Fair Trade

Fair Trade is a trading arrangement intended to provide more equitable international trade by creating better conditions for disadvantaged and/or marginalized producers of goods. These practices include, for example, paying fair wages, supporting participatory workplaces, supporting environmentally sustainable production, and developing long-term and sympathetic buyer-producer relationships (typically between a buyer in a developed nation who is purchasing products from a producer in a developing country).

Fair Trade results in a smaller margin of profit for (and sometimes the complete elimination of) the middleperson, whereas the producer or grower of the product receives a larger portion of the product's ultimate price. The increased income producers and growers earn is intended to enable them to move from economic vulnerability to greater self-sufficiency and from powerlessness in relation to their products to greater involvement and financial empowerment. For example, by purchasing directly from farmers, the Fair Trade premium price is significantly higher than the world market price and is also a stable price. This allows farmers to afford basic costs of living such as food, health, and education. At this time, the world market price for coffee is $0.50 to $0.80 per pound (growers often receive less than this), whereas the stable Fair Trade price for coffee is $1.21 per pound for nonorganic and $1.41 per pound for organically grown coffee.

[Page 507]Fair Trade is mostly about making changes to conventional trade, which frequently fails to deliver on promises of sustainable livelihoods and opportunities for individuals living in the poorest countries in the world. Poverty and hardship limit individuals’ choices, and market forces tend to further marginalize and exclude them. This makes them vulnerable to exploitation, whether as farmers and artisans or as hired workers within larger businesses, or even as small entrepreneurs. This is particularly the case for women. Indeed, women in small, medium, and microenterprises, as workers and entrepreneurs, are important contributors to world trade. Women are at the same time profoundly affected by trade liberalization, as they are often not benefiting from concomitant market access and employment opportunities. The fact that 2 billion of the world's citizens survive on less than $2 per day, despite working extremely hard, suggests that there is indeed a problem. Women even survive on less money, often while providing for the entire household.

Workers at a fair trade coffee grower in El Salvador. The premium price allows workers to afford basic necessities.

Although Fair Trade seeks to change the terms of trade for the products consumers can buy to ensure that the farmers and artisans behind those products get a better deal, most often this is understood to mean ensuring better prices for producers. It often includes longer-term and more meaningful trading relationships, which particularly could benefit women when they are the head of the household.