Fairtrade: Frequently asked questions

Is there something you don't understand about Fairtrade, or want to know more about? Frequently asked questions about Fairtrade are answered on this page.

• What is fair trade?
  
  
• What's the difference between Fairtrade and Fair Trade?
  
  
• What's the difference between Fairtrade and ethically traded?
  
  
• Why isn't everything Fairtrade?
  
  
• What's Oxfam got to do with Fairtrade?
  
  
• What's Fairtrade got to do with Oxfam's trade campaigning?
  
  
• Fairtrade is all well and good, but what is being done to tackle the negative impact of food miles etc. on the environment?
  
  
• Why are Fairtrade products more expensive than non-Fairtrade ones?
  
  
• Does Fairtrade just mean that workers get paid a fair wage, or that they also receive a fair range of rights, benefits etc?
  
  

What is fair trade?

Fair trade promotes an alternative approach to conventional international trade. It is a trading partnership which aims to reduce poverty and increase sustainable development amongst excluded and disadvantaged producers. It seeks to do this by providing better trading conditions: a fair and stable price; a Fairtrade premium; pre-financing where requested; and commitment to long-term, more direct trading relationships.

One unique attribute of fair trade is that it brings consumers and producers closer together, and provides a way for consumers to benefit directly the lives of those producers through their purchasing.

What’s the difference between Fairtrade and Fair Trade?

Fairtrade

A Fairtrade-labelled product offers an independent guarantee that disadvantaged producers in the developing world are getting a better deal. Fairtrade products display the FAIRTRADE Mark, meaning that they meet internationally-recognised standards laid down by the international certification body Fairtrade Labelling Organisations International (FLO).

There are more than 3,000 Fairtrade-labelled products across the food and non-food categories, ranging from coffee, tea, nuts and rice to cotton and sports balls.

Fairtrade products provide a guarantee that producers receive a price covering the cost of production, and an extra premium which is invested in social or economic development projects such as schools, clinics, clean water supply, roads or investment back into their business.

While the stable price producers receive from Fairtrade is obviously crucial, the aspects of empowerment, access to markets, a stable trading relationship and so on are valued equally if not even more highly by Fairtrade-certified producers.

A fair price is one that allows farmers to feed and shelter their families, educate their children, buy the medicines they need and so on.

Fair Trade

Products which do not carry the FAIRTRADE Mark, but which have been produced by members of the International Fair Trade Association (IFAT), can be described as Fair Trade. IFAT, a membership association with more than 300 members in 70 countries, works by linking and promoting Fair Trade organisations and speaking out for justice in world trade. Each of IFAT’s member organisations is committed to upholding its nine Fair Trade standards, which cover everything from child labour and a fair price for goods to working conditions and the environment.

IFAT producers do not receive the extra Fairtrade premium - this is unique to the Fairtrade labelling system.

IFAT’s members tend to work with artisan and handicraft products, for which there are no Fairtrade labelling standards – hence the two complement one another.

What’s the difference between Fairtrade and ethically traded?

Fairtrade focuses on enabling disadvantaged or marginalised producers to access international markets and get a better deal from them. It goes beyond ensuring basic labour standards at the producer level to tackle the terms of trade for producers, and to provide them with a model that will enable them to strengthen their own organisations and tackle poverty by investing into their communities.

Ethical trade is primarily aimed at helping waged workers by ensuring decent minimum labour standards* in the production of goods and services.

For instance, Oxfam has been at the forefront of campaigning – for and promoting ethical trade for many years and is a founder member of the Ethical Trading Initiative (ETI) in the UK. The ETI is an alliance of companies, NGOs and trade union organisations working together to develop and implement corporate codes of practice relating to working conditions in supply chains.

* As defined by the International Labour Organisation (ILO).

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Why isn’t everything Fairtrade?

The FAIRTRADE mark can only be applied to products containing commodities for which there are internationally-agreed Fairtrade standards and certified producers. It takes much time and money to develop and agree these international criteria to ensure that new Fairtrade products really will benefit producers. The initial focus of Fairtrade was on traditional agricultural commodities, such as coffee and tea, but now Fairtrade standards have been extended to the likes of rice, seed cotton and sports balls.

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What’s Oxfam got to do with Fairtrade?

Oxfam was one of the pioneers of Fairtrade more than 40 years ago and has been involved in its successful growth in the UK ever since. In 1991, Oxfam helped to found Cafédirect, which is now the UK’s fourth-largest roast and ground coffee brand. In 1992 we co-founded the Fairtrade Foundation (with five other organisations), which licenses the use of the FAIRTRADE Mark in the UK. We continue to work closely with both of these organisations.

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What’s Fairtrade got to do with Oxfam’s trade campaigning?

On the high street, Fairtrade is a way for consumers to support producers in poor countries, and to have an impact on the way retailers do business, through their purchasing decisions.

For Oxfam, Fairtrade is one in wide range of strategies used to fight poverty. While it gives consumers an opportunity to use their purchasing power to tilt the balance in favour of the poor, on its own it can't fully address the crisis faced by the millions of small-scale farmers and producers whose livelihoods are threatened by low commodity prices and unfair competition from rich countries.

This can only be achieved by changing the unfair rules of world trade so that they work for small-scale producers as well as rich multinationals. Oxfam's trade campaign works towards this by calling on governments, institutions, and multinational companies to change the rules so that trade can become part of the solution to poverty, not part of the problem.

In the meantime, for hundreds of thousands of people, Fairtrade means the difference between a hand-to-mouth existence and being able to plan for the future.

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Fairtrade is all well and good, but what is being done to tackle the negative impact of food miles etc. on the environment?

Only a tiny proportion of Fairtrade goods are air-freighted, and only where this is unavoidable – the vast majority of Fairtrade goods are shipped, representing a much lower impact on the environment in terms of food miles. In addition, the vast majority of Fairtrade products cannot be grown in Europe and must be shipped from the countries in which they are produced. Fairtrade promotes sustainable agricultural practices and encourages farmers to invest in environmental protection programmes too.

It is also important to bear in mind that agricultural production practices, packaging, retailing, consuming and disposing of waste are all part of the life cycle of a product – on average these elements make up 90% of its carbon footprint.

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Why are Fairtrade products more expensive than non-Fairtrade ones?

There are now so many Fairtrade products available in the UK market that it is misleading to suggest that a product is more expensive simply because it carries the Fairtrade label – indeed, because Fairtrade staples such as tea, coffee and sugar have become so popular through consumer demand, the economies of scale now possible mean that they are usually no more expensive than their non-Fairtrade equivalents.

Furthermore, in some cases, retailers are able to absorb what price difference there might be when they shift an entire category over to Fairtrade, as happened when Sainsbury’s changed all of its bananas to Fairtrade, or switched all of its own-label tea over to Fairtrade this year.

Some Fairtrade products are slightly more expensive than their equivalents, however, and there are many good reasons why this can sometimes be the case:

• When a new Fairtrade product enters the market, the volume being sold may be comparatively small, so some transport, manufacture, packaging and marketing costs can be proportionally higher. As volumes have grown, so Fairtrade products have become more competitive.
• Fairtrade prices guarantee that, however low world market prices fall, the producer will always receive enough for a sustainable livelihood. When prices are very low, Fairtrade farmers could be receiving two or three times as much from their Fairtrade sales than from their other sales.
• The costs of independent certification, auditing and traceability, product licensing and labeling are built into the prices of Fairtrade products through the supply chain.
• Many companies working within the Fairtrade system also invest additional money into long-term relationships and business developments with the producers from whom they buy.

It is also important to note that the on-the-shelf price is set by retailers, not by Fairtrade. Indeed, it would be illegal for anyone other than the retailer to try to set then final retail price of a product under UK and EU competition law.

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Does Fairtrade just mean that workers get paid a fair wage, or that they also receive a fair range of rights, benefits etc.?

There are different systems in place for small-scale producers working together in co-operatives, and for larger farms employing hired workers. Each offers different benefits to producers and workers respectively.

Producer organisations receive an agreed premium for what they sell that is specifically to be invested in improving their situation for the future.

In the case of large farms, as well as Fairtrade standards reflecting ILO conventions on issues of health and safety, minimum wage, contracts, overtime etc., the Fairtrade premium is specifically aimed at providing extra resources to benefit the workers. They can decide democratically how they want this money to be spent, and discuss this with the farm managers.

This means that Fairtrade can often provide funds to achieve additional benefits for workers, not just on the farm, but also in relation to local community services they would like to have, or alternative income-generating programmes for other family members.

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