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Fair trade aims to be sustainable, productive, and beneficial to workers, communities, and the environment. It focuses on benefiting producers in developing countries and ensuring fair wages, safe working conditions, and environmentally friendly production. Consumer education is important, and there are two types of fair trade: integrated supply chain and product certification. Despite higher prices, demand for fairly manufactured goods is increasing.
Fair trade is a form of trade in goods and services that focuses on being sustainable, productive for people at all levels of the supply chain, and beneficial to workers, communities and the environment. Proponents believe that traditional trading systems are often unfair to producers at lower levels of the supply chain, such as the people who grow crops such as coffee. Opponents suggest that the push for this type of trade leads to artificially high prices and hinders free markets.
The movement is primarily focused on benefiting producers in developing countries. Farmers and artisans in developing countries have historically been subject to exploitation, receiving a fraction of the value of the goods they sell, and sometimes facing environmental and economic problems as a result of profit-making business practices in developed countries. For example, a company would move to South America to grow bananas, paying its workers very low rates for fruit that it would sell at high prices in European markets.
Several characteristics characterize fair trade goods. The safety and well-being of workers is a primary issue, with manufacturers promising fair wages for workers, safe working conditions and an absence of child labour. The goods usually must not harm the environment, must be produced in an environmentally friendly and sustainable way and must contribute to local communities. For example, a women’s cooperative in India could obtain bags from old saris, thereby benefiting women, promoting recycling and bringing income to their community.
Consumer education is also an important element, as consumers usually will not seek out these goods unless they are incentivized to do so. Many companies place a strong emphasis on humanizing their workforces, introducing consumers to the people who actually make the goods they buy, and showing consumers how their purchases confer benefits. The benefits should outweigh the higher price for the goods.
There are two types of fair trade: integrated supply chain and product certification. In the case of an integrated supply chain, every producer along the supply chain supports fair trade by promoting beneficial practices at every stage of the process, from manufacturing the good to final sale. In the case of product certification, a company signs an agreement with a manufacturer, in exchange for receiving product certification from a third-party agency. Fair Trade certification involves a partnership between people who want to sell something, but don’t have access to the supply chain to do so, and people who want to sell goods that are in demand.
The success and demand for fairly manufactured goods illustrates the many ways the free market can work. While buying such products tends to cost more, some consumers find the hidden prices of traditionally traded goods too high and actively seek out products that are manufactured and sold with a fair trade philosophy.
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