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Fair trade
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Fair trade – the principle
"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."
This definition of "fair trade" was adopted in 2001 by the informal working group FINE, an association of the four international umbrella organisations for fair trade.
Each year, the members of the association negotiate with producers (producers’ cooperatives, other cooperatives, socially responsible companies and similar entities) on the minimum quantities they will purchase, and agree a price for the products that will cover the cost of socially responsible and environmentally sustainable production methods. The umbrella group Fairtrade Labelling Organisations International (FLO) determines a minimum price for most of the products traded under the Fairtrade label. In addition to a minimum price for their products, producers will sometimes also receive a premium, which they can invest in measures to secure their communities’ socio-economic development. Furthermore, the producers undertake to uphold certain minimum social and environmental standards. The sale of their products guarantees them a relatively stable income based on steady consumer demand. Consumers consciously choose to pay a somewhat higher price for fair trade products than for conventionally traded goods.
FLO standards for fair trade products
The Fairtrade Labelling Organizations International (FLO) is the world’s largest organisation certifying social standards. FLO guarantees that products with the Fairtrade label comply with the relevant standards throughout the world.
Standards for producers in the South focus on the areas of social, economic and environmental development, and working conditions. Producers must fulfil minimum standards in each area. General standards are made product-specific, for example for coffee, tea, honey, sugar, bananas, nuts, spices, flowers, cotton and sports balls.
There are also standards that apply to traders. They relate to the payment of a fair price; the payment of a premium for development activities and a differential for organic products; the provision of up-front funding; and the cultivation of long-term trading relationships.
In Germany, the Fairtrade label is granted by the independently operated TransFair organisation. This is a non-profit body, which is funded by various organisations from areas such as development policy, the church, consumer protection, women, education, the environment and social action groups. TransFair was one of the co-founders in 1997 of the umbrella organisation FLO, which is made up of over 20 national labelling organisations. Since 2003, all FLO-affiliated organisations have been using a uniform Fairtrade label. It is not necessary for organisations to use organic methods of agriculture in order to use the label. However, an ‘organic’ premium is paid for produce which is certified as organically grown. Today, almost two thirds of all Fairtrade products come from certified organic crops.
The independent certifying body of FLO-CERT checks whether the licensees holding a Fairtrade certification meet the prescribed standards. Every organisation, company, producer organisation, exporter and importer involved in the Fairtrade trading chain is subject to a strict regime of controls by FLO-CERT.
WFTO standards for fair trade organisations
Fair trade organisations – including producers and import organisations – have come together at international level in the World Fair Trade Organization (WFTO – formerly the International Fair Trade Association, IFAT). The WFTO ensures that its members comply with the organisation’s standards by employing a three-tier monitoring system of self-assessment, reciprocal monitoring and external verification.
WFTO is currently also working on the development of a certification process for sustainable fair trade, i.e. the Sustainable Fair Trade Management System (SFTMS). It is intended to complement the FLO certification system. The SFTMS is being developed for small companies in particular. In contrast to the Fairtrade label, this system will seek to certify not only a single product but an entire company with all its products and services. Once a company has been successfully certified, it will be permitted to add "Certified Fair Trade" to its brand name. The certification process is currently still in the pilot phase.
