Exploring the Link Between Poverty and Trade

Fairtrade as a Vehicle to Combat Poverty

Rice farmers from Kohinoor Foods

31 May 2011

Fairtrade looks at trade as a means to directly address poverty. In a new position paper, Fairtrade International explores the link between poverty and trade, “Poverty Reduction and Trade: Fairtrade as a Vehicle to Combat Poverty (PDF),” outlines how the current global trading system places farmers and workers in the developing world at a disadvantage.

Internationally set prices, price volatility and increasing food prices make farmers vulnerable to a poverty trap. Farmers face barriers to competitiveness and lack access to information, investment, and infrastructure. Many lack the necessary organizational and management skills to operate on an international market. Workers, on the other hand, earn very low wages and work in difficult working conditions.

A variety of studies over the last ten years show that Fairtrade leads to individual and economic empowerment of farmers and workers. Fairtrade uses a variety of tools to support farmers, including: a Minimum Price that creates an effective safety net; the Fairtrade Premium that is invested in community development; access to specialty markets; and technical support. Through Fairtrade, workers enjoy better working conditions and earn better living wages.

This paper is part of a series of position papers by Fairtrade International. FLO’s position papers are intended to strengthen understanding and promote dialogue about key issues and be used for advocacy by Fairtrade organizations.

Past position papers addressed climate change, child labour and sustainability.

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