Fair Trade

Fair Trade is the most widely recognized “ethical” product certification developed from the alternative trading initiatives of the 1970s. These initiatives can be seen as one of the responses to the globalization of markets and, particularly, the inequalities between nations that developed during the colonial histories of trade. The initial aims of fair trade organizations were to give stability and development possibility to small farmers in the Global South during volatile market fluctuations. These organizations also hoped their intervention would raise the profile of trade and poverty issues in relatively affluent consumer cultures.

Fair trade organizations currently have two prime tools through which they intervene in the free market. They place a floor on the commodity price they pay to small farmers to ensure these producers are not denied a living income from their crop if the commodity price declines to an unsustainable low in the market. Second, they pay an additional “social premium” to allow the producers to develop their community by, for example, building a school or clinic. To democratically allocate this additional income, fair trade organizations generally require producers to form a local commercial cooperative. To be certified as Fair Trade producers, the cooperative has to comply with these requirements and pay for certification.

While the practice of fair trade might have a long history in development, particularly through alternative trading organizations (ATO), the contemporary understanding of an independently certified product is usually dated to 1988. In that year, the Max Havelaar Foundation certified the first Fair Trade coffee in the Netherlands. CAFOD, Christian Aid, Oxfam, Traidcraft, and the World Development Movement formed the Fairtrade Foundation (FTF) in the United Kingdom, and the North American equivalent TransFair was set up in 1998. The development of fair trade in other affluent consumer cultures, such as France, Belgium, and Italy, followed.

The Fairtrade Labelling Organizations International (FLO) was set up in 1997 as the primary international body. It sets both minimum standards that draw inspiration from the International Labour Organization and improvement aims for producers. However, fairly traded products that do not bear the cost of certification and alternative approaches to fair trade (see Nicholls and Opel 2005) are available on the market. Other independent certifiers include Rainforest Alliance and various industry initiatives that have subsequently been formed.

In relation to the United Kingdom, Alex Nicholls and Charlotte Opel identify three phases of development: (1) from the early 1970s, a focus on the process of developing a sustainable fair trading model to connect producers in the Global South with affluent consumers; (2) from the late 1990s, a focus on developing and marketing products to make them attractive to a wider range of consumers; and (3) from the early twenty-first century, focusing on the place. In this most recent phase, the aims have been to develop strong localized support through recognized “Fair Trade Towns” and through educational [Page 568]and other organizations. In brief, “Fair Trade Town” status can be gained by a town when a range of fair trade products are readily available in the locality including workplaces and community organizations, the local council passes a resolution supporting fair trade, and there is a local steering group that seeks to develop and raise awareness of fair trade through media coverage and other events. By contrast, Terrence Witkowski sees the U.S. fair trade market as less well developed than those in Europe.

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