Standards for Producer Organizations
There are two sets of producer standards, one for small farmers and one for workers on plantations and in factories.
- Small landholders must be organized in cooperatives or other organizations with a democratic structure;
- Workers must be paid decent wages, have the right to join trade unions and have access to good housing where relevant;
- On plantations and in factories, minimum health and safety as well as environmental standards must be met and maintained;
- No child or forced labour can occur;
Producer organizations must also prove that they are investing the premiums they receive to improve working conditions, and product quality, and to increase the environmental sustainability of their production activities.
Trading Standards
Certified fair trade products must also meet standards that are set for traders. Traders must:
- Pay a price to producers that covers the costs of sustainable production and living which is determined by FLO;
- Pay a fair trade premium that producers can invest in development;
- Partially pay in advance, when producers ask for an advance;
- Sign contracts that allow for long-term planning and sustainable production practices.
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How does the certification and licensing process work?(more)
Fair trade is similar to a normal supply chain model of business, but with fewer, and known intermediaries. Each part of the chain is certified.
Fair trade is similar to a normal supply chain model of business, but with fewer, and known intermediaries. Each part of the chain is certified. This means that the sale of products can be tracked and audited to ensure that the benefits of fair trade reach the producers. Producers and their organizations are monitored and certified by the Fair Trade Labelling Organizations International (FLO). The FLO created an independent corporation that exists solely to coordinate all the inspections of producers, trade auditing and certification. It operates at arms length from any other fair trade certified interests and follows strict guidelines to ensure the integrity of certification decisions.
In Canada, the “Licensees” (processors) are licensed and audited by TransFair Canada to ensure they are doing business with certified producers and adhering to the standards set out by FLO. TransFair Canada also works to promote Fair Trade Certified products at the retail and consumer level. These two organizations also work in tandem to verify and audit the sales from importers to the licensees.
The Fair trade certification system begins at the production level in countries where the source products and ingredients originate. All fair trade certified products come from certified producer organizations. Beyond the source, the entire supply chain is monitored to ensure the integrity of labelled products. This chain of certification, monitoring and licensing ensures that the integrity of the supply chain is not compromised. It ensures that only a product or ingredient certified at the source can carry the fair trade label.
Certification of Producers
Distinct from codes of conduct and other social labels, the FLO’s standards go beyond a set of minimum requirements for socially responsible production and trade, to ensure that fair trade products enrich the communities where they are produced. In addition to the minimum requirements that producers must meet, FLO standards guarantee the producers a fair price, and require certified organizations to invest part of the fair trade premiums in economic, environmental and social development.
The producers and their organizations must operate both transparently and democratically and are required to make quarterly reports to FLO. Certification for producers hinges on meeting all the FLO standards for which they are audited.
Supply Chain Monitoring (keeping it real)
In Canada, companies must secure a licence from TransFair Canada to use the Fair Trade certified label on approved products. This licence is attached to a system of fully audited accountability for any goods marked with the TransFair logo.
These certified products can only be imported from producer organizations monitored by FLO. Which means that the producers were contracted to work under acceptable terms and were fairly compensated. Certified importers are required to open their books to TransFair Canada for periodic audits. Finally, they pay a quarterly licence fee based on the labelled products sold, which subsides the certification process.
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How big is the market for fair trade goods in Canada?(more)
There has been significant growth in the purchase of fair trade products in Canada over the last five years. But even with this growth, fair trade products have not even begun to realize their market potential.
There has been significant growth in the purchase of fair trade products in Canada over the last five years. But even with this growth, fair trade products have not even begun to realize their market potential.
The estimated retail sales value of TransFair Canada certified products increased by more than 560% between 2000 and 2005. In 2000, the estimated retail sales value of certified products totalled almost $4.7 million. This had grown to over $22.2 million by 2005.
Fair trade coffee represents the lion’s share of sales figures but this is changing. In 2000, coffee was the only certified product sold. By 2005, coffee sales represented less than 90% of fair trade sales.
Evidence of the enormous room for further growth comes from consumer surveys. A majority of Canadian have reported willingness to switch to fair trade coffee if its cost and quality are the same as coffee of comparable grade and origin. A recent market survey also found that 55 % of Canadian consumers are willing to pay more for fairly traded coffee.
Yet, currently, fair trade coffee has an average market share in Canada of less than 1.0 %. Maybe we should all go to our favourite store and change that statistic.
