DEVELOPMENT STRATEGIES FAIR TRADE ORGANIZATIONS SOURCE: ECONOMICS – A COURSE COMPANION (p )

DEVELOPMENT STRATEGIES Fairtrade Organizations In many developing countries many small- scale farmers and workers are unable to make a living income. Low world prices for primary products, high profits for middleman, tariff escalation, and poor working conditions make life extremely difficult.

DEVELOPMENT STRATEGIES Fairtrade Organizations Fair Trade schemes are an attempt to ensure that producers of food, and some non-food, products in developing countries receive a fair deal when they are selling their products. If consumers are aware of the harsh and unfair conditions facing the farmers, then perhaps they my be willing to buy from producers who pay a fair price to farmers.

DEVELOPMENT STRATEGIES Fairtrade Organizations Today, the Fairtrade Labelling Organization International (FLO) coordinates Fairtrade labelling in 20 countries. The schemes aim to help small farmers and landless workers. Fair trade schemes have operated for more than 50 years, but the real growth of the movement has come with the advent of Fairtrade labelling. This began in the Netherlands in 1988, when the Max Havelaar Foundation began to sell coffee from Mexico with the first Fairtrade consumer guarantee lable.

DEVELOPMENT STRATEGIES Fairtrade Consumer Guarantee This is a system where products can be certified if they meet the standards of the FLO, which gives them the right to display the International Fairtrade Certification Mark. The recognisable Mark means that consumers will be able to identify Fairtrade products, know they are approved, and buy the knowing that the producer of the good was paid a fair price.

DEVELOPMENT STRATEGIES Role of the FLO The FLO regularly inspects and certifies around 500 producer organizations in more than 50 countries in Africa, Asia and Latin America, which results in fair trading conditions for approximately 1 million farmers, workers and their families.

DEVELOPMENT STRATEGIES Criteria for the FLO Certification Mark A trading company wishing to qualify for the International Fair Trade Certification Mark must meet certain FLO criteria: The product must reach the trader as directly as possible with few, if any, intermediaries. The product must be purchased at least at the Fairtrade minimum price. This is a guaranteed price that covers production costs and provides a living income. It covers the costs of `sustainable production`

DEVELOPMENT STRATEGIES Criteria for the FLO Certification Mark The producer receives a premium if the product is certified as organic. The trader must be committed to a long-term contract, which in turn gives security to the producer. Upon request, the producer has access to credit from the trader, of up to 60% of the purchase price.

DEVELOPMENT STRATEGIES Criteria for the FLO Certification Mark Where small farmers are involved the product must come from producers that are managed democratically. If the product comes from plantations then the workers must benefit from the internationally recognized employment standards, including trade unions, if they wish, and there must be no use of child labour.

DEVELOPMENT STRATEGIES Criteria for the FLO Certification Mark The producer must use sustainable farming methods to produce the good. The also pays a fairtrade premium to the producer. The producer uses these funds to aid local community development. The producers decide how the money will be spent, but is usually used to promote health care, education or other social schemes. The producers are accountable to the FLO for the appropriate use of the funds.

DEVELOPMENT STRATEGIES Fairtrade Product Range Fairtrade certified food products include bananas, cocoa, coffee, dried fruit, fresh fruit and vegetables, honey, juices, nuts/oil seeds, sugar, tea and wine. Non food products include cotton, cuts flowers, ornamental plants and sports balls.

How expense are fairtrade products? Although the price might sometimes slightly higher for the Fairtrade certified products than non-Fairtrade products, it is clear they many consumers are willing to pay to contribute to better conditions for producers. Global sales of Fairtrade products were valued as just over €1.1 billion for 2005.

Availability & Future of Fairtrade Products Fairtrade products are making their way into more and more shops and restaurants as firms become aware of the increasing popularity. Fairtrade with its emphasis on granting a living income, giving security, demanding property working conditions, encouraging sustainable production and funding local community development, is clearly a strategy that leads to development as well as growth.