Putting people before profits

Fair Trade is not charity - it provides a market-based approach to empowering disadvantaged producers. How it does this, however, is crucially different from conventional trade.

Pricing Under conventional trade, most companies look for the lowest possible price in order to make the greatest amount of money. Fair Trade guarantees producers fair prices for their products - prices that recognise the true cost of labour and production. This ensure that producers make a fair income that allows them to keep a decent roof over their heads, feed their families and send their children to school.

Purchasing Conventional trade is crowded with middlemen who often earn more than the producers. Fair Trade companies buy their products directly from cooperatives and producer groups, meaning that more of the retail price of a product makes its way back to the producers.

Payment Very few small-scale producers qualify for bank loans. When they need cash to cover expenses, they are forced to seek loans from informal lenders who charge exorbitant interest rates. Many are unable to repay these loans, and wind up in a cycle of debt that is difficult to escape. Under the Fair Trade system, producers can request advance payment for products. This helps them to avoid the kind of predatory lending that can bring families to financial ruin.

Trading Relationships In sharp contrast to conventional trade, where companies can change suppliers from one year to the next in their search for the lowest possible prices, Fair Trade companies are committed to building long-term and meaningful relationships with producers.

Environment In conventional trade, the lack of special environmental standards to regulate production, can lead to long-lasting damage to the environment. Fair Trade, on the other hand, forbids the use of hazardous pesticides, creates incentives for organic certification, and helps train producers in environmentally friendly production techniques. These measures are good not just for the planet, but also for producers and their families.