Why You Should Care About Labels – Fair Trade Explained

You’ve all probably heard the term or seen the labels, but what, exactly, is Fair Trade (or Fairtrade, as both spellings are used)? In 2001, the four members — Fairtrade Labelling Organizations International (FLO), World Fair Trade Organization (WFTO), Network of European Worldshops (now part of WFTO) and European Fair Trade Association (EFTA) — of the industry association FINE agreed the following definition: “fair trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers — especially in the South. Fair trade organizations, backed by consumers, are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade.”

The main goal is basically to ensure that producers are treated well and paid a fair price for their labor, which allows them the opportunity to improve their lives and plan for their future. For consumers, it’s a simple, powerful way to fight poverty every time we go shopping.

Fair Trade began modestly in the 1940s when a few small North American and European organizations reached out to poverty stricken communities to help them sell their handicrafts to well-off markets. Later, a fictional Dutch character, Max Havelaar, was developed as an advocate for exploited coffee pickers. Today, Fair Trade (or Fairtrade) is a global effort.

There are lots of different Fair Trade labels out there, but these are the main two to look for when you are shopping.

There are lots of different Fair Trade labels out there, but these are the main two to look for when you are shopping.

When a product carries a Fair Trade label it means the producers and traders have met standards of the certifying organization. The standards are designed to address the imbalance of power in trading relationships, unstable markets and the injustices of conventional trade. Most products have a Fair Trade price, which is the minimum that must be paid to the producers. The minimum price aims to ensure that producers can cover their average costs of sustainable production and acts as a safety net for farmers at times when world markets fall below a sustainable level. Without this, farmers are completely at the mercy of the market. That said, when the market price is higher than the Fairtrade minimum, the buyer must pay the higher price. Producers and traders can also negotiate higher prices on the basis of quality and other attributes.

Many kids enjoy the day with their family during the harvest season. It's not uncommon for there to be more kids in the field than adults. Photo by jakeliefer, Creative Commons.

Many kids enjoy the day with their family during the harvest season. It’s not uncommon for there to be more kids in the field than adults. Photo by jakeliefer, Creative Commons.

In addition to the Fair Trade price, there is an additional sum of money, called the Fair Trade Premium. This money goes into a communal fund for workers and farmers to use to improve their social, economic and environmental conditions. The use of this additional income is decided upon democratically by producers within the farmers’ organization, or by workers on a plantation. The Premium is invested in education and healthcare, farm improvements to increase yield and quality, or processing facilities to increase income. Since many projects funded by the Premium are communal, the broader community, outside the producer organization often benefits from Fair Trade.

Fair Trade farmers are audited annually for transparency, democratic processes and sound financial management. Fair Trade Standards requires environmentally-sustainable farming methods that protect farmers’ health and preserve ecosystems. These standards strictly prohibit the use of GMOs and the most toxic agrochemicals, promote active conservation of soil and water resources and protect surrounding forests. More than half of all Fair Trade farms are also certified organic. Fair Trade Standards also require freedom of association and safe working conditions. Child labor, forced labor and discrimination are strictly prohibited.

Mexican Fair Trade coffee farmer at work in the fields. Photo by Shared Interest, Creative Commons.

Mexican Fair Trade coffee farmer at work in the fields. Photo by Shared Interest, Creative Commons.

In 2005, only nine percent of Americans were aware of Fair Trade, and certified products generated approximately $15 million in additional income for producers. In 2009 awareness had increased to 33 percent, and Fair Trade generated more than $48 million. A new study conducted by researchers from MIT, Harvard and London School of Economics shows that the Fair Trade labeling has a large positive impact on consumer purchasing — sales of the two most popular bulk coffees sold in the stores rose by almost 10% when the coffees were labeled as Fair Trade. Overall the findings suggest that there is substantial consumer support for Fair Trade, with many willing to pay up to eight percent more for a product bearing the Fair Trade Certified label.

“The Fair Trade label by itself had a large positive effect on sales, indicating that a substantial number of coffee buyers place a positive value on Fair Trade certification, said Michael J. Hiscox of Harvard University. “In addition, a sizeable segment of coffee buyers were willing to pay a premium for coffee if the premium was directly associated with support for Fair Trade. The tests suggest that there are plenty of consumers ready to vote with their shopping dollars to support Fair Trade when it is offered as an option by retailers.”

Coffee was the first product to be Fair Trade Certified. Photo by Angie Muldowney, Creative Commons.

Coffee was the first product to be certified by Fair Trade USA, perhaps why that is why we tend to associate the Fair Trade label with this roasted beverage. According to Fair Trade USA, coffee imports have increased from 78,000 pounds certified in 1998 to 108 million pounds certified in 2010. With the rising popularity of Fair Trade more products are constantly introduced. Fair Trade standards exist for food products ranging from tea and coffee to fresh fruits and nuts, as well as non-food products like flowers and plants, cotton, and sports balls.

Bananas are the most consumed fresh fruit in the U.S., and represents a whopping 50 percent of all U.S. fresh fruit imports. Photo courtesy of Fair Trade Certified.

Bananas are the most consumed fresh fruit in the U.S., and represents a whopping 50 percent of all U.S. fresh fruit imports. Photo courtesy of Fair Trade Certified.

Bananas are the most consumed fresh fruit in the U.S., and represents a whopping 50 percent of all U.S. fresh fruit imports, a large portion of which are produced in Latin America. The 27 Fair Trade producers supplying bananas to the U.S. market are located in Ecuador, Costa Rica, Perú and in the northwestern Urabá region of Colombia. According to Fair Trade USA’s Product Impact Report, imports of Fair Trade bananas almost doubled from 2008 to 2009, reaching 49 million pounds. This phenomenal growth also led to a 98 percent increase in premium dollars paid to banana farmers and workers in South America. Fair Trade Certified wine has also seen phenomenal growth since its inception, increasing four-fold year over year. In 2009, cumulative Fair Trade wine imports reached 1.7 million bottles.

Although the “change the world by shopping” adage is feeling very old and tired, buying Fair Trade is something we can all do to improve the world just a little bit every time we shop.

On May 14, help Wake up the World by educating friends and family about the benefits of supporting Fair Trade. Photo courtesy of Fair Trade Certified.

On May 14, help Wake up the World by educating friends and family about the benefits of supporting Fair Trade. Photo courtesy of Fair Trade Certified.

May 14th is World Fair Trade Day, and Fair Trade USA wants us to show that we can change the world by changing our breakfast. How? Have a breakfast that features as many Fair Trade Certified products as possible and help Wake up the World by educating friends and family about the benefits of supporting Fair Trade. Last year more than 110,000 people from 21 countries joined the campaign, making it the world’s biggest Fair Trade Breakfast. Can you help beat that number for 2011?

Here are some easy ways to get involved:
– Host a Fair Trade breakfast for your family and friends
– Celebrate a day early with a Fair Trade breakkie at your office or school on Friday 5/13
– Join the Global Fairtrade Breakfast Facebook group
– Partner with a local store or cafe to hold a Fair Trade Breakfast event
– Organize a big Fair Trade Breakfast picnic in a public park

About author
A designer by trade, Johanna has always had a passion for storytelling. Born and raised in Sweden, she's lived and worked in Miami, Brooklyn and, currently, Ojai, CA. She started Goodlifer in 2008 to offer a positive outlook for the future and share great stories, discoveries, thoughts, tips and reflections around her idea of the Good Life. Johanna loves kale, wishes she had a greener thumb, and thinks everything is just a tad bit better with champagne (or green juice).
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