What is ‘Fair Trade Price’
Fair trade price is the minimum price paid for certain agricultural products imported from developing countries. Fair trade is a movement that believes it is unethical to pay producers in developing countries the market price if that price is too low to provide a sufficient quality of living. Instead, certain importers agree to pay producers in the developing world at least a minimum price for their goods. The goods are then imported to developed nations where they are promoted as fair trade products and, normally, sold at a higher price.
Explaining ‘Fair Trade Price’
For goods to be labeled as Fair Trade Certified, they must comply with standards outlined by the non-governmental organization FLO-CERT and/or other local fair trade labelers. These set of standards, put in place by FLO-CERT, are broken up into five different categories with standards for small producer organizations, hired labor, contract production, traders, and climate. Within each one of these categories there is a set of specific standards for products; for example, within the small producer standards, there is another set of standards for products like coco, cane sugar, cereals, coffee, fresh fruit, honey, nuts, tea, and so on. These specific product standards cover issues like product composition, production, contracts, pre-financing, and pricing. However, these standards aren’t set in stone.