What is Fairtrade?

Fair Trade

Molly Harriss Olson, CEO of Fairtrade Australia New Zealand talks about what Fairtrade is and why it matters now more than ever.

What is Fairtrade?

Fairtrade is an international not-for-profit. It was created to make trade fair by changing the way trade works, so farmers and growers get better working conditions and pay for their products. It’s a tangible way to address complex problems like modern slavery within supply chains. It also supports sustainable farming, child protection, gender equality and climate action.

Fairtrade works because it acknowledges the root cause of modern slavery in supply chains: endemic poverty and unfair trading conditions. If we fail to recognise poverty as one of the key factors contributing to complex issues such as child labour, the extreme poverty continues.

The sale of Fairtrade certified products (like tea, coffee, cotton, flowers and chocolate) supports workers and their communities, and gives consumers the confidence that they’re buying a fairly made product.

How does Fairtrade actually work?

It all begins with the farmers and workers in developing countries forming cooperatives. Around the world, about 80% of farmers only have around 2.5 acres of land—we call these farmers smallholders. By working together, smallholders become stronger and have more power to negotiate terms of trade.

If the cooperative decides they want to become Fairtrade certified, they have to go through a process and agree to meet certain standards. These standards concern governance, working conditions, human rights, child protection, environmental management and gender equality. Fairtrade has the most robust and heavily audited processe of any ethical label; which is why it is globally the most recognized and trusted.

Once certified, the cooperative can trade worldwide, but any buyer purchasing Fairtrade products must pay (at least) the Fairtrade Minimum Price. This price is set by Fairtrade and considers what the farmer needs to earn to receive a living wage to cover the cost of production—which is often much higher than the market price.

In addition, the producers also receive a Fairtrade Premium payment which goes to the cooperative. Together, they decide how to spend that money to benefit their community—usually, it pays for things like drinking water wells, schools, hospitals or farming equipment.

How does Fairtrade help the environment?

Despite producing food that most people consume every day, farmers in developing countries are some of the most marginalised people in the world. And, they are also the most affected by climate change (despite being least responsible for causing it).

Fairtrade has always believed there can be no climate justice without trade justice. Choosing Fairtrade prioritises supply chain workers’ rights and helps farmers adapt to, and mitigate against, the effects of climate change by supporting biodiversity and environmentally friendly farming. 

For farms to be able to sell their products as Fairtrade, they have to protect forests, reduce their climate emissions, energy and water consumption, and minimize the use of pesticides and fertilisers (amongst other things).

Buying Fairtrade is one-way consumers can be part of the solution, not part of the problem.

How can we tell if something really is Fairtrade?

Look for the Fairtrade mark. It’s usually on coffee, tea, chocolate or cotton products. If you look closely, you’ll see it’s a farmer waving. If it doesn’t have that mark, it’s not Fairtrade, even if they use words that suggest sustainability. 

Ethical consumerism is a rapidly growing movement, but it comes with an increase in the number of ethical labels and fair-washing. While we applaud every attempt to make a difference, it’s important to note that not all ethical labels are equal in the benefits they achieve for women, children and the environment. And, many claims are not verified. As consumers, we need to consider our options carefully.

The Fairtrade mark is your assurance that every step involved in making that product was done as fairly as possible.

Does Fairtrade only support farmers?

To have the Fairtrade mark on your product, you must work with us to ensure every part of your supply chain is independently audited and shown to be fair. For coffee, that means that farmers need to be treated fairly, but so do the people hulling, drying, packing, transporting and roasting the coffee.

What does it mean if a product is not Fairtrade?

If a product isn’t certified as Fairtrade, you can’t be sure the people within its supply chain were treated fairly. That’s something we don’t think about enough in our daily decision-making, but it’s important. Consider chocolate — 60% of the world’s cocoa is produced in Ghana and the Ivory Coast, where around 1.5 million children work in slavery.

Fairtrade is different to other ethical labels because every decision we make is considered through the lens of producer ownership and benefits. Fairtrade gives power directly to farmers because they own 50% of the organization (which today is worth over $15 billion USD in retail sales per year). That means they get an equal say in the system’s decision-making. No other global sustainability standard is owned and managed by producers for producers.

Fairtrade is the only label that provides a minimum price for every product we deal with and focuses on a living wage. We also pay the highest premiums and require good governance and democracy through the implementation of that premium.

Why should we buy Fairtrade?

Ultimately, if all global trade was conducted on Fairtrade terms, the Planet would already be infinitely more sustainable. The more people support Fairtrade products like chocolate, coffee, flowers and cotton the more all communities benefit. Small decisions can make a big difference.

My hopes are that more and more people will recognise the Fairtrade mark and reward the businesses who chose to be part of the most robust ethical trade system in the world.  

I want to see trade transformed so that consumer choices are truly benefitting people and the planet.

To learn more about Fairtrade brands we love and why we think they are ace, head HERE.

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