In essence, fair trade is a partnership that sets certain parameters under which trading takes place. It is based on a variety of values, which include transparency, dialogue, and respect for the supplier. The purpose of this trading partnership is to create equity in the international trading market.
The World of Fair Trading
When we think about fair trade, our mind automatically goes towards elements, such as paying workers fair wages and ensuring that our farmers are being treated well. However, that is not all; questions, such as does fair trade only exists in the market for products, such as coffee, chocolate, and tote bags made of organic material, come to mind. Well, since then, the world of fair trading has become much more vast and has infiltrated a wide variety of international markets. Over time, being certified as fair traders are becoming more and more popular amongst a variety of businesses. This is because with the accessibility to information increasing, the consumers of the world are becoming more and more aware of the concept of fair trading. Although, it is fair to say that what most consumers know about the world of fair trading is the tip of the iceberg.
What Is Fair Trade?
Fair trade is not only a certification but, at this point, has become a global movement. This movement involves all of the entities that fall within the supply chain of a product, as well as a variety of stakeholders. These entities include the business itself, producers of the raw material, manufacturing facilities, consumers, and of course, those who provide fair trade certifications on account of considering the planet and its people first. All of these entities and stakeholders must work together on treating the raw materials and resources of their particular industry as limited. Thus, products created within that industry must be created in a way where the result benefits the producers of the product and the land that the product is made on.
Why Was Fair Trade Developed?
At this point, you might be wondering what the catalyst behind the development of fair trade was. One has to wonder what went wrong within the international trading market that led to the development of such a certification. It is known that fair trade was developed as a response to counter the widespread adverse impact that the trading practices had on the producers and the land. The trading practices were known to be unfair and were even leading to a divide between the North and South worldwide. At this point, consumers began to realize that even though open markets, mass production, and subsidization of commodities are beneficial to them, these benefits are being enjoyed at the expense of the freedom, livelihood, and even human rights of the farmers, children, and artisans of the world. This negative impact was particularly seen in third world countries, where several companies take advantage of cheap labor and lack of regulations.
Since it is, at the end of the day, a certification, to be certified as fair traders, there are certain requirements that companies and businesses must meet and uphold. So, what are the parameters of it? To be certified, the product has to be produced by entities, which includes corporates, workers, or farmers. The standards that these entities must meet are set by the Fair-Trade Labeling Body. Internationally, at this moment, there are more than eleven certifiers, where each certifier has set its own set of standards. However, the core requirements remain the same. Here is a list of the common focal points that you will find for Fair Trade:
- The workers producing the product must be given Fair Trade minimum wages
- The manufacturing process must uphold environmentally sustainable practices
- The company must provide its labor with safe working conditions
- The companies must not partake in employing child or bonded labor practices
- The producers must be given a premium based on their created product
- The premiums given must be put into a communal fund, which will then fund developmental projects
- There should be transparency within the supply chain for the consumers.
Impact of Fair Trade
The impact of Fair Trade certifications has been quite positive, where the global movement has contributed towards sustainable development. This was achieved as workers are now being offered better trading and working conditions. This has also led to companies enhancing the quality of their products as well as their environmental performance. One of the major reasons behind this success is the backing of consumers, thus allowing companies to actively engage in supporting their suppliers, campaigning, and raising awareness regarding the unfair practices that should be changed with conventional trading practices.
What Is the Goal of Fair Trade Product Marking?
Since fair trade is a certification given to businesses, the Fair Trade mark was designed in 2002. The basic goal of the use of the product marking is to help consumers in distinguishing between companies that partake in fair trade practices and those that don’t. So, it helps set Fairtrade certified businesses apart from the rest, thus allowing consumers to make better purchasing decisions that align with their values. This is why you will see companies placing the product marking on their packaging. The impact of Fair Trade product marking is quite beneficial to companies as, according to statista.com, the global sales of products that feature the marking have crossed eight billion euros.
At this point, you might have realized that fair trade is beyond the concept of ‘just trading.’ It is a concept that has proved that justice within international trading is achievable and puts focus on a need for change within the conventional international trading practices. That is not all; it has also proven that it is possible to run a business successfully while putting the people and the land first, all the while making contributions that are tangible to the fight against the economic crisis, climate change, and poverty.
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