What is Fair Trade?
Fair Trade is a commerce agreement between companies in developed countries and commodity producers in developing countries. This agreement aims to pay the producers an equitable price and improve the environmental and social standards of production. Fair Trade looks to use trade rather than aid to facilitate international development.
The Fair Trade products sold in the largest quantities globally are bananas, coffee beans (our favorite!), sugar, and cocoa beans. However, wine, tea, cotton, flowers, rice, orange juice, and gold also have Fair Trade options.
How did Fair Trade emerge as a standard in the international coffee market?
Though Fair Trade as a concept originated in 1970s Netherlands, it didn’t take off in the coffee market until the late 1980s. Before then, coffee prices were controlled by the International Coffee Agreement of 1962 (ICA), signed by coffee-producing and coffee-consuming countries with the goal of keeping prices stable and high through export quotas. The year after its passage, the United Nations, recognizing coffee’s economic importance, set up the International Coffee Organization (ICO) to administer the ICA’s terms, including price regulation.
However, the ICO did not always succeed in this aim. In the “coffee crisis” of 1988, an excess of coffee production relative to demand caused the international price of coffee to collapse. In 1989, in regular five-year renegotiations, member countries decided not to renew the International Coffee Agreement. By 1992, the price of coffee had fallen from about $1.50 per pound to $0.46 per pound. In the aftermath of this calamity, Fair Trade emerged as an alternative pricing standard.
Beginning in 1988, Fair Trade certification was conducted by a German organization called Transfair. In the next decade, Transfair U.S.A., The Fair Trade Foundation, and Rättvisemärkt would join its efforts. In 1997, all four organizations merged to form Fair Trade International (FTO). Fair Trade U.S.A. broke away in 2011 and now certifies all Fair Trade Coffee marketed in the United States.
How does Fair Trade work?
At first, Fair Trade coffee programs focused on promoting a better life for coffee farmers and community development. This idea later expanded to include emphasis on sustainable coffee production and environmental stewardship.
Today, Fair Trade organizations certify farmers, importers and roasters. Coffee producers are certified based on a list of standards for cultivation, processing, labor, and sustainability. Once growers are certified, the Fair Trade Organization guarantees a minimum price for any coffee they produce, and farmers pay a fee to use the Fair Trade Logo. The Fair Trade Organization uses most of this fee for marketing expenses, including promotion to retailers the benefits of marketing Fair Trade-certified coffee products.
While Fair Trade International only permits small farm cooperatives to be certified, Fair Trade U.S.A. also allows large single-farm estates to participate in its programs. The presence of a Fair Trade certification label on a bag of whole-bean or ground coffee indicates that the business marketing that coffee complies with Fair Trade regulations.
What are the benefits and impact of Fair Trade?
First, economic impact. the Fair Trade minimum price protects coffee farmers from price fluctuation, providing them with income stability. In addition, a Fair Trade Premium is paid into a communal fund for workers and farmers to spend on expenses such as education, healthcare, or community infrastructure construction. Fair Trade supplements this primary economic impact by providing small farmers with access to loans so that they can invest in expanding their businesses.
Second, Fair Trade’s rigorous environmental standards protect the environment. Fair Trade requires safe and minimal use of agrochemicals, the maintaining of soil fertility, the responsible management of erosion and waste, and the continual monitoring of farmers’ environmental impact.
Third, a zero-tolerance policy toward child labor. Children under 15 are barred from employment entirely, and children under 18 are banned from work that interferes with their schooling or threatens their safety.
In 2017, there were 1,226 Fair Trade-certified producers in 74 countries, which comprised 1.65 million farmers and workers, 25% of whom were women.
Cadena Coffee is proud to support one of the largest and most effective global trade and development movements. Order now to join us. Every cup of Cadena you drink is a one more step toward poverty elimination and environmental protection!