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105-530: The aim of FINE is to enable these networks and their members to cooperate on: FINE is an informal working group. It has no formal structure and no decision-making power. Meetings are held as required. Preparation, hosting and facilitation of the meetings rotates between members. Decisions are taken by the boards of the FINE members. Since April 2004 FINE has run a fair trade advocacy office in Brussels . Its role

210-678: A certified fair trade producer , the primary cooperative and its member farmers must operate to certain political standards, imposed from Europe. FLO-CERT, the for-profit side, handles producer certification, inspecting and certifying producer organizations in more than 50 countries in Africa, Asia, and Latin America. In the fair trade debate there are many complaints of failure to enforce these standards, with producers, cooperatives, importers, and packers profiting by evading them. There remain many fair trade organizations that adhere more or less to

315-458: A "feel good" movement. Because the movement has an established history, it is not just a fad. It raises awareness about an issue and offers a solution. The solution is an easy one for college students to handle: paying about five cents more for a cup of coffee or tea. Worldshops, or fair trade shops, are specialized retail outlets that offer and promote fair trade products. Worldshops also typically organize educational fair trade activities and play

420-423: A 1.9% licensing fee at wholesale , the maximum that reaches the developing world, even if traders charge unrealistically low margins, is 50%, and a much smaller amount would reach the target farmers. The Fairtrade Foundation does not monitor how much of the premium paid to the exporting cooperatives reaches the farmer. Cooperatives incur certification and inspection fees, additional marketing costs, costs in meeting

525-733: A Fair Trade school or Fair Trade university emerged from the United Kingdom , where the Fairtrade Foundation maintains a list of colleges and schools that comply with the requirements to be labeled such a university. In order to be considered a Fair Trade University, a university must establish a Fairtrade School Steering Group. They must have a written and implemented, school-wide, fair trade policy. The school or university must be dedicated to selling and using Fair Trade products. They must learn and educate about Fair Trade issues. Finally, they must promote fair trade not only within

630-552: A definition of fair trade developed by FINE , an informal association of four international fair trade networks: Fairtrade Labelling Organizations International , World Fair Trade Organization (WFTO), Network of European Worldshops and European Fair Trade Association (EFTA). Fair trade, by this definition, is a trading partnership based on dialogue, transparency and respect, that seeks greater equity in international trade. Fair trade organizations, backed by consumers, support producers, raise awareness and campaign for changes in

735-407: A detailed description about what fair trade is. They could, however, identify fair trade based on some of its possible benefits to their community. When asked, farmers responded that fair trade has had a positive effect on their lives and communities. They also wanted consumers to know that fair trade is important for supporting their families and their cooperatives . Some producers also profit from

840-423: A few cases the criticisms presented are assertions with little or no credible evidence to support them. These claims have themselves been criticized on matters of fact, theory, methodology, use of evidence and incorrect citations. One study concluded that benefits of fair trade to producers were close to zero because there was an oversupply of certification, and only a fraction of produce classified as Fair Trade

945-459: A higher price per pound but a lower net income because of higher costs and lower yields. Some critics argue that there have been few fair trade impact studies to confirm the benefits claimed and there have been calls for more evaluations as the movement has grown. A 2009 literature review found 33 studies that met the criteria for impact studies. Griffiths (2011) says that few meet the normal standards for an impact evaluation , such as comparing

1050-423: A lesser extent, North America. Some felt that these shops were too disconnected from the rhythm and the lifestyle of contemporary developed societies. The inconvenience of going to them to buy only a product or two was too high even for the most dedicated customers. The only way to increase sale opportunities was to offer fair trade products where consumers normally shop, in large distribution channels. The problem

1155-415: A process of convergence among "LIs" ("Labeling Initiatives") led to the creation of Fairtrade Labelling Organizations International, an umbrella organization whose mission is to set fair trade standards, support, inspect, and certify disadvantaged producers, and harmonize the fair trade message across the movement. In 2002, FLO launched an International Fairtrade Certification Mark. The goals were to improve

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1260-867: A product they think ethically suspect. However, the opposite has been argued, that a more participatory and multi-stakeholder approach to auditing might improve the quality of the process. Some people argue that these practices are justifiable: strategic use of labeling may embarrass (or encourage) major suppliers into changing their practices. They may bring to light corporate vulnerabilities that activists can exploit. Or they may encourage ordinary people to get involved with broader projects of social change. Volunteers may do unpaid work for fair trade firms, or promote fair trade organizations in schools and local governments, often without full awareness that these are not non-profit organizations. Davies and Crane report that Day Chocolate "made considerable use of unpaid volunteer workers for routine tasks, many of whom seemed to be under

1365-552: A role in trade justice and other North-South political campaigns . Worldshops are often not-for-profit organizations run by local volunteer networks. The movement emerged in Europe and a majority of worldshops are still based on the continent, but worldshops also exist in North America, Australia, and New Zealand. Fair trade debate The fair trade debate concerns the ethics and economic implications of fair trade ,

1470-408: A sales value ratio of 80% handcrafts to 20% agricultural goods was the norm, in 2002 handcrafts amounted to 25% of fair trade sales while commodity food was up at 69%. Sales of fair trade products only took off with the arrival of the first Fairtrade certification initiatives. Although buoyed by growing sales, fair trade had been generally confined to small worldshops scattered across Europe and, to

1575-538: A simple choice while being spared these burdens and expenses. Consumers of fair trade products usually make the intentional choice to purchase fair trade goods based on attitude , moral norms, perceived behavioral control and social norms. It is useful to include of measure of moral norms to improve the predictive power of intentions to buy fair trade over the basic predictors, like attitude and perceived behavioral control. University students have significantly increased their consumption of fair trade products over

1680-613: A standard-setting body ( Fairtrade International ) and a certification body ( FLO-CERT ), the system involves independent auditing of producers and traders to ensure the standards are met. For a product to carry either the International Fairtrade Certification Mark or the Fair Trade Certified Mark , it must come from FLO-CERT inspected and certified producer organizations. The crops must be grown and harvested in accordance with

1785-591: A term for an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships. The benefits of fair trade for farmers and workers can vary considerably and the social transformation impacts also vary around the world. However the main concerns from critics is that fair trade may give an unfair advantage to some producers over others. Fairtrade researcher Alastair Smith argues that while some criticisms are grounded in acceptable standards of evidence (and deserve serious attention), others are less well elaborated, and that in

1890-452: A third of their output as fair trade, because of lack of demand, and sell the rest at world prices. The exporting cooperative can spend the money in several ways. Some go to meeting the costs of conformity and certification: as they have to meet fair trade standards on all their produce, they have to recover the costs from a small part of their turnover, sometimes as little as 8%, and may not make any profit. Some meet other costs. Some

1995-412: A variety of marketing strategies . Most fair trade marketers believe it is necessary to sell the products through supermarkets to get a sufficient volume of trade to affect the developing world. In 2018, nearly 700,000 metric tons of fair-trade bananas were sold worldwide, with the next largest fair-trade commodity being cocoa beans (260,000 tons) then coffee beans (207,000 tons). The biggest product in

2100-561: Is a visible way that these farmers are different from their neighbors and it influences the way they farm. They place importance on natural growing methods. Fair trade farmers are also more likely to attribute their higher prices to the quality of their products rather than fair market prices. Fairtrade labelling (usually simply Fairtrade or Fair Trade Certified in the United States) is a certification system that allows consumers to identify goods that meet certain standards. Overseen by

2205-519: Is difficult. There is a difference between impact studies and case studies. Case studies are valuable for, among other things, researching specific systems and sub-systems, constructing models, and identifying problems. However, the impacts noted cannot be extrapolated generally. For instance, if a hundred dairy farms lose money, this does not mean that all or most dairy farms do. There are a lot of case studies on Fairtrade, but many are erroneously referred to as impact studies. One reason for low prices

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2310-456: Is illustrated with the example of Vietnam paying its coffee farmers above the world market price in the 1980s, planting much coffee, then flooding the world market in the 1990s. Smith (2010) questioned the relevance of the Vietnam example, and Griffiths later published a response. Low prices may also occur because the fair trade marketing system provides more opportunities for corruption than

2415-473: Is no evidence that Fairtrade farmers get higher prices on average.Farmers are allegedly paid more by traders than by Fairtrade cooperatives while others state that they were paid less. Few such anecdotes address the problems of price reporting in developing world markets, or appreciate the complexity of different price packages. A different price package may or may not include credit, harvesting, transport, processing, etc. Cooperatives typically average prices over

2520-463: Is rarely possible to determine how much extra is charged and so how much of that premium reaches the producers. In a very few cases, it has been possible to find out. One British café chain was passing less than one percent of the extra charged to the exporting cooperative; in Finland, Valkila, Haaparanta, and Niemi found that consumers paid much more for Fairtrade, but that only 11.5% of that reached

2625-416: Is spent on social projects such as building schools, health clinics and baseball pitches. Sometimes there is money left over for the farmers. The cooperatives sometimes pay farmers a higher price than farmers do, sometimes less, but there is no evidence on which is more common. The marketing system for fair trade and non-fair trade coffee is identical in the consuming and developing countries, using mostly

2730-412: Is spent. These premiums usually go towards socioeconomic development, wherever the producers or producer-groups see fit. Within producer-groups, the decisions about how the social premium will be spent are handled democratically, with transparency and participation . Producers and producer-groups spend this social premium to support socioeconomic development in a variety of ways. One common way to spend

2835-479: Is that Fairtrade farmers are forced to sell through a monopsonist cooperative, which may be inefficient or corrupt. They cannot choose the buyer who offers the best price, or switch when their cooperative is going bankrupt. Fairtrade deviates from the free market ideal of some economists. Brink calls fair trade a "misguided attempt to make up for market failures " that encourages market inefficiencies and overproduction . Sometimes goods are overproduced, leading to

2940-614: Is to coordinate the advocacy activities of fair trade proponents at both the European and the international levels. The aim of the office is to step up public support for fair trade and to speak out for trade justice . In 2001, FINE members agreed the following definition of fair trade, on which to base their work: " 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

3045-487: Is used in all these meanings in key documents. In practice, when price and credit are discussed, "producer" means the exporting organization, "For small producers' organizations, payment must be made directly to the certified small producers' organization". and "In the case of a small producers' organization [e.g. for coffee], Fairtrade Minimum Prices are set at the level of the Producer Organization, not at

3150-456: Is weak. Labourers on Fairtrade farms in Peru are paid less than the minimum wage; some non-Fairtrade coffee is sold as Fairtrade; "the standards are not very strict in the case of seasonally hired labour in coffee production"; "some fair trade standards are not strictly enforced"; and supermarkets may avoid their responsibility. In 2006, a Financial Times journalist found that all ten out of

3255-654: The Earth Charter and the application of fair trade principles, and several upper-level anthropology courses focused on fair trade. In 2010, the University of California, San Diego became the second Fair Trade University in the United States. UC San Diego considered the efforts of the Fairtrade Foundation in the UK, but wanted to be more detailed about how their declaration as a Fair Trade University would change

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3360-570: The Fairtrade Schools Scheme . In 2011, more than 1.2 million farmers and workers in more than 60 countries participated in Fairtrade International's fair trade system, which included €65 million in fairtrade premium paid to producers for use developing their communities. Some criticisms have been raised about fair trade systems. One 2015 study concluded that producer benefits were close to zero because there

3465-523: The Mennonite Central Committee (MCC), and SERRV International were the first, in 1946 and 1949 respectively, to develop fair trade supply chains in developing countries. The products, almost exclusively handicrafts ranging from jute goods to cross-stitch work, were mostly sold in churches or fairs. The goods themselves had often no other function than to indicate that a donation had been made. The current fair trade movement

3570-766: The United Nations charter of human rights , a fair price that covers the cost of production and facilitates social development, and protection of the environment. The Fairtrade certification also attempts to promote long-term business relationships between buyers and sellers, crop pre-financing, and greater transparency throughout the supply chain. The Fairtrade certification system covers a growing range of products, including bananas, honey, coffee, oranges, Cocoa bean, cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea and wine. Companies offering products that meet Fairtrade standards may apply for licences to use one of

3675-416: The trade justice movement have also criticized fair trade for focusing too much on individual small producer groups without advocating trade policy changes that would have a larger impact on disadvantaged producers' lives. RFI correspondent Jean-Pierre Boris championed this view in his 2005 book Commerce inéquitable . Political criticisms of Fairtrade come from both the left and the right. Some believe

3780-775: The (false) impression that they were helping out a charity. Not only might one question the sometimes quite excessive use of unpaid labour in a for-profit organisation, but the management team at Day appeared to have no intention of correcting the obvious misapprehensions of the volunteers. However, this did not appear to be acknowledged as a potential ethical problem at Day." There have been complaints that Fairtrade standards are inappropriate and may harm producers, sometimes imposing months of additional work for little return. Christian Jacquiau and Paola Ghillani (who spent four years as president of Fairtrade Labelling Organizations) claim that adherence to fair trade standards by producers has been poor and that enforcement of standards by Fairtrade

3885-614: The Canadian Student Fair Trade Network (Canada), or Fair Trade Campaigns (USA), which also houses Fair Trade Universities and Fair Trade Schools. The involvement of church organizations has been and continues to be an integral part of the fair trade movement: The first attempts to commercialize fair trade goods in markets in the global north were initiated in the 1940s and 1950s by religious groups and various politically oriented non-governmental organizations (NGOs). Ten Thousand Villages, an NGO within

3990-506: The Earth Charter and created a Campus Sustainability Plan to align with the efforts of becoming a Fair Trade University. The University of Wisconsin-Oshkosh also offers courses in different disciplines that implement fair trade learning. They offer a business course with a trip to Peru to visit coffee farmers, an environmental science class that discusses fair trade as a way for cleaner food systems, an English course that focuses on

4095-556: The Fairtrade Certification Marks for those products. The International Fairtrade Certification Mark was launched in 2002 by FLO, and replaced twelve Marks used by various Fairtrade labelling initiatives. The new Certification Mark is currently used worldwide (with the exception of the United States). The Fair Trade Certified Mark is still used to identify Fairtrade goods in the United States. The fair trade industry standards provided by Fairtrade International use

4200-583: The Fairtrade political standards, and possibly costs arising from the monopoly power of the cooperative. Farmers also incur additional production costs on their production, even if only a small amount is sold at Fairtrade prices. Over the years, Fairtrade producers have been able to sell only 18% to 37% of their output as Fairtrade certified, selling the rest without certification at market prices. While both proponents and opponents of Fairtrade acknowledge this problem, there are scarce economic studies presenting

4305-419: The actual revenues of Fairtrade cooperatives and how they spend their money. Weber (2006) examined the additional marketing costs of some cooperatives and found, for example, that "after six years Oro Verde can cover only 70 percent of its [additional marketing] costs with its current income stream" and that the cooperative needs to double its current annual export volume in order to sustain its management team. At

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4410-429: The average consumer to take a transactional decision that he would not have taken otherwise" or (c) "fails to identify the commercial intent of the commercial practice… [which] causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise." Griffiths (2011) points to false claims that Fairtrade producers get higher prices, the almost universal failures to disclose

4515-412: The before and after situation, having meaningful control groups , and allowing for the facts that Fairtrade recruits farmers who are already better off, that a Fairtrade cooperative receives aid from other organizations (government departments, aid agencies, donor countries, and NGOs ), and that Fairtrade may harm other farmers. Other methodological problems arise in sampling, in comparing prices, and from

4620-597: The belief that this helps the very poor. Critics of the Fairtrade brand have argued that the system diverts profits from the poorest farmers, that the profit is received by corporate firms, and that this causes "death and destitution". Evidence suggests that little of the extra money paid by consumers actually reaches the farmers. The Fairtrade Foundation does not monitor how much extra retailers charge for Fairtrade goods. Furthermore, retailers almost never sell identical Fairtrade and non-Fairtrade lines side by side, so it

4725-444: The consumers providing the money may not agree with. These critics also state that the unorthodox marketing system imposed, which aims to replace capitalism, may not tie in with the objectives of producers, consumers, importers, or retailers. Booth says that the selling techniques used by some sellers and supporters of Fairtrade are bullying, misleading, and unethical. Boycott campaigns and other pressure force sellers to stock

4830-582: The cooperative, other than receiving a better price for their coffee. Many farmers around the world are unaware of fair trade practices that they could be implementing to earn a higher wage. Coffee is one of the most highly traded commodities in the world, yet the farmers who grow it typically earn less than $ 2 a day. When surveyed, farmers from Cooperativa Agraria Cafetalera Pangoa (CAC Pangoa) in San Martín de Pangoa, Peru, could answer positively that they have heard about fair trade, but were not able to give

4935-407: The criminal offence of Unfair Trading is committed if (a) advertising or selling information "contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct", (b) "it omits material information that the average consumer needs… and thereby causes or is likely to cause

5040-499: The current fair trade system, but some farmers, such as the Mazaronquiari group from CAC Pangoa, desire yet a higher price for their products in order to live a higher quality of life. A component of trade is the social premium that buyers of fair trade goods pay to the producers or producer-groups of such goods. An important factor of the fair trade social premium is that the producers or producer-groups decide where and how it

5145-414: The defining characteristic of ATOs is equal partnership and respect–partnership between the developing region producers and importers, shops, labelling organizations, and consumers. Alternative trade "humanizes" the trade process–making the producer-consumer chain as short as possible so that consumers become aware of the culture, identity, and conditions in which producers live. All actors are committed to

5250-443: The developing world, it is common for small-scale farmers to have only one or two buyers for their commodity products. Prices thus can be set by the buyers along with quality criteria. Normally buyers do not provide transparency as to the weighing and grading of product. Unless the buyers are linked to a quality supply chain (such as a fair trade or organic supply chain), the buyers normally do not provide any capacity-building to improve

5355-647: The emphasis on the establishment of fair trade relations with the developing world. 1965 saw the creation of the first alternative trading organization (ATO): that year, British NGO Oxfam launched "Helping-by-Selling", a program that sold imported handicrafts in Oxfam stores in the UK and from mail-order catalogues. By 1968, the Whole Earth Catalog was connecting thousands of specialized merchants, artisans, and scientists directly with consumers who were interested in supporting independent producers, with

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5460-403: The exporter. Kilian, Jones, Pratt, and Villalobos say U.S. Fairtrade coffee gets US$ 5 per pound extra at retail, of which the exporter receives only 2%. Mendoza and Bastiaensen calculated that in the UK only 1.6% to 18% of the extra charged for one product line reached the farmer. Critics claim that many counter-examples would be needed to show that these are not typical. Since Fairtrade charges

5565-433: The extra price charged for Fairtrade products, to disclose how much of this actually reaches the developing world, to disclose what this is spent on in the developing world, to disclose how much (if any) reaches farmers, and to disclose the harm that Fairtrade does to non-Fairtrade farmers. He also points to the failure to disclose when "the primary commercial intent" is to make money for retailers and distributors Segments of

5670-477: The fact that the social projects of Fairtrade do not usually aim to produce economic benefits. Due to the snapshot nature of research, few studies include how long producers have been involved with fair trade. A further problem is that most studies ignore the agency and perspective of producer decision makers, especially those farmers excluded from the Fairtrade system. Capturing such socially constructed benefits, including that of confidence in business relationships,

5775-471: The fair trade movement also varies around the world. A study of coffee growers in Guatemala illustrates the effect of fair trade practices on growers. In this study, thirty-four farmers were interviewed. Of those thirty-four growers, twenty-two had an understanding of fair trade based on internationally recognized definitions, for example, describing fair trade in market and economical terms or knowing what

5880-637: The fair trade movement that aims "to contribute to the alleviation of poverty in developing regions of the world by establishing a system of trade that allows marginalized producers in developing regions to gain access to developed markets." ATOs have fair trade at the core of their mission and activities, using it as a development tool to support disadvantaged producers and to reduce poverty and combining their marketing with awareness-raising and campaigning. ATOs are often based on political and religious groups, though their secular purpose precludes sectarian identification and evangelical activity. According to EFTA,

5985-479: The fair trade system is not radical enough. French author Christian Jacquiau, in his book Les coulisses du commerce équitable , calls for stricter fair trade standards and criticizes the fair trade movement for working within the current system (i.e. partnerships with mass retailers, multinational corporations , etc.) rather than establishing a new fairer, fully autonomous trading system. Jacquiau also supports significantly higher fair trade prices in order to maximize

6090-413: The financing of scholarships from funding from their fair trade social premium. In terms of education, the social premium can be used to build and furnish schools too. Most fair trade import organizations are members of, or certified by, one of several national or international federations. These federations coordinate, promote, and facilitate the work of fair trade organizations. The following are some of

6195-484: The first instance, and subsequently command a particular ethical vision as the truth." Some free market criticisms of Fairtrade appear to be linked to right wing political approaches, but this does not mean that their analysis in this particular case is unacceptable to mainstream economists. Key ideas of fair trade include transparency and capacity building , as outlined by the WFTO fair trade principles. Particularly in

6300-408: The global market. Economists assert that, as the demand for coffee is highly inelastic , an increased price for Fairtrade which produces a small increase in supply means a large fall in market price. In addition, the Fairtrade minimum price means that when the world market price collapses, it is the non-Fairtrade farmers, particularly the poorest, who have to cut down their coffee trees. This argument

6405-621: The goal of bypassing corporate retail and department stores. The Whole Earth Catalog sought to balance the international free market by allowing direct purchasing of goods produced primarily in the U.S. and Canada but also in Central and South America. In 1969, the first worldshop opened its doors in the Netherlands. It aimed at bringing the principles of fair trade to the retail sector by selling almost exclusively goods produced under fair trade terms in "underdeveloped regions". The first shop

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6510-400: The handicrafts market forced fair trade supporters to rethink their business model and their goals. Moreover, several fair trade supporters were worried by the effect on small farmers of structural reforms in the agricultural sector as well as the fall in commodity prices. Many came to believe it was the movement's responsibility to address the issue and remedies usable in the ongoing crisis in

6615-573: The higher income or middle income developing countries, such as Costa Rica and Mexico, with relatively few in the poorest countries. Mexico has 70 times the GNP per capita as Sierra Leone, and much larger coffee farms. The minimum wage of agricultural workers in Peru is US$ 3 per day and the average income of Fairtrade farmers in Bolivia was US$ 900/year, much higher than normal agricultural incomes in Africa and much of Asia. Critics say this diverts money from

6720-464: The impact, as most producers only sell a portion of their crop under fair trade terms. It has been argued that the FairTrade system is too rooted in a Northern consumerist view of justice which Southern producers do not participate in. "A key issue is therefore to make explicit who possesses the power to define the terms of Fairtrade, that is who possesses the power to determine the need of an ethic in

6825-423: The implementation of certain fair trade standards can cause greater inequalities in some markets where these rigid rules are inappropriate for the specific market. In the fair trade debate there are complaints of failure to enforce the fair trade standards, with producers, cooperatives, importers, and packers profiting by evading them. One proposed alternative to fair trade is direct trade , which eliminates

6930-461: The indirect benefits of fair trade practices. Fair trade cooperatives create a space of solidarity and promote an entrepreneurial spirit among growers. When growers feel like they have control over their own lives within the network of their cooperative, it can be empowering. Operating a profitable business allows growers to think about their future, rather than worrying about how they are going to survive in poverty. Overall, farmers are satisfied with

7035-442: The industry. In subsequent years, fair trade agricultural commodities played an important role in the growth of many ATOs: successful on the market, they offered a source of income for producers and provided alternative trading organizations a complement to the handicrafts market. The first fair trade agricultural products were tea and coffee, followed by: dried fruits, cocoa, sugar, fruit juices, rice, spices and nuts. While in 1992,

7140-527: The largest: In 1998, the four federations listed above joined together as FINE , an informal association whose goal is to harmonize fair trade standards and guidelines, increase the quality and efficiency of fair trade monitoring systems, and advocate fair trade politically. Student groups have also been increasingly promoting fair trade products. Although hundreds of independent student organizations are active worldwide, most groups in North America are either affiliated with United Students for Fair Trade (USA),

7245-633: The last several decades. Women college students have a more favorable attitude than men toward buying fair trade products and they feel more morally obligated to do so. Women are also reported to have stronger intentions to buy fair trade products. Producers organize and strive for fair trade certification for several reasons, either through religious ties, wants for social justice, wants for autonomy, political liberalization or simply because they want to be paid more for their labor efforts and products. Farmers are more likely to identify with organic farming than fair trade farming practices because organic farming

7350-430: The level of individual producers (members of the organization)" which means that the "producer" here is halfway up the marketing chain between the farmer and the consumer. The part of the standards referring to cultivation, environment, pesticides, and child labour has the farmer as "producer". An alternative trading organization (ATO) is usually a non-governmental organization (NGO) or mission-driven business aligned with

7455-463: The market in terms of units was fair-trade flowers, with over 825 million units sold. To gain a licence to use the FAIRTRADE mark, businesses need to apply for products to be certified by submitting information about their supply chain. Then they can have individual products certified depending on how these are sourced. Coffee packers in developed countries pay a fee to the Fairtrade Foundation for

7560-466: The normal marketing system, and less possibility of, or incentive for, controlling it. Corruption has been noted in false labeling of coffee as Fairtrade by retailers and by packers in the developing countries, importers paying exporters less than the Fairtrade price for Fairtrade coffee, failure by importers to provide the credit and other services specified, theft or preferential treatment for ruling elites of cooperatives, and not paying laborers

7665-556: The notion of fair trade practices as "moral economies". The presence of labeling gives consumers the feeling of "doing the right thing" with a simple purchase. Labeling practices place the burden of getting certification on the producers in the Global South, furthering inequality between the Global North and the Global South. The process of securing certification is burdensome and expensive. Northern consumers are able to make

7770-459: The original objectives of fair trade and that market products through alternative channels where possible and through specialist fair trade shops, but they have a small proportion of the total market. Fair trade benefits workers in developing countries, considerably or just a little. The nature of fair trade makes it a global phenomenon; therefore, there are diverse motives for group formation related to fair trade. The social transformation caused by

7875-516: The other donors. Some research indicates that the implementation of certain fair trade standards can cause greater inequalities in some markets where these rigid rules are inappropriate for the specific market. The Fairtrade criteria presuppose a set of political values as to what economic, environmental, and social problems exist and how they are to be solved. Critics say it is unethical to bribe developing world producers to act according to political viewpoints that they may not agree with, and that

7980-492: The overhead of the fair trade certification and allows suppliers to receive higher prices much closer to the retail value of the end product. Some suppliers use relationships started in a fair trade system to autonomously springboard into direct sales relationships they negotiate themselves, whereas other direct trade systems are supplier-initiated for social responsibility reasons similar to a fair trade systems. A large number of fair trade and ethical marketing organizations employ

8085-530: The payment of higher prices to exporters with improved social and environmental standards . The movement focuses in particular on commodities, or products that are typically exported from developing countries to developed countries but is also used in domestic markets (e.g., Brazil, the United Kingdom and Bangladesh), most notably for handicrafts , coffee , cocoa , wine, sugar, fruit, flowers and gold. Fair trade labelling organizations commonly use

8190-553: The poorest farmers. Fairtrade supporters boast of "the honeypot effect": that cooperatives which become Fairtrade members then attract additional aid from other NGO charities, government, and international donors as a result of their membership. Typically this results in six to twelve other donors. Critics point out that this inevitably means that resources are being removed from other, poorer, farmers. It also makes it difficult to discern whether any positive or negative changes can be attributed specifically to either Fairtrade or one of

8295-554: The principle of alternative trade, the need for advocacy in their working relations , and the importance of awareness-raising and advocacy work. Examples of such organisations are Ten Thousand Villages, Greenheart Shop, Equal Exchange , and SERRV International in the U.S. and Equal Exchange Trading , Traidcraft , Oxfam Trading, Twin Trading , and Alter Eco in Europe as well as Siem Fair Trade Fashion in Australia. The concept of

8400-518: The quality of the product and thus gain a higher price. Fair trade, when practiced well, must provide full transparency in terms of pricing, weighing, and quality standards. As the end goal is a superior quality product in all ways, good fair trade organizations provide good capacity building in terms of best production, harvest, and post-harvest practices. Hayes identifies limitations in LeClaire's (2002) formulation of this, both using what they agree

8505-411: The right to use the brand and logo. Packers and retailers can charge as much as they want for the coffee. The coffee has to come from a certified fair trade cooperative, and there is a minimum price when the world market is oversupplied. Additionally, the cooperatives are paid an additional 10c per pound premium by buyers for community development projects. The cooperatives can, on average, sell only

8610-615: 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." FINE members further agreed to define fair trade 's strategic intent as: Fair trade Fair trade is a term for an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships. The fair trade movement combines

8715-453: The rules and practice of conventional international trade. There are several recognized fair trade certifiers , including Fairtrade International (formerly called FLO, Fairtrade Labelling Organizations International), IMO, Make Trade Fair , and Eco-Social. Additionally, Fair Trade USA , formerly a licensing agency for the Fairtrade International label, broke from the system and implemented its own fair trade labelling scheme, which expanded

8820-476: The sale of a fair trade product in a non-fair trade market, causing potential issues with customers who are paying for fair trade products despite the fact that the same products are available for lower amounts. Critics argue that Fairtrade, but not all other fair trade businesses, harms non-Fairtrade farmers. Fairtrade claims that its farmers are paid higher prices and are given special advice on better techniques, both of which lead to increased output being sold on

8925-471: The same importing, packing, distributing, and retailing firms used worldwide. Some independent brands operate a "virtual company", paying importers, packers and distributors, and advertising agencies to handle their brand, for cost reasons. In the producing country, fair trade is marketed only by fair trade cooperatives, while other coffee is marketed by fair trade cooperatives (as uncertified coffee), by other cooperatives and by ordinary traders. To become

9030-702: The school but throughout the wider community. A Fair Trade University develops all aspects of fair trade practices in their coursework. In 2007, the Director of the Environmental Studies program at the University of Wisconsin-Oshkosh , David Barnhill, endeavored to become the first Fair Trade University. This received positive reactions from faculty and students. To begin, the university agreed that it would need support from four institutional groups—faculty, staff, support staff, and students—to maximize support and educational efforts. The University endorsed

9135-509: The scope of fair trade to include independent smallholders and estates for all crops. In 2008, Fairtrade International certified approximately (€3.4B) of products. On 6 June 2008, Wales became the world's first Fair Trade Nation ; followed by Scotland in February 2013. The fair trade movement is popular in the UK, where there are over 500 Fairtrade towns , 118 universities, over 6,000 churches, and over 4,000 UK schools registered in

9240-490: The social premium in its entirety on themselves, but the rest invest in public goods, like paying for teachers' salaries, providing a community health care clinic, and improving infrastructure, such as bringing in electricity and bettering roads. Farmers' organisations that use their social premium for public goods often finance educational scholarships. For example, Costa Rican coffee cooperative Coocafé has supported hundreds of children and youth at school and university through

9345-414: The social premium is and how their cooperative has used it. Three growers explained a deep understanding of fair trade, showing a knowledge of both fair market principles and how fair trade affects them socially. Nine growers had erroneous or no knowledge of Fair Trade. The three growers who had a deeper knowledge of the social implications of fair trade all had responsibilities within their cooperatives. One

9450-463: The social premium of fair trade is to privately invest in public goods that infrastructure and the government are lacking in. These include environmental initiatives, public schools, and water projects. At some point, all producer-groups re-invest their social premium back into their farms and businesses. They buy capital, like trucks and machinery, and education for their members, like organic farming education. Thirty-eight percent of producer-groups spend

9555-401: The specified minimum wage. Fair trade is profitable for traders in rich countries. It is also aimed at richer farmers: in order to join Fairtrade, cooperatives must meet quality and political standards which means their farmers must be relatively skillful and educated. Critics point out that these farmers are, therefore, far from the poorest farmers. The majority of Fairtrade suppliers are in

9660-419: The standards set by FLO International. The supply chain must be monitored by FLO-CERT, to ensure the integrity of the labelled product. Fairtrade certification purports to guarantee not only fair prices, but also ethical purchasing principles. These principles include adherence to ILO agreements such as those banning child and slave labour , guaranteeing a safe workplace and the right to unionise, adherence to

9765-497: The ten mills they visited had sold uncertified coffee to co-operatives as certified. It reported on "evidence of at least one coffee association that received Fairtrade certification despite illegally growing some 20 per cent of its coffee in protected national forest land. Another criticism is that false claims made for fair trade and the withholding of relevant information constitute Unfair Trading under EU law . Under EU law (Directive 2005/29/EC on Unfair Commercial Practices)

9870-400: The time they were losing money on their Fairtrade membership. FLO figures show that 40% of the money reaching the developing world is spent on "business and production," which includes the costs mentioned above as well as costs incurred by inefficiency and corruption in the cooperative or the marketing system. The rest is spent on social projects, rather than being passed on to farmers. There

9975-587: The visibility of the Mark on supermarket shelves, facilitate cross border trade, and simplify procedures for both producers and importers. The certification mark is used in more than 50 countries and on dozens of different products, based on FLO's certification for coffee, tea, rice, bananas, mangoes, cocoa, cotton, sugar, honey, fruit juices, nuts, fresh fruit, quinoa, herbs and spices, wine, footballs , etc. With ethical labeling, consumers can take moral responsibility for their economic decisions and actions. This supports

10080-504: The way on-campus franchises do business with the university. They required constant assessment and improvement. Being a Fair Trade University for UC San Diego is a promise between the university and the students about the continual effort by the university to increase the accessibility of fair trade-certified food and drinks and to encourage sustainability in other ways, such as buying from local, organic farmers and decreasing waste. Fair Trade Universities have been successful because they are

10185-714: The word "producer" in many different senses, often in the same specification document. Sometimes it refers to farmers, sometimes to the primary cooperatives they belong to, to the secondary cooperatives that the primary cooperatives belong to, or to the tertiary cooperatives that the secondary cooperatives may belong to but "Producer [also] means any entity that has been certified under the Fairtrade International Generic Fairtrade Standard for Small Producer Organizations, Generic Fairtrade Standard for Hired Labour Situations, or Generic Fairtrade Standard for Contract Production." The word

10290-486: The worldshops and into the mainstream, reaching a larger consumer segment and boosting fair trade sales significantly. The labeling initiative also allowed customers and distributors alike to track the origin of the goods to confirm that the products were really benefiting the producers at the end of the supply chain. The concept caught on: in ensuing years, similar non-profit Fairtrade labelling organizations were set up in other European countries and North America. In 1997,

10395-431: The year, so they may pay more or less than traders, depending on the day. Basset compares prices only where Fairtrade and non-Fairtrade farmers have to sell cotton to the same monopsonistic ginneries , which pay low prices. Prices would have to be higher to compensate farmers for the increased costs of producing Fairtrade. For instance, when Fairtrade encouraged Nicaraguan farmers to switch to organic coffee, they earned

10500-506: Was a manager, one was in charge of the wet mill, and one was his group's treasurer. These farmers did not have a pattern in terms of years of education, age, or years of membership in the cooperative; their answers to the questions, "Why did you join?" differentiate them from other members and explain why they have such an extensive knowledge of fair trade. These farmers cited switching to organic farming, wanting to raise money for social projects, and more training offered as reasons for joining

10605-489: Was actually sold on Fair Trade markets, just enough to recoup the costs of certification. A study published by the Journal of Economic Perspectives however suggests that Fair Trade does achieve many of its intended goals, although on a comparatively modest scale relative to the size of national economies. Consumers buy fair trade goods for a variety of reasons; some are willing to pay more for Fairtrade certified products in

10710-434: Was an oversupply of certification, and only a fraction of produce classified as fair trade was actually sold on fair trade markets, just enough to recoup the costs of certification. A study published by the Journal of Economic Perspectives , however, suggests that Fair Trade does achieve many of its intended goals, although on a comparatively modest scale relative to the size of national economies. Some research indicates that

10815-488: Was run by volunteers and was so successful that dozens of similar shops soon went into business in the Benelux countries, Germany, and other Western European countries. In the early 1980s, alternative trading organizations faced challenges: the novelty of fair trade products began to wear off, demand reached a plateau and some handicrafts began to look "tired and old fashioned" in the marketplace. The decline of segments of

10920-534: Was shaped in Europe in the 1960s. Fair trade during that period was often seen as a political gesture against neo-imperialism: radical student movements began targeting multinational corporations, and concerns emerged that traditional business models were fundamentally flawed. The slogan at the time, "Trade not Aid", gained international recognition in 1968 when it was adopted by the United Nations Conference on Trade and Development (UNCTAD) to put

11025-421: Was to find a way to expand distribution without compromising consumer trust in fair trade products and in their origins. A solution was found in 1988, when the first fair trade certification initiative, Max Havelaar , was created in the Netherlands under the initiative of Nico Roozen , Frans Van Der Hoff , and Dutch development NGO Solidaridad . The independent certification allowed the goods to be sold outside

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