Fair trade products are certified by various organizations as meeting certain environmental or labor standards. For example, producers of fair trade goods commit to paying their workers a decent wage. Both consumers and producers can benefit from fair trade, but the system does have flaws.
The Good News
Groups such as Fairtrade International and Fair Trade USA say that qualifying for certification provides farmers and other producers with multiple benefits:
- Certified producers must pay their workers a good wage and guarantee safe working conditions.
- Fair trade guarantees producers a stable minimum price, even when the market price drops.
- Producers also earn a community-investment premium above the minimum price. They can invest this in improving product quality, or in health care and education projects in the community
- As quality goes up, producers can negotiate for a higher price than the guaranteed minimum.
- Fair trade groups encourage sustainable agriculture and other practices that benefit the producers in the long term.
For consumers concerned about how their goods are made, fair trade offers a way to buy ethically. Knowing that goods were produced without worker exploitation, such as with slave labor or in sweatshops, and using environmentally sustainable practices can help buyers reconcile their purchases with their principles.
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In addition, the Artisans Hope organization says, buying fair trade shows that there's a market for such goods. That offers an incentive for more producers and traders to adopt the same practices, which increases the ethical impact of the consumer's decisions.
Fair Trade USA says that while fair trade certification doesn't set quality standards, the premium enables producers to reinvest in their operations and raise quality. The end result is a better product for consumers. The organization says, for example, that most fair-trade coffee qualifies as the superior specialty grade.
No system is perfect, and that includes fair trade. World Centric, an organization that sells fair-trade goods, lists several drawbacks for producers on its website:
- Producers have to pay for the costs of certification. Some small farms or artisans can't afford it.
- Big companies can claim to be fair traders even if only a fraction of their sales are from fair trade. This puts small importers who deal 100 percent in fair trade at a competitive disadvantage.
- Certification doesn't take into account that what constitutes a living wage or a fair payment in one area may not be enough for someone in a different location to subsist on.
Negatives for Consumers
Buying fair trade may require spending more money, depending on which store consumers patronize and which products they buy. Stanford University says that studies of coffee-buyers indicate that consumers are willing to pay a higher price for high quality fair-trade coffee, but possibly not for lower-quality fair trade beans.