What Is Fair Trade and What Does It Mean? – Definition, Products & Facts

Take a stroll down the coffee aisle of any large supermarket, and there’s a good chance you’ll see at least one or two bags of beans sporting a little label that says “Fair Trade.” These bags don’t look obviously different from the others on the shelf, but their price is definitely on the high end – at least $7 per pound, and as high as $15 per pound. What, you might wonder, makes them worth that extra money?

The answer is that when you pay extra for Fair Trade coffee, the money goes directly to the farmers who grow it. Fair Trade coffee dealers guarantee the growers a fair wage for their products, and in return, the farmers promise to provide decent conditions for their workers and to grow their coffee in an eco-friendly way. The same guarantees apply to other products bearing the Fair Trade label, such as chocolate, sugar, bananas, and cotton.

Fair Trade products are a hot commodity. The British newspaper The Guardian reports that global sales of Fair Trade products rose by 15% in 2013, reaching a total of £4.4 billion ($6.55 billion). Worldwide, the Fair Trade movement that year supported more than 1.4 million farmers and workers in 74 countries.

Principles of Fair Trade

The goal of Fair Trade is to reduce poverty for farmers and workers in developing countries. This means not just paying them more in the short term, but also helping them improve their skills, build up their communities, and protect the local environment so its resources will be there for future generations.

Organizations involved in Fair Trade, including Fair Trade USA and the Fair Trade Federation, have outlined several basic principles for both buyers and sellers to follow:

1. Direct Trade
Fair Trade importers work with producers as directly as possible. Cutting out the middleman enables the importers to pay the farmers a larger share of the money their products will eventually fetch on store shelves. Fair Trade importers often deal with collectives – groups of small-scale growers who run their own farms with little or no hired labor. To meet Fair Trade standards, the collectives must be democratically run, with each farmer getting a vote, and must split their profits equally among all the members.

2. Fair Price
Fair Trade guarantees farmers a reasonable minimum price for their crops, no matter how low the market price falls. Buyers promise to pay producers promptly for their goods, and producers promise in turn to pay a fair wage to all their workers. Buyers also extend credit to their producers – for instance, paying them in advance of the harvest – to make sure the producers have all the resources they need to turn over their goods on time.

3. Decent Conditions
Fair Trade requires that farmers provide safe and healthy conditions for their workers. It also bans all use of child labor and forced labor, which are widespread in many parts of the world – particularly on cocoa plantations, as CNN reported in 2012. Fair Trade rules ban all forms of worker abuse, harassment, and discrimination, including discrimination based on political affiliation or union membership.

4. Respectful Relationships
Fair Trade promotes open, honest communication among producers, buyers, and consumers. Fair Trade dealers do their best to give growers the information they need about market conditions, share what they know about the best growing practices, and provide technical assistance when needed. Importers seek to build long-term relationships with growers and work with them to solve any problems that come up.

5. Community Development
On top of the regular price for their goods, growers earn a Fair Trade Premium to invest in their communities. For coffee, for instance, they get paid an extra $0.20 per pound, plus an extra $0.30 if it’s grown organically. These funds go toward projects like building new schools, providing scholarships, improving nutrition and healthcare, and digging wells. Farmers can also invest the money into their businesses, spending it on irrigation for fields or on organic certification, which can enable them to earn higher prices for their crops in the future.

6. Environmental Sustainability
Although not all Fair Trade products are organic, farmers are required to use sustainable growing practices that protect natural resources, including water, soil, and natural vegetation. The use of pesticides and fertilizers – particularly the most harmful ones – is restricted. Farmers also pledge to use energy efficiently and manage waste properly, reducing, reusing, and recycling whenever possible. The use of genetically modified organisms (GMOs) is specifically banned for all Fair Trade products.

7. Respect for Local Culture
Fair Trade dealers promise to respect the cultural heritage of the growers they work with. Instead of forcing them to adopt the latest, most efficient methods for growing or producing goods, they allow them to follow their traditional practices, while also teaching them about new techniques. In this way, growers can keep their traditions alive while still increasing their production to keep up with the market’s demands.

Fair Trade Certification

Fair Trade certification is a way of guaranteeing that both buyers and sellers stick to the principles of Fair Trade. There are several different organizations that certify Fair Trade products, each with its own label and its own set of standards. To bear the Fair Trade label, a product must meet all the standards of the certifying organization, which inspects farms regularly to make sure they’re following the rules.

fair trade certified bananas

Fair Trade Labels

There are several different Fair Trade labels you might spot as you cruise the supermarket aisles. They include:

fair trade markThe FAIRTRADE Mark
The largest worldwide Fair Trade organization is Fairtrade International. It works with more than 1,200 different producers in 74 countries, which employ more than 1.5 million farmers and workers. Fairtrade International employs an organization called FLOCERT to certify all its members and enforce its standards. Its label, known as the FAIRTRADE Mark, appears on over 27,000 products worldwide, including food, drinks, cotton, clothing, and jewelry.

fair trade certifiedFair Trade Certified
The Fair Trade Certified label represents Fair Trade USA, the leading certifier of Fair Trade products in the United States. This organization, formerly known as Transfair USA, was once a part of Fairtrade International, but it split off in 2011, adopting a new name and its own set of standards. For instance, Fairtrade International requires all its coffee to come from collectives of small farmers, while Fair Trade USA also accepts coffee from large plantations run by a single company. Fair Trade USA certifies a wide variety of products, including coffee and tea, fresh fruits and vegetables, spices, wine, and clothing. Inspections for these goods are performed by a third-party certifier called SCS Global Services.

fair for lifeFair for Life
Most Fair Trade programs apply to specific products and aren’t concerned with anything else the company produces (companies may produce multiple products – some Fair Trade, some not). Fair for Life, by contrast, only works with companies that provide fair wages and working conditions for all their staff, as well as their suppliers  – not just the producers of certain specific products. The Fair for Life label can be used for nearly any type of goods – food or non-food, raw material or finished product – and certain types of services as well. Currently, there are about 500 different products certified as Fair for Life, all made by companies that meet the Fair for Life standards. The certification process is administered by the Institute for Marketecology.

fair trade federationFair Trade Federation Member
The Fair Trade Federation (FTF) is not a certification program; rather, it’s a membership organization for U.S. and Canadian companies that follow Fair Trade principles. Individual companies pay dues to the Federation and get the right to display its label, showing that they’re committed to the principles of Fair Trade. Companies don’t need to have Fair Trade certification to join the FTF, which means they don’t need to pay the fees both FLOCERT and Fair Trade USA charge for their programs. However, they must show that they meet the group’s strict code of practice for all their products – a strict standard that only 50% to 60% of all the companies that apply are able to meet.

world fair trade organizationWorld Fair Trade Organization
The World Fair Trade Organization (WFTO) is a global network of smaller Fair Trade organizations, as well as individual companies. The WFTO has a five-stage guarantee system to monitor all its members and make sure they conform to the principles of Fair Trade and to the group’s own Fair Trade standard. Run from a central office in the Netherlands, the WFTO represents over 370 member organizations and 40 individual associates, spanning 70 countries and 5 continents.

utz certifiedUTZ Certified
The UTZ Certified program is not a Fair Trade certifier, but it stands for many of same principles: sustainable farming, safe working conditions, and better opportunities for farmers and their families. Unlike Fair Trade, UTZ doesn’t guarantee farmers a baseline price for their crops, but it does pay them a premium over the market rate, as well as helping them improve quality and yield so their crops are worth more. UTZ monitors the farms it works with to make sure they follow its codes of conduct, which cover farming methods, working conditions, and the environment. UTZ is the largest program for sustainably grown coffee and cocoa in the world, accounting for nearly 50% of all sustainably labeled coffee – its clients include such major companies as Mars, Nestlé, and IKEA.

Differing Standards: Fairtrade International vs. Fair Trade USA

Fair Trade USA triggered a major controversy when it broke away from Fairtrade International in 2011. The main reason for the split was that the two programs didn’t agree on what their standards should be for coffee growers. Fairtrade International requires all its coffee to be grown on democratically run, farmer-controlled collectives. Fair Trade USA, by contrast, hoped to expand Fair Trade by making certification available to coffee produced on large plantations, which are often run by a single large corporation, and by independent small farmers who do not belong to a collective.

Paul Rice, the CEO of Fair Trade USA, claimed this move was the best way to help the world’s poorest farmers, who weren’t really benefiting from the existing Fair Trade rules. In a 2012 interview with Just Means, Rice pointed out that small-scale farmers usually don’t have enough land to support their entire families, so many members end up working on the large coffee plantations. Extending Fair Trade to the large plantations, he argued, is the best way to make sure those workers get the same fair wages and decent conditions as those who work for the collectives.

Many supporters of Fair Trade, including the groups Equal Exchange and the Fair World Project, argued that Rice’s decision would weaken Fair Trade standards. They claimed that the only meaningful way to improve the lives of coffee growers was to focus on “disenfranchised” small farmers rather than expanding to larger plantations. However, research done by The Guardian tells a different story. Between 2009 and 2013, researchers found that in parts of Africa where Fairtrade International cooperatives dominated the coffee trade, workers actually earned less and had worse working conditions than those who worked on larger plantations – and the community projects funded by Fair Trade premiums, such as schools and health clinics, were often unavailable to them.

The bottom line is, while the two groups have different approaches, there isn’t enough evidence to say that Fairtrade International’s standards are inherently better or stronger than Fair Trade USA’s. For those who care about the principles of Fair Trade, products with the Fair Trade USA label are a perfectly reasonable choice.

Fair Trade Products

There are many different kinds of products that bear the various Fair Trade labels. Most of them are agricultural goods, such as coffee, tea, chocolate, herbs and spices, sugar, flowers, and produce, such as bananas and mangoes. However, both Fair Trade USA and Fairtrade International certify some manufactured products as well, including clothing, wine, and sports balls. Here’s a closer look at some of the most common Fair Trade Products (and where they’re sold) to help you form more socially responsible eating and drinking habits.

fair trade coffee

Coffee

The Fair Trade movement first started with coffee, and coffee remains the most important Fair Trade product today. A 2012 report from Fairtrade International says it sold 88,000 tons of Fair Trade coffee worldwide in 2010 – about 1% of the world’s entire coffee crop. The United States and Canada account for a large share of these sales – according to Fair Trade USA, these countries imported 163 million pounds (81,500 tons) of Fair Trade coffee in 2012.

Major sellers of Fair Trade coffee include:

  • Green Mountain Coffee is a Vermont-based roaster owned by Keurig.
  • Allegro Coffee is a Colorado roaster and coffeehouse that sells its coffees online.
  • Equal Exchange is a worker cooperative that has dealt in Fair Trade coffee since 1991.
  • Starbucks sells some Fair Trade coffees in its stores, along with other “ethically sourced” beans.
  • Dunkin’ Donuts uses Fair Trade Certified espresso beans in all its espresso drinks.

Cocoa

Most of the world’s cocoa comes from African countries, particularly Côte d’Ivoire (Ivory Coast), where child labor and slave labor are widespread. By buying Fair Trade cocoa and chocolate, conscientious consumers can be sure their money doesn’t support these abuses of human rights.

Fair Trade cocoa comes from many countries, including Bolivia, Cote d’Ivoire, Ghana, Haiti, Honduras, India, Nicaragua, Peru, and Sri Lanka. It’s used in a variety of products, both organic and conventional, including chocolate bars, hot chocolate mix, and ice cream.

Companies that use some or all Fair Trade cocoa in their products include:

  • Ben & Jerry’s uses Fair Trade ingredients in all its ice cream flavors.
  • Cadbury uses Faitrade International cocoa in its Dairy Milk Chocolate products.
  • Chocolove is a chocolate company that sources all its chocolate sustainably and makes three bars that are both Fair Trade and organic.
  • Divine Chocolate is co-owned by Kuapa Kokoo, a Fairtrade International collective of cocoa farmers.
  • Endangered Species Chocolate is the first company to produce chocolate in the United States from Fair Trade cocoa.
  • Green & Black’s is a 100% organic chocolate company that produced the first Fairtrade International certified chocolate bar in Britain.
  • Theo Chocolate is a Fair for Life company that produces organic, Fair Trade chocolate in its Seattle factory.

Clothing and Textiles

Clothing is one of the newest Fair Trade products, but it’s growing quickly. A 2015 article in MarketWatch reports that the amount of Fair Trade apparel and home goods on the market grew to almost five times its former size during 2014. Factories that make Fair Trade clothing must meet standards for environmental health, wages, working conditions, and workers’ rights.

You can find Fair Trade clothing and home products at many different retailers. Some of them deal exclusively in Fair Trade clothing and home products, while others sell just a few specific products that carry the Fair Trade label.

Sellers of Fair Trade clothing and textiles include:

  • BeGood Clothing is an online retailer based in San Francisco that sells casual clothing for men and women.
  • Fair Indigo is an online retailer that sells organic, Fair Trade, and locally sourced women’s clothing and accessories.
  • Good & Fair Clothing Co. is an online seller of organic tees and underwear that are “certified Fair Trade from farm to factory.”
  • Maggie’s Organics buys organic cotton and wool directly from the growers to be processed into knitwear in its North Carolina warehouse.
  • Patagonia is a major seller of outdoor sports gear that offers an assortment of Fair Trade activewear and outerwear for men and women.
  • prAna is a yoga company that was the first major apparel company in North American to be certified by Fair Trade USA.
  • West Elm is the first retailer in the world to offer Fair Trade Certified rugs.

Crafts

Fair Trade USA and Fairtrade International do not provide certification for craft items, such as handmade jewelry, pottery, and artwork. However, there are several importers and retailers that follow Fair Trade principles when dealing with craft workers. These include:

  • Fair Trade Federation distributes clothing, jewelry, housewares, accessories, and even musical instruments through a wide variety of stores and online markets. As noted above, FTF members don’t have to have Fair Trade certification, but they must adhere to the FTF’s strict code of conduct.
  • SERRV is a nonprofit organization that sells handmade gifts, clothing, jewelry, and home decor made by artisans throughout the developing world. SEERV is a founding member of the WFTO and FTF, and it pledges to follow Fair Trade principles in all its dealings with its artisan and farmer partners.
  • Bead for Life sells bead jewelry made by Ugandan women from colorful recycled paper. Bead for Life, a member of the FTF and the WFTO, says that increasing women’s income helps reduce poverty, improve the lives of children, and reduce domestic violence.
  • Ten Thousand Villages is a nonprofit organization that sells jewelry, home decor, and gifts in stores throughout the United States and Canada. Ten Thousand Villages is a founding member of the WFTO and is committed to fair wages, long-term relationships with artisans, and environmental sustainability.

fair trade necklaces and crafts

Fair Trade on a Budget

Though Fair Trade is growing fast, Fair Trade goods still account for a fairly small of the market. One reason for this is that they often cost more than other products in the same category. That’s hardly surprising, considering that Fair Trade pays farmers a higher price for their crops.

On the other hand, since Fair Trade importers work directly with farmers and eliminate the middleman, the higher prices the farmers get paid don’t always translate into higher prices for the consumer. Fair Trade USA points out in its FAQ that while some Fair Trade Certified products, such as bananas, tend to cost much more than conventional versions, Fair Trade Certified coffee and chocolate cost about the same as “other gourmet specialty coffees and chocolates.”

In fact, in some cases, Fair Trade products actually cost slightly less than conventional equivalents. For instance, a one-pound bag of organic, Fair Trade coffee from the Congo region costs $12 in the Equal Exchange online store, while a one-pound bag of Ethiopian coffee from Starbucks – which is neither Fair Trade nor organic – costs $14. A simple sleeveless cotton dress from Mata Traders, made by a Fair Trade women’s cooperative in India, costs $85; a similar dress from ModCloth, which is not Fair Trade, costs $110.

Still, if you’re used to buying the cheapest coffee on the shelf, it’s easy to get sticker shock from the “gourmet” price of a Fair Trade equivalent. Here are several tips for shopping Fair Trade without blowing your budget:

  1. Buy in Bulk. Many natural foods stores sell whole-bean coffee in bulk bins, often at a lower price per pound than similar coffees sold in bags. You can also buy your coffee online in five-pound bags from a Fair Trade dealer like Dean’s Beans and pay less than $10 a pound, including shipping.
  2. Try Store Brands. Trader Joe’s house brand offers several Fair Trade coffee varieties for $10 a pound or less. Archer Farms, a store brand available at Target, has several coffees that are Fair Trade or Direct Trade – that is, bought straight from the growers –  at $8.49 for a 12-ounce bag, or around $11.32 per pound.
  3. Shop “Light” Fair Trade. Brands that are not Fair Trade certified can still promote the goals of Fair Trade. For instance, you can buy UTZ Certified coffee at IKEA for about $7.25 a pound and UTZ Certified chocolate bars for $1 apiece. Costco also sells some brands of coffee that are not Fair Trade Certified but say in their product descriptions, “We work with the farmers to supply healthcare, housing, meal programs, and education to the workers and their families.”
  4. Look for Sales. You can often find Fair Trade clothing and craft items on sale at physical stores, such as Ten Thousand Villages, and online retailers, such as Fair Indigo. Both stores have clearance sections as well.

Final Word

Shopping Fair Trade can sometimes cost more, and it definitely doesn’t offer you as wide a selection as having every product in a shopping mall – or on the Internet – at your disposal. However, the products that are available, whether for coffee, chocolate, or clothes, tend to be high quality. So choosing Fair Trade products can be a way to treat yourself and help others out of poverty at the same time.

If the higher price of Fair Trade goods is a deterrent for you, remember that you don’t have to buy them all the time. Switching just a small amount of your consumption to Fair Trade can make a difference without making too big a dent in your wallet.

Do you buy Fair Trade products? Why or why not?