What is Fair Trade?

7 Loaves Definition

The International Fair Trade Association (IFAT) describes Fair Trade as “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.” As the Fair Trade industry has grown, particularly in the U.S., it has become synonymous with trade that ensures producer groups (and their employees) receive a fair price for goods. While this is a key component of fair trade, there is more than that to Fair Trade. The Fair Trade Federation (FTF) outlines the following key principles:

• Creating opportunities for economically disadvantaged producers - Fair Trade is a strategy for poverty alleviation and sustainable development. Its purpose is to create opportunities for producers who have been economically disadvantaged or marginalized in the conventional trading system.
• Gender equity - Emphasis is placed on ensuring that women’s work is properly valued and rewarded. Women are always paid for their contribution to the production process and empowered in their organizations.
• Transparency and accountability - Fair Trade involves transparent management and commercial relations in order to deal fairly and respectfully with trading partners and customers.
• Capacity building - Fair Trade assists in developing producer independence through sustained relationships with trading partners that provide continuity, and help to develop management skills, access to markets, and financial and technical expertise.
• Payment of a fair price - A fair price in the regional or local context is one that has been agreed to through dialogue and participation. It covers not only the costs of production but enables production that is socially just and environmentally sound. It provides fair pay to the producers and takes into account the principle of equal pay for equal work by women and men. Fair Traders ensure prompt payment to their partners and, whenever possible, help producers with access to pre-harvest or pre-production financing.
• Working conditions - Fair Trade means a safe and healthy working environment for producers. The participation of children (if any) does not adversely affect their well-being, security, educational requirements and need for recreation, and conforms to the UN Convention on the Rights of the Child as well as the law and norms in the local context.
• Environmental sustainability - Fair Trade encourages producers to engage in production practices that manage and use local resources. Fair Traders often work directly with producers in regions of high biodiversity in order to develop products based on sustainable use of their natural resources, giving communities incentive to preserve their natural environments for future generations.
• Promoting Fairer Trade - Fair Trade organizations educate the public about the importance of purchasing fairly traded products, highlight the need for change in the practices of conventional trade, and publicly demonstrate how Fair Trade is a successful model that emphasizes social justice and environmental sustainability. By providing information about producers’ communities Fair Trade businesses enhance cross-cultural understanding and respect between consumers in the industrialized nations and communities in the developing world.

The History of Fair Trade

For more on the history of fair trade, check out what Wikipedia has to say about fair trade.