Who Benefits When You Buy 'Fair Trade' Products?

Here's what it means to buy items with the label.

A farmworker holds drying cacao beans in the processing area of one of the small farmers' cooperatives in CONACADO (National Confederation of Dominican Cocoa Producers), on the north coast of the Dominican Republic. (Photo: Owen Franken)

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Oct 20, 2016· 5 MIN READ
Betty Baboujon is a food journalist based in Los Angeles. She previously was an editor at the Los Angeles Times and at BBC Australian Good Food magazine.

At a glance, buying a product marked “fair trade” seems like one of the easiest ways to turn the prosaic act of shopping into consumer activism. Fair trade products have proliferated in stores, especially in the past decade, as has the number of producer organizations worldwide that have been certified as meeting fair trade standards. Despite that growth, or perhaps because of it, most consumers would be hard-pressed to explain the differences among the product labels or what fair trade means on the ground. In this FAQ, we look at the basics of fair trade and more.

What is fair trade?

Fair trade is when fair prices are paid to growers, artisans, and other producers in developing countries for their products. It’s an alternative to conventional deals, offering better terms on several fronts. The idea is to reduce poverty, provide good working conditions, and encourage eco-friendly practices around the world. Fair trade says no to child labor and yes to improving the producers’ communities with funds, or premiums, for social, business, and environmental development. On the consumer end, the fair trade movement needs shoppers’ buy-in: Their purchases are a crucial link in the cycle and encourage more companies to get involved.

What products are certified as fair trade?

Mainly they are commodities—raw, primary agricultural products—and among the most common are coffee, tea, cocoa, bananas, and sugar. Also on the list are other fruits, vegetables, herbs, grains, beans, nuts, oils, butter, honey, spices, and wine. You’ll also find labels on such items as fresh flowers, textiles and apparel (made with fair trade materials or fair trade labor), packaged foods and beverages containing fair trade ingredients, and sports balls and handicrafts.

How do I know that every product labeled “fair trade” was made ethically?

The labels indicate that the products have undergone certification with regular audits or some level of screening to ensure they meet established standards.

Why are there so many kinds of labels?

Fair trade certification is not centralized under one agency. Numerous independent organizations offer the service, each with its own logo and label (or set of labels for various criteria). On the one hand, shoppers may find it confusing to see so many logos in the shopping aisles. On the other hand, the labels can indicate what aspect of the product is certified: say, all the coffee beans in a package, just the sugar in those cupcakes, a percentage of leaves in those tea bags, or the labor of sewing a shirt. You’ll often see the term in other forms—such as “Fair Trade” or “Fairtrade”—as they refer to particular organizations’ trademarked certifications. This FAQ uses “fair trade” generically as a term to encompass the movement as a whole.

What’s the difference among the labels?

In the United States, the most widely recognized labels come from these five organizations: Fairtrade International, Fair Trade USA, Fair for Life, World Fair Trade Organization, and Fair Trade Federation. The first three are independent certifying agencies; each uses a third-party inspection agency to ensure specific criteria are met. The latter two are membership groups that require members to adhere to the group’s fair trade rules.

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Are some organizations’ labels more “fair” than others?

This has been the subject of ongoing debate, and there is no straight answer given multiple sets of criteria. The standards overlap, but all cover the main principles of fair trade. Generally, the key differences include the types of products that are certified, the stage of production when certification happens, and whether just a product or an entire company is certified fair trade.

What do the labels mean?

It’s simple enough for single-item products such as coffee, nuts, or a bunch of roses: 100 percent of the packaged contents must be certified to bear a label from any of the three certifying organizations mentioned above.

The matter is more complex for a multi-ingredient product—say, chocolate ice cream, cookies, or an energy bar. In a nutshell, the ingredients don’t have to be 100 percent fair trade, with a couple of caveats. First, any ingredient in the product that can be sourced as fair trade must indeed be fair trade. Second, the product must have a minimum percentage of fair trade ingredients. That minimum varies among organizations: Fair Trade USA and Fairtrade International call for at least 20 percent (though they say many products easily go above that), while Fair for Life requires 50 percent or more.

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Are fair trade products more expensive?

Not always. Products with a fair trade label can cost less, the same, or more than their conventional counterparts because fair trade isn’t the only factor behind retail prices. According to Fairtrade International, a certified product might be cheaper or cost the same because the raw material that’s shipped, packaged, and marketed by others in the supply chain ends up representing just a small fraction of the final retail cost.

The bottom line for shoppers is a matter of common sense: Compare like for like when deciding which to buy. Fair trade items typically are priced competitively with other high-quality products. “Regardless, when you choose fair trade, more of that money is getting back to the people who produced it,” says Nora Pittenger, director of business development at Fair Trade USA.

Is there enough interest in fair trade to make a difference?

Yes, and it’s growing. Fair trade now involves thousands of products, from niche brands such as Numi Organic Tea and chocolate maker Valrhona to more mainstream items from larger manufacturers such as General Mills, Kellogg, PepsiCo, Patagonia, Starbucks, and West Elm.

How much more do producers get under a fair trade deal versus a conventional one?

There isn’t one neat answer, considering the range of products and the variance in living wage from one region to the next. However, consider that by definition the fair trade model provides a markup over the market price or the cost of production; there always will be a built-in premium that producers can use for projects of their choice. “We’ve seen farmers vote to invest in seedlings, scholarships for kids, bring in mobile cancer screenings for women, and build wells for clean water,” says Pittenger. “What really matters is that the power is in their hands.”

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Is there a cost to producers?

Generally speaking, producer cooperatives pay fees related to fair trade certification, as well as for audits to ensure compliance. In the Philippines, for example, whose fair trade exports include sugar, coconut oil, and bananas, producers pay about $9,400 annually for certification audits, according to Edwin Lopez, executive director of Alter Trade Foundation, a nongovernmental organization that assists farmers. “You must have a good market in order to recover the cost,” he said. “On the other hand, the producers could benefit from maintaining the fair trade standard, and so it is part of their operating cost.”

Does fair trade mean organic?

Not necessarily. Fair trade certification is separate from organic certification, though many products end up having both. That’s because fair trade organizations encourage sustainable farming practices that may include organic options. As well, many producers decide to invest their premium funds in organic certification. Fair Trade USA says nearly half of all its certified imports are also organic.

Is it better to buy local or fair trade?

Both have their pros. Buying local, especially from farmers markets, supports your local economy and agriculture. Buying fair trade, meanwhile, is also a way of supporting global social justice and sustainability in the food chain. It isn’t so much a question of “or” but a matter of “and”—do both. You’ll find that many items on your shopping list can’t be grown at scale within 100 or even 1,000 miles of your home, so fair trade is a good option for those things.

So all I need to do is shop?

Not quite. Money talks, but ask questions and speak out as well. Email and social media, in particular, have given shoppers a powerful means to influence the decisions of companies and organizations. Today’s conscientious consumer can have a stronger voice than ever. Note that it can be hard to evaluate a label when a company uses its own certification or simply says it buys fairly, so be prepared to research your favorite products.

Where can I find more details about what all the labels mean?

Look for the particulars on the websites of these organizations:

Fair for Life, www.fairforlife.org

Fair Trade Federation, www.fairtradefederation.org

Fair Trade USA, www.fairtradeusa.org

Fairtrade America, www.fairtradeamerica.org

Fairtrade International, www.fairtrade.net

World Fair Trade Organization, www.wfto.com