What Fair Trade Is and What It is Not

What Fair Trade IsUnderstanding what fair trade is includes understanding what it is not. Fair trade means a fair price for products. It does not mean that everyone who produces a product receives the same wage all around the world. It means a worker receives a price on their goods that allows them to make a decent living in their community. The prices cover the cost of production and enough profit to produce a living wage for the person and their family. It is not a charity give-away that offers something for nothing. The person must produce the goods as directed. They sell them to traders that pay them a fair trade price.

Fair trade also means an investment in the producers’ communities. Part of the fair trade practice is a premium paid by traders that go into a community fund. The people who are part of that community democratically decide where that money goes in the community. Those funds are something they use to fund projects that they might not be able to do otherwise. Many communities use them for health clinics, schools, housing, and other programs that promote community growth. What fair trade is not about is moving jobs overseas. The idea is to grow a community’s production capability from the inside in, without bringing jobs from other countries or regions.

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Fair trade goods often have a similar price to the same goods that go through conventional trading channels. It might surprise some people with that fact. But, it is the truth. Fair trade often removes many of the unnecessary companies in between that add price on to their products. It keeps prices at a good rate for consumers and puts more money back to the original producers. The only losers in this equation are the middlemen who add their charges along the way to the price. What fair trade is not about is producing inferior goods for prices above the current market. The goods coming from fair trade are as good as or better than those going through conventional trading channels are.

Fair trade supports globalization efforts with a balance towards keeping sustainable wages. There is a misconception of what fair trade is in context with international business. It is not about stopping international trade. It is about making it fair for everyone from the producer to the consumer. In fact, since trade is the cornerstone of fair trade, one cannot exist without the other.

Some Recommended Fair Trade Books