A Look at Fair Trade

The dark green labels on your McDonalds cup boasting “ethically sourced Arabica beans.” The frequent Cadbury YouTube ads touting ethical chocolate. The effort to highlight fair trade is becoming more frequent in our everyday lives. It should be a win-win to impress consumers and do better by the workers that supply our goods. With Fair Trade Day on May 8th, it’s important to take some time to recognize ethical consumption. Take a look at the methodology, goals and impact of fair trade.

What is Fair Trade?

In short, the concept of fair trade is:

  • Market prices that cover costs of producing products sustainably
  • Prices that are in a safe range of market price fluctuations
  • Decent working conditions, fair pay to workers, and a ban on discrimination, forced labour and child labour

The organization Fair Trade also established a system of additional funds. This is for businesses to invest in projects that improve the workers’ lives or the business. The Fair Trade seal on products will let consumers know they are supporting ethical production.

Fairtrade was a business strategy established in the 1950s. European and American travellers saw struggling local artisans and farmers. They would purchase the products and sell them for a higher price back home, then compensate the cooperatives with some extra profit. This seemed an agreeable system, but some began to exploit the struggling workers. It could be difficult to check if the money actually went back to workers or if anyone bothered to do anything about it. Founder of Fair Trade USA, Paul Rice, who worked with coffee farmers in Nicaragua, wanted to establish trade standards that could hold everyone accountable. Other fair trade organizations followed in suit. In some ways, it helped shine a light on the issue of ethical consumption. The Fair Trade seal was sought by corporations, serving as a good marketing strategy and satisfaction on the customers’ end for supporting better work conditions.

Fair Trade Programs

The Fair Trade International established codes for fair partnership between companies and farmers or artisans. The Fairtrade Minimum Price is an international minimum for various products. For example, the compensation for farmers is 15% of the commercial price for herbs and spices. An additional negotiated price is added on top of the 15% for secondary products, such as milk (from cows) and cereal (from grains). A quick skim through their standard code document breaks down prices for other products. The system of additional funds, called the Fairtrade Premium, is given to producers to enhance their lives or invest in a project. Funds to get health insurance, a bike, or building a nursery school for their children can greatly support these workers.

Another program is called the Nest Ethical Handcraft Program. Their focus is to support handcrafts and work not done in factories or farms. Mainly, they look out for women who work from home or in small workshops. In certain countries, it is not acceptable or safe for a woman to work outside. Standards and codes are used to outline fair hours of work, supply chain transparency, and a separate section on child advocacy and protection.

Transparency in the Business

This all sounds promising, and there are successful projects to show for it. However, there can be issues beneath the supposed satisfaction of the consumer and ethical treatment of producers. Certifying a producer takes months and heavy assessment, and with so many fair trade programs floating out there, what is the weight of being “fair trade certified?” Sometimes, the benefits do not go to all workers as intended. For example, a tea cooperative purchased modern toilets using their premium fund, but it was discovered only senior managers could use them. These slight flaws impact the guarantee of a fair trade seal. 

However, at the end of the day, it still makes a difference to educate yourself. Buying handcrafted gifts and checking the production can give you more peace of mind. Sincere partnerships between cooperatives and fair trade organizations can be beneficial. At the very least, there is some back and forth about the market’s stability with this concept in mind. For next time, a quick read about fair trade coffee or artisan goods may help us be more aware of what’s behind our consumerism.


“Fair Trade Pricing Table.” Fairtrade International, www.fairtrade.net/standard/minimum-price-info.

Haight, Colleen, and Colleen Haight is an assistant professor at San Jose State University. “The Problem With Fair Trade Coffee (SSIR).” Stanford Social Innovation Review: Informing and Inspiring Leaders of Social Change, ssir.org/articles/entry/the_problem_with_fair_trade_coffee.

“Key Benefits of Fairtrade.” Fairtrade International, www.fairtrade.net/about/key-benefits-of-fairtrade.

Shoenthal, Amy. “What Exactly Is Fair Trade, And Why Should We Care?” Forbes, Forbes Magazine, 14 Dec. 2018, www.forbes.com/sites/amyschoenberger/2018/12/14/what-exactly-is-fair-trade-and-why-should-we-care/?sh=40b05b147894.