What Is Fairtrade?

So what is FAIRTRADE exactly? Fairtrade’s purpose is to create sustainable market opportunities for producers in developing countries who have been economically disadvantaged or marginalised by the conventional trading system. The Fairtrade Standards define the rules of Fairtrade trading and outline a number of benefits that must be provided to Fairtrade producers and their organisations. Only those products that meet the following standards can be labelled as ‘Fairtrade’:

  • The Fairtrade Minimum Price is designed to cover the costs of sustainable production. The Minimum Price acts as a floor price that protects farmers from unsustainable downturns in the market and offers them stability and security of income. The Fairtrade Premium is an additional financial payment to producer organisations over and above the Fairtrade Minimum Price (and any Organic Price Differential) for investment in improving social, economic and environmental conditions in the community .
  • The opportunity for pre-financing allows producers to access up to 60% of their final Fairtrade contract value in advance to enable them to get the product to market.
  • Long-term contracts allow for stability and predictability and therefore future planning.
  • Access to export markets facilitated through the Fairtrade network to improve market opportunities for producers.
  • Being organised into democratic organisations means that producers are in a better position to negotiate with exporters, to invest in skill development and to deliver community development projects.
  • The Organic Price Differential is a financial incentive paid to producers of some Fairtrade products such as cocoa and coffee to cover the additional costs of certified Organic production and to encourage the use of environmentally friendly practices.

Fairtrade Labelling is a global network of non-government organisations pursuing the fair trade agenda through the certification and labelling of products, such as coffee, tea and chocolate. Oxfam works with organisations around the world to shift global trade rules so they work to help raise poor people in the developing world out of poverty.

(from www.australianwomenonline.com who sourced this information from Oxfam Australia. To learn more about Fairtrade you can read Oxfam Australia’s full report here)