Fair Trade Federation Principles and Practices
Fair Wages in the Local Context
Producers receive fair compensation for their products, which means that workers are paid at least that country's minimum wage. Since the minimum wage is often not enough for basic survival, whenever feasible, workers are paid a living wage, which enables them to cover basic needs, such as food, shelter, education and health care for their families. Paying fair wages does not necessarily mean that products will cost the consumer more. Since fair trade organizations bypass exploitative middlemen and work directly with producers, they are able to reduce costs and return a greater percentage of the retail price to the producers.
Fair trade organizations work primarily with small businesses, democratically-run associations, and/or cooperatives which bring significant benefits to workers and their communities. Cooperatives and producer associations provide a healthy alternative to large-scale manufacturing and sweatshops 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. By banding together, workers are able to access credit, reduce raw material costs and establish more just prices for their products. Workers earn a greater return on their labor, and profits are distributed more equitably. Profits are also often reinvested in community projects, such as health clinics, child care, education and training. Workers practice important leadership and organizing skills, enabling self-reliant grassroots-driven development. Safe and healthy working conditions are maintained and producers gain greater control and decision making power over the use of their resources.
Financial and Technical Support
Small-scale farmers and artisans in the developing world lack access to affordable financing. FTF members that buy products directly from producers often provide financial assistance either through direct loans, prepayment or link producers with sources of financing. Unlike many commercial importers who often wait 60-90 days before paying producers, many FTF members supply prepayment so that producers have sufficient funds to cover raw materials and basic needs during production time. They also often provide other critical technical assistance and support such as market information, product feedback and training in financial management. Unlike commercial importers, FTOs establish long term relationships with their producers and help them adapt production for changing trends.
WHAT DOES FAIR TRADE MEAN?
Fair Trade means an equitable and fair partnership between marketers in North America and producers in Asia, Africa, Latin America, and other parts of the world. A fair trade partnership works to provide low-income artisans and farmers with a living wage for their work. Fair Trade Federation (FTF) criteria are:
- Paying a fair wage in the local context.
- Offering employees opportunities for advancement.
- Engaging in environmentally sustainable practices.
- Being open to public accountability.
- Building long-term trade relationships.
- Providing healthy and safe working conditions within the local context.
- Providing financial and technical assistance to producers whenever possible.