What is the Meaning of Fair Trade?
The meaning of fair trade can vary according to which source you use. But the definition put forward by Oxfam and the Fairtrade Foundation is that it is an alternative approach to international trade. It is a partnership aimed at sustainable development for producers excluded from of or at a disadvantage in conventional trading channels. Those that help change these practices do this by raising awareness, campaigning, and promoting better trading options. There are other definitions of course. The basic meaning is making sure everyone in the chain from producer to consumer gets a fair deal as part of a product.
Typically, products move through many companies or individuals from the original producer to the final consumer. The original producer could be a family farmer located in a developing country. The final consumer might be someone living in North America or Western Europe. In between those two people, there can be several others taking a share of the profit. The original producer may sell to a local buyer. The local buyer may sell the product to a national buyer. The national buyer may sell the product to an exporter. The exporter ships the product to the final destination and sells it to a wholesaler. The wholesaler may sell the product to a distributor who then sells it to a store. The store is the one who sells it to the final consumer. One meaning of fair trade is removing much of the profiting middlemen from the equation.
In a fair trade situation, the number of middlemen is down significantly. The local producer is part of a cooperative which contracts with a fair trade buyer. The buyer may pay a part of the payment up front to help with costs. Once the buyer has the product, they will likely ship the products overseas to a fair trade distributor. The distributor puts the product out to stores where the final consumer purchases the product. The balance makes itself known at the consumer’s end. The very meaning of fair trade comes down to more of the profit going in the original producers pockets instead of all the middlemen. Everyone along the way makes a living wage without exploiting the original producer with non-living wages.
The meaning of fair trade is providing a living wage to producers. It means offering quality products at competitive prices to the consumer. It means making sure to cover the producer’s costs while also giving them sufficient profit to live on.