Labels are useful tools, but they also can be ways of oversimplifying information. The Fair Trade label helps consumers identify products that have been created according to a transparent set of standards created and monitored by the global Fairtrade Labelling Organizations International. The labelling system provides a convenient, easily recognizable shorthand, but the intricacies of global trade are often more complex than a fixed set of standards.
The 10 guiding principles of the World Fair Trade Organization include transparency, respect for the environment, no child labor, no discrimination, fair payment and a good work environment. These principles express a vision of a trade paradigm based on equity and humanitarian principles. Paying fairly for products produced in developing nations helps to build broad-based prosperity, which improves the quality of life for growers and processors who are typically at the mercy of low prices paid by global commodity markets.
Fair Trade principles are expressed in a set of standards, such as specific price levels above the mainstream market rate and a requirement to reinvest profits in community services like education. These standards are verified by a handful of independent certification agencies worldwide, such as Fairtrade International and Fair Trade USA.
Fair Trade-certified products usually cost more than mainstream goods because of a commitment to pay growers above-market prices. Higher prices help ensure that growers and processors earn enough to support themselves and their families. But higher prices can be a deterrent to the overall success of Fair Trade industries because many consumers aren’t willing to pay the Fair Trade premium.
Certification also can be both a benefit and a liability. The third-party verification process allows customers to choose Fair Trade products with confidence. But certification can be expensive, especially for farmers in developing nations, negating some of the benefit they gain from earning higher prices.
The Fair Trade model specifies that producers will be paid a minimum price for their products. This price is well above the market average and pays for workers to earn a fairer wage than they could earn if they sold their crops for commodity prices. However, some argue that Fair Trade misses the mark. It often doesn’t cover the added expense of producing an artisan, high-quality product. Plus, some products that don’t meet specific Fair Trade standards are every bit as ethically sourced as products that do, and sometimes certified products fall short of what it really means to be fairly and sustainably traded.
In some industries, such as artisan coffee and craft chocolates, producers are moving beyond the guarantee of the Fair Trade label. These companies are working directly with the source to develop products that can fetch higher prices than Fair Trade by appealing to discriminating customers willing to pay even more for higher quality items. In return, the farmer gets more than just an insurance policy against the price of his or her chocolate or coffee. Rather, he or she gets direct access to the marketplace so he or she can enjoy the value of the product as it moves through the supply chain and to consumers down the line.