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Fair Trade FAQ's

History

The Fair Trade movement can be traced back to 1946 when Edna Ruth Byler, a volunteer for Mennonite Central Committee (MCC), visited an MCC sewing class in Puerto Rico. She soon realized that the women creating the beautiful lace, though immensely talented, lived in terrible poverty. In an attempt to help, she set out to carry their work back to the United States to sell them and then return the money back to the groups directly. Her work grew into Ten Thousand Villages, which opened its first fair trade shop in 1958 and is now the largest fair trade retailer in North America. In 1949, Sales Exchange for Refugee Rehabilitation and Vocation (SERRV International) began helping recovering World War II refugees in Europe. Today, they support artisans in more than 35 countries. 

In the late 1970s, US- and Canadian-based entrepreneurs devoted to helping producers market their crafts began to meet regularly, exchange ideas, and network. Out of this process developed the Fair Trade Federation, which formally incorporated in 1994. In 1989, the World Fair Trade Organization (formerly IFAT) was founded as a global network of committed fair trade organizations, seeking improvement in the livelihoods of marginalized people via trade, and to provide a forum for the exchange of information and ideas.

In 1988, as world coffee prices began to sharply decline, a Dutch NGO, Solidaridad, and a farmer organization, UCIRI, created the first fair trade certification initiative. Named after a best-selling 19th century book, the Max Havelaar label initially applied only to coffee in the Netherlands, but more of Europe soon witnessed the growth of similar labeling initiatives within just a few years. In 1997, these organizations created Fairtrade Labelling Organizations International (FLO), an umbrella organization which sets the fair trade certification standards and supports, inspects, and certifies disadvantaged farmers. In 1997, FLO affiliate TransFair Canada opened, followed soon after by TransFair USA, now known as Fair Trade USA, in 1999. 

Fair trade sales and consumer awareness have seen tremendous growth since 2000 while the range of fair trade products has also expanded. From starting with lace and home décor, handmade items now include clothing, sports equipment, toys, jewelry, and other items. From its initial focus on coffee, fair trade product certification now also focuses on tea, chocolate, sugar, vanilla, fruit, wine, jewelry, furniture, and much more. The first World Fair Trade Day was celebrated in 2002 to heighten consumer awareness and to strengthen connections among fair traders and interested citizens around the globe. In 2006, IFAT reported that total fair trade sales topped $2.6 billion. 

Fair trade continues to expand across the globe due to the efforts of consumers, entrepreneurs, non-governmental organizations, and other communities to embrace a movement that offers real solutions to poverty, inequality, and a way towards social justice. 

Do Fair Trade goods cost more than non-Fair Trade goods?

No. Fair Trade crafts generally don’t cost more than other goods because the middle players in the supply chain are removed, thus decreasing the mark up costs. Each additional person in the supply chain adds on to the cost of the product, as that person expects a profit. Since there is more of a direct link from consumer to producer in a Fair Trade scenario, costs are kept comparable to non-Fair Trade goods, and more of the profit goes to the producer rather than to many different people in the supply chain.

How is Fair Trade making a difference if the sales volume is so low compared to non-Fair Trade sales? 

First, Fair Trade sales volume is not low: retail sales of Fair Trade items passed $1.1 billion in the U.S. in 2009. That has generated additional income paid to producers, beyond normal market rates, of $48 million. Further, for a Peruvian weaving cooperative making only a few hundred dollars a year, a $1,000 craft sale to a Fair Trade Organization is a significant increase in income. In some parts of the world, Fair Trade earnings are turned over to the community to improve quality of life. The money may fund a potable water system or provide health education or bring an adult literacy program to the community. Keep in mind, there is a much more direct link from consumer to producer in Fair Trade, and so the producers benefit that much more from each incremental increase in revenue. 

What are cooperative workplaces, and why are they important to Fair Trade?

Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshop conditions, where unprotected workers earn below minimum wage and most of the profits flow to foreign investors and local elites who have little interest in ensuring the long term health of the communities in which they work. Fair Trade Organizations work primarily with small businesses, worker-owned and democratically run cooperatives and associations which bring significant benefits to workers and their communities. By banding together, workers are able to access credit, reduce raw material costs and establish higher and more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably and often reinvested in community projects such as health clinics, child care, education, and literacy training. Workers learn important leadership and organizing skills, enabling self-reliant grassroots-driven development.

Do Fair Trade Organizations offer financial support to producers?

Yes. Small-scale farmers and artisans in the developing world lack access to affordable financing, impeding their profitability. Fair Trade Organizations that buy products directly from producers often provide financial assistance either through direct loans, pre-payment, or by linking producers with sources of financing. Unlike many commercial importers who often wait 60-90 days before paying producers, many Fair Trade Organizations ensure pre-payment so that producers have sufficient funds to cover raw materials and basic needs during production.

Do Fair Trade Organizations offer technical support to producers?

Yes. Fair Trade Organizations provide crucial technical assistance and support such as market information, organizational development and training in financial management. Unlike conventional importers, Fair Trade Organizations establish long term relationships with their producers and help them adapt production to changing trends, which ultimately helps the producer communities to become more economically sustainable. 

How does Fair Trade help artisan communities?

In artisan communities, schools are built, wells are constructed, children attend school, essential medical care is provided, and income is generated by fair trade sales. In addition, cultural techniques are revived; women become valued members of their societies; alternative production methods preserve bio diversity; small and medium sized enterprises in the developing world increase their capacity. These are a few of the many benefits to artisan communities in the developing world from Fair Trade.

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