How fairtrade contributes to local economies in producer countries

Economic: Fair trade minimum price (1)

The minimum price that a buyer has to pay to a producer organisation for their product

(2)

Ensures producer organisations receive a price that covers the cost of a sustainable production for their product

(3)

If the market price for that product is higher than the fair trade minimum price, then farmers & workers should receive that price

(4)

Ensures producers receive a stable income even when market prices fall below a sustainable level - supports farmers to become more income secure & less vulnerable to poverty

Example

The minimum price of coffee was raised to $1.80/lbs with an additional $0.20 premium & $0.40 organic premium totalling $2.40/lbs for organic fair trade coffee

Fair trade premium (1)

An additional sum of money that goes into a communal fund for workers & farmers to use to improve their social, economic & environmental conditions eg education, healthcare or building vital infrastructure for their community

(2)

Empowers farmers to organise into cooperatives & negotiate a higher price for a product

(3)

Gives farmers confidence to expand their enterprises & negotiate better terms of employment

Investments include:

-education & school infrastructure

-healthcare & sanitation

-agricultural equipment & training

-housing & community development

(4)

Often used to support women to develop new ways of earning income or cut down on the time they spend on unpaid tasks by improving access to water, healthcare, childcare & transport

Example

Cocoa farmers receive an extra $200 per tonne of cocoa beans they sell. This money was given back to communities to invest in projects of their choice

Access to services (1)

Benefit from training in agriculture & organic farming, climate resilience & access to premium markets encouraging them to farm better & sell more

(2)

Provides access to & oversees loans to help producers invest

(3)

38% of fair trade producer organisations have climate adaptation plans in place

Social: gender inequality (1)

Women = 33-40% of fair trade farmers & workers

(2)

Initiatives eg women in coffee programme (Kenya) & women's school of leadership (LATAM & Africa) have helped women gain leadership roles & financial independence

(3)

Women's leadership & participation in cooperatives is encouraged

Workers' Rights (1)

Standards prohibit discrimination, labourers guaranteed safe & healthy working conditions & opportunities for advancement

(2)

Human rights & child labour laws are enforced & upheld

(3)

Producers encouraged to negotiate work terms & conditions through trade unions & collective bargaining

(4)

In the uk: challenges gov. & businesses to make changes to policy that would increase fairer trading

Youth & marginalised groups (1)

Supports inclusive development, offering training & opportunities for youth & disadvantaged communities

(2)

Fair trade global system: 50% owned by producers representing farmer & worker organisations - gives producers a say in decision-making on overall strategy, use of resources & setting prices, premiums & standards

Empowerment of farmers & workers (1)

Have more control over the future: greater power & voice

(2)

Must have a democratic structure & transparent administration to be certified

(3)

Must be allowed representatives on a committee that decides in uses of fair trade premium

(4)

Supported by fair trade international to develop their capacity in the area

(5)

Fair trade invests in education, better schools & medical facilities in worker communities, improving quality of life in rural communities

Living income (1)

Set international standards including establishing decent wages in line with the living income reference price - enhances economic benefits for producer country

(2)

Supports development of living wage benchmarks - help identify gap with current wages & find solutions together with employers, workers, buyers, retailers

(3)

More secure income & reduced vulnerability means farmers & workers can increase assets & activities eg paying school fees or boosting savings - raises living standard, offering opportunity to plan better & invest in their future

Environmental (1)

Provides environmental protection standards eg banning toxic pesticides & GMO seeds & requiring responsible land & water use (with a focus on water conservation & waste management) to reduce environmental impact. Farmers can receive training & support to meet these standards

(2)

Encourages biodiversity: standards protect biodiversity & promote practices that support it

(3)

Promotes training for farmers to switch to environmentally friendly practices eg nutrient rich soils & encouraging wildlife to help control pests & diseases

Example

Sustainable banana programme seeks to improve farming practices through soil health management, efficient water use & building climate resilience - improved yields & reducing environmental costs

(4)

Provides access to finance, producer support & expertise in tackling climate change, supporting long term environmental sustainability

Challenges in global trade & consumption: price variability

Global food prices remain unstable. Farmers risk financial loss if prices drop before harvest

Market concentration

A few large corporations dominate international food trade, often retaining profits without passing benefits to producers

Living conditions

Many farmers still live on less that $2 daily with limited access to healthcare, education or secure employment

Barriers to consumers: attitudes, beliefs & knowledge

Can be challenging for consumers to see how food purchased in their local town/supermarket has any impact on the working life & environment of others

Climate change

Fair trade products are imported - may question environmental cost of importing products by sea/air

Cost

Fair trade products perceived to be more expensive than other products