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Fair Trade Price

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. 

The body responsible for setting these standards is the Fair Trade International Standards Committee, a committee appointed by the board of the FLO, which constantly review how individual international markets shift and economies change. Yet, while the specifics of these standards are always subject to change, the principals that inform them are much more firm. It's FLO-CERT's mission to provide producers in developing countries living wages for their work, and to make sure that their livelihood isn't put at risk. While the intentions of FLO-CERT are virtuous, not all believe that the Fair Trade system to be completely fair to producers.

Fair Trade Opposition

Opponents of the fair trade system argue that establishing a price floor results in oversupply. It is argued that this oversupply can actually lead to lower market prices for producers that are not able to sell to fair trade buyers. For example, many in the North American coffee industry have shifted from using the Fair Trade system to buy and source beans to a Direct Trade model. By forming direct business relationships with the farmers, many roasters and coffee suppliers find they can get a better product and ensure fair pay to producers.


Further Reading


On the efficiency of fair trade
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

Fair trade, free trade and the stateFair trade, free trade and the state
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

Is Fair Trade-organic coffee sustainable in the face of migration? Evidence from a Oaxacan CommunityIs Fair Trade-organic coffee sustainable in the face of migration? Evidence from a Oaxacan Community
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

Where now for fair trade?Where now for fair trade?
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

Are sustainable coffee certifications enough to secure farmer livelihoods? The millenium development goals and Nicaragua's Fair Trade cooperativesAre sustainable coffee certifications enough to secure farmer livelihoods? The millenium development goals and Nicaragua's Fair Trade cooperatives
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

Does fair trade make a difference? The case of small coffee producers in NicaraguaDoes fair trade make a difference? The case of small coffee producers in Nicaragua
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

A taste of trade justice: marketing global social responsibility via Fair Trade coffeeA taste of trade justice: marketing global social responsibility via Fair Trade coffee
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

The future of Fair Trade coffee: dilemmas facing Latin America's small-scale producersThe future of Fair Trade coffee: dilemmas facing Latin America's small-scale producers
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …

'Fair trade'with Africa'Fair trade'with Africa
www.tandfonline.com [PDF]
… The financial support to enable the Workshop to take place was provided by the Newcastle Fairtrade Partnership. Notes … [Google Scholar]; Barratt Brown, M. 1993. Fair Trade: Reform and Realities in the International Trading System, London: ZED Books … How Fair is Fair Trade …



Q&A About Fair Trade Price


Who determines the fair trade prices?

Fair Trade International Standards Committee sets the standards.

What are the five categories of standards that FLO-CERT uses to determine if a product can be labeled as "Fair Trade Certified"?

Small producer organizations, hired labor, contract production, traders and climate.

What is fair trade?

Fair Trade is an arrangement designed to help producers in developing countries achieve sustainable and equitable trade relationships.

What do members of the fair trade movement want for themselves and others who are involved with them?

They believe that they can make a difference in their lives through unity with consumers.

Who are the main participants of fair trade?

The main participants of fair trade include exporters, importers, consumers, and workers.

What is a fair trade price?

A fair trade price is the minimum price paid for certain agricultural products imported from developing countries.

How does fair trade work?

Fair Trade works by offering better trading conditions to marginalized producers and workers in developing countries.

What does fair trade focus on?

Fair Trade focuses on commodities that are typically exported from developing countries to developed countries.

How are goods labeled as Fair Trade Certified?

They must comply with standards outlined by FLO-CERT and other local fair trade labelers.

What are some examples of specific standards within each category?

Within small producer organizations there are specific standards for coco, cane sugar, cereals coffee fresh fruit honey nuts tea and so on.

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