Currently the most widely recognized definition of fair trade was created by FINE, an informal Association of the four main Fair Trade networks (Fairtrade Labelling Organizations International, International Fair Trade Association, Network of European Worldshops and European Fair Trade Association):

“Fair Trade is a trading partnership, based on dialogue, transparency and respect, that seeks greater equity in international trade. It contributes to sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers - especially in the South. Fair Trade organisations (backed by consumers) are engaged actively in supporting producers, awareness raising and in campaigning for changes in the rules and practice of conventional international trade. Fair Trade's strategic intent is:

• deliberately to work with marginalised producers and workers in order to help them move from a position of vulnerability to security and economic self-sufficiency
• to empower producers and workers as stakeholders in their own organisations
• to actively to play a wider role in the global arena to achieve greater equity in international trade.”

The term Fairtrade is used to describe the certification and labelling system governed by FLO designed to allow consumers to identify goods produced under agreed labour and environmental standards.

The term Fair Trade is used to refer to the Fair Trade movement as a whole and can be used to describe both labelled and unlabelled goods and the work of Alternative Trade Organizations (ATOs), Fair Trade federations and networks such as IFAT, NEWS, EFTA etc. The term fair trade is a broader term often used to describe one or many of the above, but can also occasionally be used to refer to trade justice issues. In such cases, it can be as broad as to describe general fairness in trade, such as tariffs, subsidies, worker rights and other issues.

Ethical trading means companies are involved in a process of trying to ensure that the basic labour rights of the employees of their third world suppliers from developing countries are respected. The Fairtrade Certification Mark, which applies to products rather than companies, aims to give disadvantaged small producers more control over their own lives. It addresses the injustice of low prices by guaranteeing that producers receive fair terms of trade and fair prices – however unfair the conventional market is. On top of the Fairtrade Minimum Price, the Fairtrade Labelling system guarantees a premium for producer organizations or workers bodies to enable them to invest in social, economical or environmental improvements.

The Fairtrade Certification Mark is an independent consumer certification mark which appears on products as an independent guarantee that disadvantaged producers in the developing world are getting a better deal. As a result of Fairtrade, these producers receive a Fairtrade Minimum Price that covers the cost of sustainable production as well as an extra Fairtrade Premium that is invested in social or economic development projects.

For a product to display the Fairtrade Certification Mark it must meet international Fairtrade Standards. These standards are established by FLO International e.V. and are set in accordance to the requirements of the ISEAL Code of Good Practice in standards setting. They are in addition the result of broad consultations of different stakeholders and external experts.

Producer organizations supplying Fairtrade Products are then certified against these standards by FLO-CERT GmbH, an independent certification body, which carries regular inspections.

The Fairtrade Certification Mark guarantees a better deal to disadvantaged producers and workers in developing countries. In order for a product to display the Fairtrade Certification Mark, it must comply with various labour and environmental standards set by FLO e.V.

The certification process begins at the production level in countries where the source products and ingredients originate. All Fairtrade Certified Products come from FLO-CERT inspected and certified producer organizations. The crops must have been grown and harvested in accordance with the international Fairtrade Standards set by FLO International e.V. Beyond the source, the entire supply chain is monitored to ensure the integrity of labelled products. This chain of certification, monitoring and licensing ensures that the integrity of the supply chain cannot be compromised. It ensures that only a product or ingredient certified at the source can be labelled as Fairtrade Certified. Only products that are licensed by a Labelling Initiative can carry the Fairtrade Certification Mark.

The Fairtrade system provides tangible benefits to small-scale farmers and workers, consumers and the environment.

1. Small-scale Farmers and Workers: In 2005, the Fairtrade system benefited approximately 1 million workers and farmers in 58 developing countries in Africa, Asia and Latin America. Including their dependents, five million people were affected. Fairtrade Certification allows them to achieve economic independence and empowerment while improving their standards of living. Beyond being paid a fair price for their produce, the Fairtrade Premiums enables producers to better their communities by providing:

• Improved access to low or no-interest loans

• Technical assistance for building infrastructure to improve production

• Communications systems, and collectively-owned transport and processing equipment

• Better health care and education
• Technical training and skill diversification for cooperative members and their families
• Any other investment deemed necessary or beneficial to the community or organization.

2. Consumers: The Fairtrade system benefits consumers by:

• Giving them the option of purchasing according to their principles and values
• Empowering them to be a player in the solution to global trade inequities
• Providing them with high quality products

• Assuring them of the ethical source of their purchases

3. Environment: Fairtrade rewards and encourages farming and production practices that are environmentally sustainable, such as:

• Integrated farm management systems which minimize pollutants, pesticides and herbicides
• Organic agriculture techniques
• Banning the use of most dangerous pesticides

In 2005, Fairtrade sales amounted to approximately €1.1 billion worldwide, a 37 % year-to-year increase over 2004. As per December 2005, 508 Certified Producer Organizations in 58 developing countries were Fairtrade Certified. That represents more than one million producers and five million people, including dependents, benefiting directly from Fairtrade.

Fairtrade is a voluntary model of trade that brings consumers and companies together to offer Small Farmers' Organisations and Hired Labour a price for their produce that covers the cost of sustainable production and provides a sustainable livelihood. Fairtrade is a market-responsive model of trade: the farmers only receive the Fairtrade Minimum Prices and Premiums if they have a buyer willing to pay them, and many producer groups continue to also sell in the conventional market.

Fairtrade Producers use their additional income from Fairtrade to for example improve their homes, send their children to school, and improve the quality of their existing crop, rather than to increase production. Farmers also invest Fairtrade Premiums in crop diversification in order to escape from their dependence on a single crop as their primary source of income. Because Fairtrade Certified Producers often choose to spend their social Premiums on projects such as improving local schools, health, water or sanitation projects, this means the benefits of Fairtrade can be shared more widely by the local community, not just the farmers themselves.

Fair Trade as such has existed since the 1950s. It started as a partnership between non-profit importers, retailers in the North and small-scale producers in developing countries. Many of these producers were at the time struggling against low market prices and high dependence on intermediaries. They saw fair trade as an opportunity to protect their livelihoods, bypass the middlemen and directly access Northern markets. Over the years, more and more Alternative Trade Organisations (ATOs) were created in different countries, often closely linked to volunteer groups and World Shops. These networks of ATOs and World Shops played a vital role in the development of Fair Trade as we know it today.

In 1988, in an effort to expand the distribution of fair trade products to mainstream retailers, a Dutch ATO, Solidaridad, found an innovative way to increase sales without compromising consumer trust in Fairtrade products and in their origins. The organization created a label, called Max Havelaar, which guaranteed that the goods met certain labour and environmental standards. The label, first only applied to coffee, was named after a best-selling 19th century book about the exploitation of Javanese coffee plantation workers by Dutch colonial merchants.

The concept caught on: within years, similar Fairtrade labelling organizations such as the Fairtrade Foundation, TransFair and Rättvisemärkt, emerged across Europe and North America in an effort to follow Max Havelaar’s footsteps and boost Fairtrade sales. The organizations created and launched their own campaigns and Certifications Marks independently.

In 1997, these organizations created Fairtrade Labelling Organizations (FLO) International, an umbrella organization whose mission is to set the Fairtrade Standards, support, inspect and certify disadvantaged producers and harmonize the Fairtrade message across the movement.

At present, over 20 Labelling Initiatives are members of FLO International. There are now Fairtrade Labels on dozens of different products, based on FLO’s certification for coffee, tea, rice, bananas, mangoes, cocoa, sugar, honey, fruit juices, wines, nuts, footballs etc.

In the early years of Fairtrade labelling, each Labelling Initiative had its own Certification Mark and operated independently.

In 2002, Fairtrade Labelling Organizations launched a new international Fairtrade Certification Mark. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, convey a dynamic, forward-looking image for Fairtrade, facilitate cross border trade, and simplify procedures for importers and traders. The Fairtrade system has always been about global relationships and global standards of fairness - these were recognised for the first time with an international Fairtrade Certification Mark.

The Fairtrade Certification Mark harmonization process is still under way – as of August 2006, all but three Labelling Initiatives have adopted the new international Certification Mark. Full transition to the new Mark should become reality as it gradually replaces the old Certification Marks at various speeds in various countries.

See FLO-CERT website: www.flo-cert.net

See ”Fairtrade Standards in general” in STANDARDS

A fair price for a product is one that covers the producer’s cost of sustainable production. On top of the production costs, FLO establishes a Fairtrade Premium, which is invested in social, economic or environmental projects of improvement, decided upon democratically by producers within the organisation or workers within the plantation.

Fairtrade Minimum Prices are therefore not determined by bargaining, pressure tactics, or traders in commodity markets half way around the world. They are determined in a fair and systematic manner, and are periodically reviewed to ensure producers’ production costs are still being covered.

Introducing a new product into the Fairtrade system is slow and costly. That is because we try to get it right and this takes a great deal of research. If you know of a product that would sell well in your market, we would encourage you always to talk to your Labelling Initiative. Be realistic, however. A product needs to sell in considerable volume before a producer begins to benefit from these sales.

FLO receives innumerable requests for help from students and researchers. We are delighted that more and more people are interested in Fair Trade, but due to our limited staff capacity we are not able to help with projects or dissertations. However, we do try to put loads of information on our website: to help you. We also recommend you to visit the Websites of our Members organizations. You can find the complete list under Labelling Initiatives. Please note that we don’t provide information about producer organisations. Many producers don’t want details of their activities to be made public for reasons of commercial confidentiality.

Please see FLO-CERT Website.

Contact FLO to get the list of certified organizations and then contact the organizations directly. However, FLO will ask you to sign an Importers Contract with FLO International. The purpose of the contract is to enable FLO and its Member organizations to monitor the Fairtrade supply chain and verify that FLO Standards are met in the trading relationship.

If you would like to sell Fairtrade Labelled Products to consumers, please contact the Labelling Initiatives in your country. They are in charge of licensing companies in their home country to use the Fairtrade Certification Mark on Fairtrade Certified Products. Companies putting the Certification Mark on the consumer products are asked to sign a license agreement with this Labelling Initiative, before putting the Fairtrade Certification Mark on the products.

If you are a retailer or distributor of already labelled and licensed products from other companies, you are free to do so without registering with FLO or a Labelling Initiative. However, if you wish to sell your own brand products with a Fairtrade Certification Mark, you will be treated as a "licensee" who need to sign a license agreement with a Labelling Initiative. If you wish to promote Fairtrade Products, you need to obtain prior written approval from your Labelling Initiative.

If there is no Labelling Initiative in your country, please contact FLO for use of the Certification Mark.

It takes a great deal of time and money to develop Fairtrade Standards to ensure that new Fairtrade Products really will benefit producers. The initial focus of Fairtrade was on agricultural commodities, such as coffee and tea, which have the most widespread impact on the livelihoods of small producers and workers in the developing world. Since then, the scope of Fairtrade is continuously being extended to other agricultural products and some manufactured products such as sports balls.

Not necessarily. Fairtrade criteria however require sustainable farming techniques, and offer a higher price for organic products. Moreover, Fairtrade Premiums are often used to train producers in organic and sustainable techniques like composting and integrating recycled materials.

If you want to know where to buy Fairtrade labelled products, you can contact the Labelling Initiative in your country, and check their website or ask them directly.

The purpose of Fairtrade is not merely to avoid exploitation of suppliers but to help make a real improvement in people’s lives. Fairtrade is based on a clear set of internationally-agreed criteria, which are independently assessed and monitored, and the whole system is open and transparent. The Fairtrade Certification Mark is the only independent consumer guarantee of Fairtrade. If a company is claiming that it meets these standards, ask them whether they are prepared to subject them to the independent scrutiny and monitoring of the Fairtrade Certification system.

There has been much concern lately among consumers over GMO crops. Many worry the risks of environmental contamination and producer dependence to GMO seed might outweigh the benefits of the crops. FLO believes GMO crops are incompatible with Fairtrade and has adopted strict environmental standards and guidelines expressly forbidding their use and monitoring GMOs in nearby fields to avoid any possible contamination.

Some organizations, also called Alternative Trading Organisations (ATOs), are purely dedicated to trading fairly and have been doing so for many years before Fairtrade Certification was established. However, some other companies make their own ‘fair trade’ claims without having the independent scrutiny of the Fairtrade Certification Mark, or the interests of producers at heart. If you are shopping and see tea, coffee, bananas or cocoa products without the Mark, there is no guarantee that they give producers a fair deal.

Fairtrade Certification and its system of minimum pricing were designed for commodity products. It is technically difficult to adapt this model of standardized minimum pricing to crafts and other products made by small-scale artisans, which are each unique and have highly varied production processes and costs.

It does not always make sense to insist that every product ingredient should be imported from developing countries – for example, dairy ingredients such as milk, cream and eggs do not transport easily over long distances, and there are more local dairy farmers who can supply these. However we can extend the opportunities for producers in developing countries if ingredients they produce, such as cocoa, coffee, sugar, spices and fruit can be combined with locally sourced ingredients. That’s why the Fairtrade system operates a set of rules for certifying ‘composite’ products. These are defined as manufactured or processed consumer-end products, composed of more than one ingredient of which at least one is sourced from Fairtrade Certified Producers. The rules state that any ingredient for which Fairtrade Standards exist must be sourced from Fairtrade Certified Producers. They also state that at least 50 % of the total ingredients must be sourced from Fairtrade Certified Producers.

Not all Fairtrade Certified Products cost more than conventional products. Where the Fairtrade Certified Products do cost more, there are many factors to be considered.

The Fairtrade system guarantees a better deal to the disadvantaged producer by offering them two major monetary benefits that can both have an impact on the end price: the Fairtrade Minimum Price and the Fairtrade Premium.

The Fairtrade Minimum Price is a guaranteed price that covers the cost of sustainable production. The set Fairtrade Price is always the Fairtrade Minimum Price paid but rises in line with market prices if they rise above it. 

In addition to the purchase price paid by importers, a separate payment, called the Fairtrade Premium, is made which is designated for social and economic development in the producing communities. The farmers and workers themselves decide how these funds are to be spent. As part of the Fairtrade Standards, Certified Producers are accountable to FLO-CERT for the use of this money. It is generally used for improvements in health, education or other social facilities, although it may also be used for certain development projects to enable growers to improve productivity or reduce their reliance on single commodities.

It is worth mentioning that the Fairtrade Premium and the Fairtrade Minimum Price do no always significantly increase the end price paid by consumers for a product. There are other factors to consider when studying the price structure of products.

Production costs, for example, can sometimes be higher due to the organic farming practices. Economies of scale can also have a significant impact in pricing: production of smaller quantities can often cost producers and processors more at every turn (packaging, transport, etc) because they cannot benefit from a large enough scale to use as a bargaining position.

And finally, retailers are the ones setting the final price paid by consumers. Retail pricing is not controlled or influenced by FLO or any of the Labelling Initiatives. The Labelling Initiative verifies the guaranteed Minimum Price has been made to the producer but the final price paid by the consumer is solely the decision of the retailer. Luckily, FLO anticipates that as demand for Fairtrade Products grows and as competition intensifies in consumer markets, issues of economies of scale and disproportionate retailer margins will become less and less significant in the future.