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The Fairtrade certification initiative was created to form a new method for economic trade. This method takes an ethical standpoint, and considers the producers first.
Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. A system or network that allows trade is called a market.
Producer, in United States agricultural policy, is generally thought of as a farm operator. However, given the sometimes complex ownership and rental arrangements of today’s farms, the 2002 farm bill defines a producer for purposes of farm program benefits as an owner-operator, landlord, tenant, or sharecropper that shares in the risk of producing a crop and is entitled to a share of the crop produced on the farm. Under this definition, a landlord receiving cash rent is not considered a producer and is not eligible to receive subsidy program payments. However, a landlord receiving crop share as rent is a producer.
Several attempts to market fair trade products were observed in the 1960s and 1970s, fair trade sales became widespread with the Max Havelaar labeling initiative in 1988 and the establishment of Fairtrade International in 1997. Fairtrade sales prior to labeling initiatives were contained to relatively small world shops (also called charity shops), operated by alternative trading organizations (ATOs) such as Oxfam and Traidcraft.
At the initiative of Mexican coffee farmers, the first fair trade labeling initiative, Stichting Max Havelaar, was launched in the Netherlands on November 15, 1988, by Nico Roozen, Frans van der Hoff, and Dutch ecumenical development agency Solidaridad. In 1992, the organization was founded by Michael Gidney. The initiative offered coffee producers following various social and environmental standards an above market price for their crop. The coffee, originating from the UCIRI cooperative in Mexico, was imported by Dutch company Van Weely, roasted by Neuteboom, sold directly to shops and, for the first time, to mainstream retailers across the Netherlands.
The initiative was groundbreaking as for the first time Fairtrade coffee was being offered to a larger consumer segment. Fairtrade labeling certification provided some assurance that the products were really benefiting the farm workers at the end of the supply chain.
Fairtrade International started with the coffee industry, but now covers a range of products such as cocoa, fruit, cotton, flowers, tea and others. The established buyers of these products make up a niche market, which makes marketing for Fairtrade a challenge.
The cocoa bean or simply cocoa, which is also called the cacao bean or cacao, is the dried and fully fermented seed of Theobroma cacao, from which cocoa solids and cocoa butter can be extracted. Cocoa beans are the basis of chocolate, and Mesoamerican foods including tejate, a pre-Hispanic drink that also includes maize.
In botany, a fruit is the seed-bearing structure in flowering plants formed from the ovary after flowering.
Cotton is a soft, fluffy staple fiber that grows in a boll, or protective case, around the seeds of the cotton plants of the genus Gossypium in the mallow family Malvaceae. The fiber is almost pure cellulose. Under natural conditions, the cotton bolls will increase the dispersal of the seeds.
As of 2016, 1,411 producer organizations in 73 developing countries were Fairtrade certified, representing over 1.66 million farmers and workers.
The fair trade movement stemmed from an initiative established by the Dutch development agency, Solidaridad, and aimed to create more equality between coffee producers and roasters. The agency recognized that the producers were not being treated fairly, and strived to create a more ethical system to trade.
The Max Havelaar seal, which was based on a fictional character, was established "to license existing roasters and retailers who complied with its fair trade criteria".The seal provided specific benefits for cooperatives of small coffee producers in Mexico, with the aim of balancing the production of crops to be exported, as well as crops for the local population. The four benefits in this early model of the fairtrade initiative were:
The initiative was a great financial success and was replicated in several other markets: in the ensuing years, similar non-profit Fairtrade labelling organizations were set up in other European countries and North America, called "Max Havelaar" (in Belgium, Switzerland, Denmark, Norway and France), "Transfair" (in Germany, Austria, Luxembourg, Italy, the United States, Canada and Japan), or carrying a national name: "Fairtrade Mark" in the UK and Ireland, "Rättvisemärkt" in Sweden, and "Reilu kauppa" (Finnish) or "Rejäl handel" (Swedish) in Finland.
Belgium, officially the Kingdom of Belgium, is a country in Western Europe. It is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to the southwest, and the North Sea to the northwest. It covers an area of 30,688 square kilometres (11,849 sq mi) and has a population of more than 11.4 million. The capital and largest city is Brussels; other major cities are Antwerp, Ghent, Charleroi and Liège.
Switzerland, officially the Swiss Confederation, is a country situated in western, central and southern Europe. It consists of 26 cantons, and the city of Bern is the seat of the federal authorities. The sovereign state is a federal republic bordered by Italy to the south, France to the west, Germany to the north, and Austria and Liechtenstein to the east. Switzerland is a landlocked country geographically divided between the Alps, the Swiss Plateau and the Jura, spanning a total area of 41,285 km2 (15,940 sq mi). While the Alps occupy the greater part of the territory, the Swiss population of approximately 8.5 million people is concentrated mostly on the plateau, where the largest cities are to be found: among them are the two global cities and economic centres Zürich and Geneva.
Denmark, officially the Kingdom of Denmark, is a Nordic country and the southernmost of the Scandinavian nations. Denmark lies southwest of Sweden and south of Norway, and is bordered to the south by Germany. The Kingdom of Denmark also comprises two autonomous constituent countries in the North Atlantic Ocean: the Faroe Islands and Greenland. Denmark proper consists of a peninsula, Jutland, and an archipelago of 443 named islands, with the largest being Zealand, Funen and the North Jutlandic Island. The islands are characterised by flat, arable land and sandy coasts, low elevation and a temperate climate. Denmark has a total area of 42,924 km2 (16,573 sq mi), land area of 42,394 km2 (16,368 sq mi), and the total area including Greenland and the Faroe Islands is 2,210,579 km2 (853,509 sq mi), and a population of 5.8 million.
Global Fairtrade sales
|2014||€ 5 900 000 000|
|2011||€ 4 900 000 000|
|2010||€ 4 300 000 000|
|2009||€ 3 400 000 000|
|2008||€ 2 900 000 000|
|2007||€ 2 381 000 000|
|2006||€ 1 623 000 000|
|2005||€ 1 142 000 000|
|2004||€ 832 000 000|
|2003||€ 555 000 000|
|2002||€ 300 000 000|
|2001||€ 248 000 000|
|2000||€ 220 000 000|
Initially, while the Max Havelaars and the Transfairs co-operated product by product with equivalent standards and producer lists there was no contractual agreement to ensure global standards. In 1994, a process of convergence among the labelling organizations – or "LIs" (for "Labelling Initiatives") – started with the establishment of a TransMax working group, culminating in 1997 in the creation of Fairtrade Labelling Organizations International, now simply known as Fairtrade International (FLO). FLO is an umbrella organization whose mission is to set the Fairtrade Standards, support, inspect and certify disadvantaged producers and harmonize the Fairtrade message across the movement.
In 2002, FLO launched a new International Fairtrade Certification Mark, effectively replacing most previous Max Havelaar and TransFair certification marks. The goals of the launch were to improve the visibility of the Mark on supermarket shelves, facilitate cross-border trade and simplify export procedures for both producers and exporters.
The International FAIRTRADE Certification Mark is an independent certification mark used in over 50 countries. It appears on products as an independent guarantee that a product has been produced according to Fairtrade political standards.
Today, all but one labeling initiative have fully adopted the new mark. TransFair USA has apparently elected to continue with its own Fair Trade Certified Mark for the time being,while the Canadian organization currently allows certified products to carry either mark, it is transitioning toward the sole use of the International Fairtrade Certification Mark.
In January 2004, Fairtrade Labelling Organizations International was divided into two independent organizations: Fairtrade International (FLO), which sets Fairtrade Standards and provides producer business support, and FLO-CERT, which inspects and certifies producer organizations. The aim of the split was to ensure the impartiality, the independence of the certification process and compliance with ISO 65 standards for product certification bodies.
At present, over 25 labelling initiatives and producer networks are members or associate members of Fairtrade International. There are now FAIRTRADE Certification Marks on dozens of different products, based on FLO's certification for coffee, tea, rice, bananas, mangoes, cocoa, cotton, sugar, honey, fruit juices, nuts, fresh fruit, quinoa, herbs and spices, wine and footballs.
In 2009, fair trade coffee was sufficiently mainstream that Walmart, the world's largest retailer began selling it, and pricing it about the same as regular.
The Fairtrade and Fairmined dual certification for gold was launched across the United Kingdom on 14 February 2011,a joint scheme between The Fairtrade Foundation and The Association for Responsible Mining.
The Solidaridad informed large audiences of the mistreatment of coffee producers and poor living conditions in developing countries. They worked with other associations as well as the mass media to spread the message and create an awareness of their fair trade initiative. Because of their efforts, in 1988 the first bag of Max Hevelaar sealed coffee from Mexico was delivered to Holland's Prince Claus, and was launched to be sold in supermarkets throughout Holland. By the 1990s every western European country had established their own national version of the Max Hevelaar initiative.
Between the late 1980s and the mid-1990s, multiple national initiatives following a fair trade system coexisted within Europe, the US, Canada, and Japan.In 1997, however, 17 national initiatives joined forces to create one international umbrella organisation called the Fair Trade Organization (FLO). FLO is based in Bonn, Germany, and has quickly become the largest organisation of its kind. FLO also has branches and field workers in Africa, Central and South America and China. The international fair trade label was introduced in 2002 to improve visibility for consumers. The Fairtrade producers did not like the way they were treated.
A key part of the fair trade initiative is to inform consumers through innovative marketing. The marketing must create a value proposition for the initiative that encompasses the ethical side, as well as the quality of the product.
As an example: fair trade coffee packers in developed countries pay a fee to their country's Fairtrade organization for the right to use the brand and logo. Nearly the entire fee goes to marketing. Packers and retailers can charge as much as they want for the coffee. The coffee has to come from a certified Fairtrade cooperative, which pays certification and inspection fees. The importer is obliged to pay the exporter a base price which keeps the price from sinking below that level. It is sometimes higher than the going world price, but at times when coffee prices are high, it may be lower than the going price. There is an additional "producer premium" (20c/lb for coffee). For a few products, like coffee, there is also a minimum price.
The cooperatives or other Fairtrade certified firms incur additional costs including increased marketing costs, certification and inspection fees,and costs of conforming to the specifications.
Any deficit after paying these costs means a lower price for farmers, while any surplus from the premium price must be spent on "social projects" for "common goals" organized by the exporting cooperative rather than being an extra payment for farmers.These may include the building of classrooms, baseball pitches, or the establishment of women's groups.
Fairtrade farmers have to meet a large range of criteria on production: there are limits on using child labour, pesticides, herbicides, genetically modified products and so on.
Fairtrade standards contain minimum requirements that all producer organizations must meet to become certified as well as progress requirements in which producers must demonstrate improvements over time. To become certified Fairtrade producers, the cooperatives and their member farmers must operate to certain standards laid down by Fairtrade International. FLO-CERT, the for-profit side, handles producer certification, inspecting and certifying producer organizations in more than 50 countries in Africa, Asia, and Latin America.
There are several types of Fairtrade standards, including standards for contract situations,for importers, and also for the different products.
Fairtrade standards for small farmers' organizations include requirements for democratic decision making, so that farmers may have a say in how the Fairtrade Premiums are invested. They also include requirements for capacity building and economic strengthening of the organization.
Fairtrade standards for hired labour situations specify that employees receive minimum wages and collective bargaining. The standards also specify that Fairtrade-certified plantations should have no forced or child labour and that health and safety requirements are met. In a hired labour situation, Fairtrade standards require a "joint body" to be set up with representatives from both the management and the employees. This joint body decides on how Fairtrade Premiums will be spent to benefit plantation employees.
Fairtrade standards and procedures are approved by the Fairtrade International Standards Committee, an external committee comprising all FLO stakeholders (labeling initiatives, producers and traders) and external experts. Fairtrade standards are set by FLO in accordance to the requirements of the ISEAL Code of Good Practice in standard setting and are in addition the result of a consultation process, involving a variety of stakeholders: producers, traders, external experts, inspectors, and certification staff.
The main aspects of the Fairtrade system are the Minimum Price and the Premium. These are paid to the exporting firm, usually a second tier cooperative, not to the farmer. They are not paid for everything produced by the cooperative members, but for that proportion of their output they are able to sell with the brand 'Fairtrade Certified', typically 17% of their turnover, rising to as much as 60% in a few cases.
Fairtrade inspection and certification are carried out by FLO-CERT, an independent, for-profit body created by Fairtrade International. FLO-CERT certifies that both producers and traders have met with Fairtrade standards.FLO-CERT inspections and certification follow the international ISO standards for product certification bodies (ISO 65).
FLO-CERT works with a network of around 100 independent inspectors that regularly visit producer and trade organizations and report back to FLO-CERT. All certification decisions are then taken by a Certification Committee, composed of stakeholders from producers, traders, national labelling organisations and external experts. An Appeals Committee handles all appeals.
In 2006, a Financial Times journalist found that ten out of the ten mills they visited had sold uncertified coffee to co-operatives as certified. It reported that they were "also handed evidence of at least one coffee association that received Fairtrade certification despite illegally growing some 20 per cent of its coffee in protected national forest land.
Certified organizations such as cooperatives have to pay FLO-CERT a fee to become certified and a further annual fee for audit and continued certificationThe first year certification fee per unit sold as "Fairtrade certified" varies but has been over 6c/lb with an annual fee of 3c/lb to 3.4c/lb for coffee up to 2006 in some countries, at a time when the "Fairtrade premium" was 5c to 10c/lb.
Fairtrade farmers also have to meet a large range of criteria on production: there are limits on using child labour, pesticides, herbicides, genetically modified products and so on.
Fair trade is an institutional arrangement designed to help producers in developing countries achieve better trading conditions. Members of the fair trade movement advocate the payment of higher prices to exporters, as well as improved social and environmental standards. The movement focuses in particular on commodities, or products which are typically exported from developing countries to developed countries, but also consumed in domestic markets most notably handicrafts, coffee, cocoa, wine, sugar, fresh fruit, chocolate, flowers and gold. The movement seeks to promote greater equity in international trading partnerships through dialogue, transparency, and respect. It promotes sustainable development by offering better trading conditions to, and securing the rights of, marginalized producers and workers in developing countries. Fair trade is grounded in three core beliefs; first, producers have the power to express unity with consumers. Secondly, the world trade practices that currently exist promote the unequal distribution of wealth between nations. Lastly, buying products from producers in developing countries at a fair price is a more efficient way of promoting sustainable development than traditional charity and aid.
Fairtrade International otherwise known as in many countries Fairtrade Labelling Organizations International e.V. (FLO) was established in 1997, and is an association of 3 Producer Networks, 19 National Fairtrade Organizations and 8 Fairtrade Marketing Organizations that promote and market the Fairtrade Certification Mark in their countries
The Fairtrade Foundation is a charity based in the United Kingdom that works to empower disadvantaged producers in developing countries by tackling injustice in conventional trade, in particular by promoting and licensing the Fairtrade Mark, a guarantee that products retailed in the UK have been produced in accordance with internationally agreed Fairtrade standards. The Foundation is the British member of FLO International, which unites FLO-CERT, 25 National Fairtrade Organisations and 3 Producer Networks across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand.
The Rainforest Alliance is a non-governmental organization (NGO) working to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behavior. Based in New York City with offices throughout North and South America, Asia, Africa and Europe, it operates in more than 70 countries. It was founded in 1987 by Daniel Katz, who serves on its board of directors, and is currently led by CEO Han de Groot.
Coffee is a popular beverage and an important commodity. Tens of millions of small producers in developing countries make their living growing coffee. Over 2.25 billion cups of coffee are consumed in the world every day. Over 90% of coffee production takes place in developing countries - mostly South America, while consumption happens mainly in the industrialized economies.
Fair Trade USA, formerly "TransFair USA", is a 501(c)(3) non-profit organization, that sets standards, certifies, and labels products that promote sustainable livelihoods for farmers and workers and protect the environment.
Frans van der Hoff, or Francisco VanderHoff Boersma as he is called in Latin America, is a Dutch missionary who, in collaboration with Nico Roozen and ecumenical development agency Solidaridad, launched Max Havelaar, the first Fairtrade label in 1988. Frans van der Hoff's contacts with disadvantaged Mexican coffee producers were key in securing the supply and ensuring the success of the very first Fairtrade certification initiative.
Fairtrade Canada, formerly TransFair Canada, is a national non-profit certification and public education organization promoting Fairtrade certified products in Canada to improve the livelihood of developing world farmers and workers. It is the Canadian member of FLO International, which unites 24 fair trade producer and certification initiatives across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand.
Stichting Max Havelaar is the Dutch member of FLO International, which unites 23 Fairtrade certification producer and labelling initiatives across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand. Several of these corresponding organizations in other European countries also use the Max Havelaar name. The name comes from Max Havelaar, which is both the title and the main character of a Dutch 19th-century novel critical of Dutch colonialism in the Dutch East Indies.
The Fair Trade Association of Australia and New Zealand is a member-based organization that supports two systems of fair trade. The first is the Australia and New Zealand member of FLO International, which unites Fairtrade producer and labeling initiatives across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand. The second, is the World Fair Trade Organization (WFTO), of over 450 worldwide members, to which the Fair Trade Association is one. Fairtrade refers to FLO certified commodity and associated products. Fair trade encompasses the wider Fair Trade movement, including the Fairtrade commodities and other artisan craft products.
The fair trade movement has undergone several important changes since its early days following World War II. Fair trade, first seen as a form of charity advocated by religious organizations, has radically changed in structure, philosophy and approach. The past fifty years have witnessed massive changes in the diversity of fair trade proponents, the products traded and their distribution networks.
The Fair trade debate is a debate around alleged issues with the Fairtrade brand. The debate surrounds the ethics and alleged economic implications of fair trade. Some criticisms have been raised about fair trade systems. One 2015 study in a journal published by the MIT Press concluded that producer benefits were close to zero because there was an oversupply of certification, and only a fraction of produce classified as Fair Trade was actually sold on Fair Trade markets, just enough to recoup the costs of certification. Some research indicates that the implementation of certain fair trade standards can cause greater inequalities in some markets where these rigid rules are inappropriate for the specific market. In the fair trade debate, there are complaints of failure to enforce the fair trade standards, with producers, cooperatives, importers and packers profiting by evading them.
The Max Havelaar Foundation is a non-profit certification and public education organization promoting Fairtrade products in Switzerland to improve the livelihood of developing world farmers and workers. The Max Havelaar Foundation is the Swiss member of FLO International, which unites 23 Fairtrade producer and labelling initiatives across Europe, Asia, Latin America, North America, Africa, Australia and New Zealand. Several of these corresponding organizations in other European countries also use the Max Havelaar name. The Swiss Max Havelaar organization was founded in 1992 by the Third World aid organisations Brot für alle, Caritas, Fastenopfer, HEKS, Helvetas and Swissaid.
Fair Trade coffee is coffee that is certified as having been produced to fair trade standards.
A fair trade certification is a product certification within the market-based movement fair trade. The most widely used fair trade certification is FLO International's, the International Fairtrade Certification Mark, used in Europe, Africa, Asia, Australia and New Zealand. Fair Trade Certified Mark is the North American equivalent of the International Fairtrade Certification Mark. As of January 2011, there were over 1000 companies certified to the FLO International's certification and a further 1000 or so certified to other ethical and fairtrade certification schemes around the world.
The Union of Indigenous Communities of the Isthmus Region, is a farmer's cooperative in the state of Oaxaca, Mexico. It was established in 1982 to assist in production, marketing and distribution of locally produced coffee and other products. UCIRI was a pioneer of organic coffee production and one of the first fair trade suppliers.
Sustainability standards and certifications are voluntary, usually third party-assessed, norms and standards relating to environmental, social, ethical and food safety issues, adopted by companies to demonstrate the performance of their organizations or products in specific areas. There are perhaps up to 500 such standards and the pace of introduction has increased in the last decade. The trend started in the late 1980s and 90s with the introduction of Ecolabels and standards for Organic food and other products. In recent years, numerous standards have been established and adopted in the food industry in particular. Most of them refer to the triple bottom line of environmental quality, social equity, and economic prosperity. A standard is normally developed by a broad range of stakeholders and experts in a particular sector and includes a set of practices or criteria for how a crop should be sustainable grown or a resource should be ethically harvested. This might cover, for instance, responsible fishing practices that don't endanger marine biodiversity, or respect for human rights and the payment of fair wages on a coffee or tea plantation. Normally sustainability standards are accompanied by a verification process - often referred to as "certification" - to evaluate that an enterprise complies with a standard, as well as a traceability process for certified products to be sold along the supply chain, often resulting in a consumer-facing label. Certification programmes also focus on capacity building and working with partners and other organisations to support smallholders or disadvantaged producers to make the social and environmental improvements needed to meet the standard.
Fair trade bananas are bananas produced in partnership with an alternative trade organization which focuses on increasing the price paid to small banana growers and the wages of agricultural workers. This is not a commercial brand, but a marketing strategy. Fair trade is based on higher prices paid by consumers that allow an equitable distribution of gains from trade over the chain partners.
The Federación Campesina del Cauca is a non-profit, member-owned federation of coffee grower associations based in the Cauca Department of Colombia. It was found in 1971 as a congress of farmers, but has since formalized into a cooperative serving the interests of 630 coffee farmers from six local sub-groups. The federation was licensed FLO Cert in 2004, and has since acquired certification for producing both conventional and organic coffee.
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