Fair trade is a market-based system that uses informed consumer support to influence international trade practices toward greater social and environmental sustainability. As a response to conventional trade systems, which have contributed to poverty and poor working conditions within developing countries, fair trade aims to build an alternative approach based on mutually beneficial relationships between producers and consumers.
Fair trade is a powerful tool that goes beyond charity and other aid programs. At its core, fair trade aims to empower marginalized producers in improving their own living conditions. With the proper resources, capacity, and key relationships, disadvantaged producers are able to earn their own means to a better life for themselves and their communities.
Principles of fair trade
Fair trade aims to empower producer communities by providing them with the means to improve their communities and their livelihoods by
- building stronger relationships between producers, consumers, and business
- ensuring farmers and producers are paid a fair price that accounts for a number of factors including cost of production and adequate living standards
- streamlining supply chains to reduce inefficiencies and create more direct trading relationships
- supporting producer organizations to improve their access to markets, tools, resources, and industry knowledge
- supporting communities by creating the means to invest in infrastructures such as health and education
- ensuring proper standards for working conditions, environmental sustainability, and respect for culture identity
History of Collaboration
The growth of fair trade represents a vast network of NGOs, importers, and producers that have created a vibrant forum for exchanging knowledge and ideas around equitable trade relationships.
It has also established the capacity for individuals to make more ethical purchasing decisions, and created the means for producers to improve their own livelihoods. It has also created opportunities for businesses to support these changes.
Fair trade began in 1946 when Edna Ruth Byler visited Puerto Rico as a missionary and discovered a community of women, living in abject poverty, with a talent for handicraft work. When Byler returned to the United States, she brought handcrafted goods made by these Puerto Rican women and sold them, returning the money directly to the producers. Byler’s continued work would eventually lead to the formation of Ten Thousand Villages in 1958, which is considered the largest retailer of fair trade goods in North America.
During the 1950s, similar projects developed. Oxfam UK began to sell crafts made by Chinese refugees working in Oxfam shops, which led to the formation of the first fair trade organization. A similar group formed in the Netherlands, and by 1969, shops began to open up in Europe selling mostly hand-crafted goods, but also cane sugar. These retailers became point-of-sale outlets for ethical goods, but they also became outlets for spreading awareness.
Throughout the 1960s and 70s, NGOs began to form in Northern and Southern countries based on the need to offer disadvantaged producers advice, assistance, and support. These relationships were based on partnerships of dialogue, transparency, and respect—and included the goal of building greater equity into international trade relationships.
The notion of fair trade grew through the work of NGOs in the north and south who worked to alleviate poverty in developing communities—often around handicrafts, which offered a valuable supplementary income to women in households with limited economic opportunities.
Fair trade organizations began to form, which allowed producers to organize, provided social services, and opened the flow of exports to northern countries. These relationships supported marginalized communities in progressive countries.
The 1960s was also a time when “Trade Not Aid” campaigns came about, which emphasized the need to move away from trade models where northern businesses were able to reap the benefits of trading relationships with the South, only to return small portions of this benefit in the form of development aid.
In 1973, the first “fairly traded” coffee was imported into the Netherlands from co-operatives in Guatemala. Soon, other food products were sold, opening new market channels for fair trade goods.
In 1980, the idea of a fair trade label developed. The label would allow consumers to differentiate products that were bought, traded, and sold in a manner that respected fair trade conditions. And in 1988, the Max Havelaar label was created in the Netherlands, a concept that would soon be established in other countries.
In 1997, Fairtrade Labelling International was created to set international fair trade standards, certify products, and perform audits to ensure compliance with standards.
Within the fair trade movement, co-operatives have played a large role in community development.
Co-operatives are business organizations owned by a group of individuals who operate for their own mutual benefit. They represent democratic, participatory structures where all members have a say in how the organization operates.
Co-operatives also allow producers to work together in developing the skills and training practices that are often unavailable in developing economies, yet necessary to compete within international markets. Membership within a co-operative also allows producers to work together in negotiating better prices for their products.
The fair trade system typically works to build the co-operative system as they provide an effective model for producer empowerment and ownership. Working with co-operatives also provides the means for democratic allocation of social premiums aimed at community and business development.