Why fairtrade?
This week is World Fair Trade Day and as a sustainable fulfillment company we are happy to provide additional information in this area.
In Asia, Africa and South America, many small-scale farmers are constantly in uncertainty. They are completely at the mercy of the highly fluctuating market price, which means that the yield of the harvest is often too low to support the whole family. Without a reliable income one cannot invest in their business, the future of children or the community. This perpetuates poverty. Fairtrade sets standards that offer farmers the opportunity to develop themselves. Only together can this vicious circle be broken.
Working together in cooperatives
An important first step is for small farmers to organize themselves. This has the advantage that they can jointly invest in technology and logistics. This gives the farmers a better negotiating position, they get a better price for their harvest and access to the world market. That is why the most important condition of Fairtrade is that farmers work together in cooperatives. There are now 1,210 farmers’ cooperatives worldwide affiliated with Fairtrade.
Fair and sustainable conditions and minimum price
Ex- and importers buy the farmers’ products from the cooperative. To improve farmers’ income security, Fairtrade imposes a number of strict trading conditions. Buyers who purchase products from Fairtrade farmers’ cooperatives are obliged to pay a minimum price. This minimum price should enable farmers to cover the costs of sustainable production. This trade condition is there to protect the farmers when the world market price falls. If the world market price is lower than the minimum price, at least the minimum price is paid. If the world market price is higher than the minimum price, the cooperatives will of course receive the higher world market price. It thus acts as a safety net that provides security.
The fair trade premium
Cooperatives receive a Fairtrade premium from their customers on top of the price they pay for the products. The farmers decide democratically what they spend this premium on. This often involves business development for farmers, such as improving productivity, quality and infrastructure. For workers on plantations, the Fairtrade premium benefits community projects such as education and health care.
Social environmental criteria
The farmers and the company itself must also meet requirements. Fairtrade stands for sustainable production and development. The basis for this is environmentally friendly cultivation, respect for labor rights and a transparent, democratic working method in the farmers’ cooperatives.