What is Fair Trade?
Fair Trade is a global movement which puts social and environmental standards in place to protect producers and the environment.
Market capitalism very often concentrates wealth in a small percentage of the population. Alternatively, Fair Trade puts workers and the environment on the same page as profit to create a sustainable economic development and international trading system which benefits everyone involved.
Fair Trade exists due to the lack of accountability, traceability and reliability in the traditional market. The Fair Trade system emerged in response to market volatility, and low and uncertain commodity prices. Such instability may not always be realized on the consumer-end, but producers very often face the consequences of such instability. Secondly many producers around the world, do not have direct access to markets, often due to location, lack of transport, or simply lack of capacity. As a result, many producers are forced to sell to middle-men, and earn less than market-value for their goods. Fair Trade seeks direct relationships with producers. Additionally, Fair Trade also provides a social premium which is up and above set market prices, and flows back to the cooperative to be democratically spent on community development such as health and education.
Fair Trade commonly works to build the cooperative system; as cooperatives provide similar producers the ability to speak in one voice and achieve the highest available market price in the free market. Cooperatives allow producers to work together to develop skills and training that are traditionally inaccessible in developing economies; providing producers with the necessary business skills and knowledge that are necessary to compete on the international market. Cooperatives provide the ability for every worker to voice their opinion, and to be heard as a single united voice.
Fair Trade certification ensures that a fair price is paid to the producer/worker, safe working conditions are created and maintained, the environment is protected which leads to developing stability, and long term sustainability. Fair Trade standards include:
- Democratic organizations: Fair Trade farmers and farm workers decide amongst themselves how to invest Fair Trade revenues in their communities.
- Fair labour conditions: Workers on Fair Trade farms enjoy freedom of association, safe working conditions, and living wages. Forced child labour is strictly prohibited.
- Direct trade: With Fair Trade, importers purchase from Fair Trade producer groups as directly as possible, eliminating unnecessary middlemen and empowering farmers to develop the business capacity necessary to compete in the global marketplace.
- Long-term relationships: Companies engaging in fair trade seek to develop long-term relationships that producers can count on in the future.
- Pre-Harvest credit: Under conventional trade, farmers have to front all the money for a growing season themselves. This can mean either unreasonable interest rates, or not receiving credit at all.
- Community development: Fair Trade farmers and farm workers invest Fair Trade premiums in social and business development projects, like scholarship programs, quality improvement training, and organic certification.
- Environmental sustainability: The nature of the Fair Trade certification system means that farmers and producers have to follow a strict set of standards. Over the last few years, environmental standards have been added to the Fair Trade criteria and now nearly all Fair Trade products in Vancouver are also certified organic.
How are these standards set and maintained and who certifies these standards and how?
Creating a certification process to evaluate both social as well as environmental standards is a complex and difficult task; as it means creating a system for developing and implementing the standards as well as a system to certify or audit the producers using these standards, to ensure the standards are actually being met on the ground. Fair Trade has followed much the same route that the organic movement took, which took a great deal of work by many partners to develop. The connections between the organic movement and the Fair Trade movement are natural as many of the same standards exist within both. What Fair Trade sets out to do is to build upon organic standards to include a social aspect to protect labour and workers around the world. As a result many producers who are Fair Trade certified are also organic certified. Subsequently, many standards are the same and increasingly the certifiers are the same. Furthermore, there is less of a dichotomy between domestic and international circumstances facing producers, as many have begun to discuss the concept of a single system which protects workers and the environment around the world.
Currently the Fair Trade certification system is based on a set of concepts as discussed above, however meeting those standards are reached through various methods and through the use of various mechanisms and secondly through various certification systems, these systems will be further elaborated upon below:
The FLO/Fairtrade Canada system:
The Fair Trade Labeling Organization (FLO) sets international Fair Trade market prices. These base prices are developed based upon location, cost of production and costs of living. FLO also works to ensure producers receive a livable wage. FLO makes sure supply chains are legitimate top to bottom, and that standards are upheld throughout the life cycle of any particular good. FLO cert is independent of FLO. Its role is to certify the standards set by FLO and ensure standards are upheld through an audit-based system. FLO cert certifies producer cooperatives and authorizes the use of the “Fair Trade” logo.
While FLO and FLO cert concentrate on the producer end, sister organizations serve the developed-world end, i.e. the companies who buy through Fair Trade certified supply chains. These sister organizations operate independently of FLO, providing further transparency and oversight. They ensure standards are met on the developed-world end, and oversee those who hold licenses to use the Fair Trade logo, while monitoring to make certain the entire supply chain is legitimate. In Canada, this sister organization is known as Fairtrade Canada. This same system exists throughout Europe.
What this system provides is rigid, well-monitored standards, and oversight at all points along the supply chain. This provides maximum protection for the producer and maximum oversight for the standards. The system ensures that when consumers buy a Fair Trade product, they can be certain that the standards outlined above have been met.
IMO: Fair for Life
The Institute for Market ecology (IMO) has its roots in the Organic movement and is well established throughout the European Union, USA and Canada. They act as a certifier on organic standards and run their for life program which ensures environmental sustainability. IMO has now launched their Fair for Life program, which builds upon their for life organic standards to include social standards based around Fair Trade. IMO works with producers to set market prices, and works with companies to ensure their operations are aligned with the ideals and standards outlined by IMO. A scoring system is used where minimum scores on both producer and importer ends must be met in order to obtain “certified” status.
The World Fair Trade Organization
The World Fair Trade Organization (WFTO) exists as a member-driven network whose members uphold and promote Fair Trade standards and ideals. Members ensure Fair Trade standards are met on both the producer and importer end, and members embody these ideals in their day-to-day operations. Violation of these principles, occurring on either end or anywhere along the supply chain, would result in loss of membership.
The Fair Trade Federation
The Fair Trade Federation (FTF) acts as a trade association which sets and upholds Fair Trade principles. The FTF evaluates each member based upon Fair Trade principles, by which membership is granted. Members of the FTF adhere to and promote Fair Trade standards and each member operates their business accordingly, in all aspects of their operation.
How do you know one product is Fair Trade and another is not?
Fair Trade products can be recognized in many ways; they bare the Fairtrade certified logo, created and certified through Fairtrade International. Products may also bare the IMO certification mark, Fair for Life, or you can look for members of the WFTO and the FTF, where labels may exist on the back of packaging, or simply in writing. Alternatively you can look up any of these organizations and find those who hold licences of the organization, such as FLO, Fairtrade Canada or IMO or who are members of the organization, such as the WFTO and the FTF. Other Fair Trade, Direct Trade or Fairly Traded claims that you may find may be good intentioned, but most often lack the information to properly evaluate the Fair Trade standards listed above, or lack the rigor and systems to verify these claims.
To learn more about Fair Trade, standards, certification and how the system operates, please look into these organizations. Alternately please visit our further reading section.
Furthermore, for further details on International Fair Trade organizations, certification and to understand where Fair Trade Vancouver's endorsement policy, please download and read below strategy documents